STUMP » Articles » Taxing Tuesday: Seattle Returns to Its Dumbass Idea of an "Amazon Tax" » 7 July 2020, 17:51

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Taxing Tuesday: Seattle Returns to Its Dumbass Idea of an "Amazon Tax"  

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7 July 2020, 17:51

No, this is not the announcement of a permanent return of Taxing Tuesday…. but I am seeing stupid tax ideas popping up now that state and local governments are desperate for any sources of revenue just to get to 2019 levels.

That said, I prefer focusing on the fiscal pressures than the dumbass tax ideas. But I’m so annoyed at this one, I had to post.

Newest Seattle Tax Passed on Monday

Seattle City Council passes new payroll tax

The Seattle City Council passed the controversial payroll tax on Monday.

The council voted 7-2.

The payroll tax plan is called Jump Start Seattle, introduced by Councilmember Teresa Mosqueda.

Amazon and other businesses with annual payrolls of at least $7 million would pay a tax for each employee with a salary of $150,000.

Last week the council voted 7-2 to advance it from a budget committee for final passage.

This is idiotic.

I will get back to the current idiocy at the end of this post, because I want to go through the history of the prior attempt of the Seattle town council to make an “Amazon tax”, which, while not as fun as my soda tax sagas, certainly provided much mirth over the council’s utter stupidity.

Recap of 2018 Seattle head tax attempt

Here is the nutshell version:
- A socialist Seattle City Council member thought it would be grand to do a per-employee tax on Seattle companies
- The city council passed it in Fall 2017
- This did not go over well either with local companies nor voters, who got together a petition to rescind the tax via ballot referendum in spring 2018
- Then in June 2018, the city council rescinded it to head off the ballot initiative
- Later in 2018, it was unshockingly revealed the council would try again when people weren’t looking

May 2018: Senseless in Seattle: A Panoply of Stupidity

I find it interesting that a city with association with high-tech stuff, and supposedly smart people, keep electing total idiots.

Guys, government is too important to leave to the “professionals” – aka professional politicians, who are generally total idiots when it comes to other people’s interests, but know their own interests very well.

Maybe.

AGAIN ON THE SEATTLE HEAD TAX

That golden goose needs to die! How dare it honk at us while we hold the axe!
….
Guess what: Amazon does not have to be in Seattle.
….
They’re [Amazon] not going on strike – they’re just going to go somewhere else.

And Seattle will learn that being in the Pacific Northwest is not necessarily a big draw for the kinds of employees Amazon wants or needs in its HQ.

June 2018: Seattle City Council Votes Overwhelmingly to Repeal New Business Head Tax

Citing widespread opposition to the new tax and the need for greater consensus, seven of the nine members of City Council voted today to repeal the new tax before it goes into effect. It took a while, but Seattle officials have figured out that taxing job creation is uniquely counterproductive.

The city expected opposition for large corporations but seemed unprepared for the policy’s rejection by the general public. Today’s repeal took place under the shadow of a looming ballot referendum and polling showing the new tax’s considerable unpopularity. Organizers were preparing to submit a petition for a ballot initiative with more than twice the required number of signatures when news broke that City Council was ready to reverse itself. (Once the petition was certified, the new law would have been suspended pending the outcome of the ballot question.)

The two people who did not vote to overturn the head tax were the socialist council member who proposed the head tax & the council member who proposed the payroll tax that just passed here in July 2020.

More inside baseball here on what went down in the tax repeal: Council moves suddenly and swiftly to repeal the head tax

I’m not going to dig into all the politicking. Let’s just go to the end:

For her part, Council member Sawant took to Twitter to call the repeal effort a “backroom betrayal” and gave a fiery speech during this afternoon’s Council meeting. She has put out a call to her “movement” to pack City Hall for tomorrow’s noon meeting when the Council will take up the head tax repeal bill.

While nothing with this Council is 100% certain until the vote is taken, it appears that tomorrow seven Council members (all but Mosqueda and Sawant) will vote to repeal the head tax, and Mayor Durkan will sign the bill. Of course, what is good for the goose is good for the gander: just as opponents of the head tax organized to file a referendum petition after it passed, supporters of the head tax could file a referendum petition on the repeal. If that were to happen, it would need to be filed with roughly 17,000 collected signatures within 30 days of the Mayor signing the repeal into law, and it would be placed on the November ballot (the King County Elections deadline is August 7).

Note: the pro-head tax people are not a large crowd, even if they are the types to set up an “autonomous zone” in Seattle itself. It was not put on the November 2018 ballot, by the way. I don’t know if anybody actually tried to even start a petition.

In September 2018, it was found various council members wanted to try again.

SEATTLE: WE’LL TRY AGAIN WHEN PEOPLE AREN’T LOOKING

There are always entrants to the “dumbest tax idea”, but this one took the cake:

Clueless in Seattle: [WSJ editorial] Text messages show politicians regret their head tax—for now.
….
‘The Seattle Times obtained the text conversations of Mayor Jenny Durkan and Councilwoman Lorena González on the weekend before the June 12 repeal vote. “Pulling the head tax down now is super super smart and strategic,” venture capitalist Nick Hanauer advised the mayor in a June 10 text. “This was a no-win fight. Wrong fight at the wrong time on the wrong terms.”’
…..
‘So lesson learned? Not for Ms. González. “Sadly the policy is right,” she wrote. “Our timing, however, was off. It’ll occur but we need to socialize people to what we’ve done, what we could do, the need and the real lack of resources.”’

‘“A replacement may be in the cards but not now,” Ms. González wrote in another text. “We need to get rid of this albatross and then quietly work to figure out what takes its place,” adding that “I’m thinking this is a November 2019 strategy.” Liberal taxers never sleep.’

Evidently now, in the middle of a pandemic, is the right time.

Let’s look at the new payroll tax details and think through likely effects.

Terms of new payroll tax

Geekwire: Seattle City Council unveils new payroll tax targeting Amazon and other large companies

The legislation establishes a tiered tax plan that breaks down like this:

Companies with annual payroll of $7 million – $1 billion would pay a 0.7% tax on salaries between $150,000-$499,999 and a 1.4% tax on salaries greater than $500,000

Companies with annual payroll exceeding $1 billion would pay a 1.4% tax on salaries between $150,000-$499,999 and a 2.1% tax on salaries greater than $500,000

The legislation only applies to the payroll of employees based in Seattle. It includes stock grants but does not apply to stock options which may or may not be exercised in the future, according to City Council staff.
….
The legislation assumes that 3% of Seattle businesses will be subject to the tax. The tax sunsets after 10 years or if the county or state create a progressive revenue source that overlaps with the goals of the legislation.

Expedia is supportive of the legislation. GeekWire reached out to Amazon to comment on the proposal and will update this story if we hear back.
…..
The City Council would initially borrow from emergency funds to provide COVID-19 relief and pay the money back with revenue from the payroll tax down the road. The funds would go toward small business grants, housing stability programs, and emergency grocery vouchers, among other programs. When the coronavirus crisis passes, revenue from the payroll tax would fund affordable housing and homeless services and economic and workforce development objectives.
…..
In the wake of the head tax [repeal], Sawant doubled down on her “Amazon Tax” plan. Her proposal would raise an estimated $500 million per year. That legislation was on pause until recently due to procedural rules tied to the pandemic, but they were revised in early June.

By the way, every time I said “the socialist council member”, I was referring to Sawant, and no, I’m not just being pissy. That’s how she describes herself:

Alongside being a teacher, Kshama is an activist, organizer, and socialist, and is a member of Socialist Alternative, in solidarity with the Committee for a Workers’ International, which organizes for working-class interests on every continent.

If that link doesn’t work, it may be that the mayor of Seattle was successful in getting Sawant thrown off the city council for her shenanigans recently. But let’s not get sidetracked right now.

And a note on other cities and states: Seattle City Council approves payroll tax on largest, best-paying companies

Meanwhile, lawmakers in the Golden State are considering coronavirus relief legislation that includes a head tax on the state’s big businesses.

No other state has a head tax.

There are reasons that head taxes or poll taxes are really unpopular. I leave it up to the reader (for now) to think about why.

I do find it grimly amusing that the types of people who would riot against a personal poll tax think it’s just peachy if applied to their employers.

The one thing I find concerning, though is the bit where they just assume the tax money will come through, and will borrow money before that revenue comes in. If that tax revenue doesn’t come in…. what then?

Why this is even more stupid this time than in 2018

Look, guys. It has become quite clear that the tech firms do not need their employees physically in Seattle or Portland or San Jose or San Francisco or Austin or wherever. They can highly encourage their employees to be physically located somewhere else. They can move their HQs somewhere else.

Commercial real estate is, shall we say, in flux at the moment. If Seattle is going to remain nuts for the foreseeable future, I’m sure that Amazon knows how to ignore sunk costs and get the hell out of town. It could simply by skinnying down the workforce physically in Seattle. The highest-paid execs might move to Colorado or Texas or someplace much more amenable to their wallets.

The more highly-paid the employee, the less likely it is that they need to be in a specific location.

It seems to me more and more states and cities are going to have to go the Connecticut way of doing things and keep close tabs on those rich people they’re hoping to get more and more of their revenue from.

In the recent stories, evidently Expedia (it still exists?) is playing ball with the tax-happy Seattle city council, but other Seattle-based employers haven’t made statements yet, that I’ve been able to find. I assume Amazon is not going to be pleased.

More on Seattle’s socialist council member Sawant

Sawant makes a threat here:

I wouldn’t call that an unhinged rant. I call that a statement of intended policy, and a specific threat against a specific person and company. It’s also under a minute… good rants take at least an hour.

Here is a thought, socialist council member: how did you make this video and put it online? Do you think people will just make all these goodies and set up networks for free?

I would like to know Sawant’s background. Most of the diehard socialists I’ve known are spoiled brats who have never really wanted for anything other than more attention from people, more power to tell other people what to do, and higher status than the people they think are “bad”. And generally the “bad” people are those who have more money and higher status without whatever requirements/markers/etc.

I went to her Wikipedia entry, and it sounds…. like it’s missing a lot. She evidently grew up in India and then moved to the U.S. She is the same age as me. It sounds like her parents were in what we would consider middle-class professions here in the U.S. Like me, she lost her father when a teenager (car accident in her case; heart attack in mine.) And this sounds… questionable to me:

After moving to the United States, she was shocked by the level of poverty and decided to abandon software engineering.8 She pursued studies in economics because of what she described as her own “questions of economic inequality”.9 She entered the economics program at North Carolina State University where she earned a PhD. Her dissertation was titled Elderly Labor Supply in a Rural, Less Developed Economy.210

Really? She was shocked by levels of poverty in the United States? Not Mumbai, where she grew up?

The poverty we have in the U.S. is more of one of relative status, and, unlike India, we have lots of fat (relative) poor people. Oh, looking at her Ph.D. thesis, it does sound she realized poverty was abject in certain nations, as it treated with elderly labor in North India.

The NYT profiled her in 2013:

The daughter of a schoolteacher and a civil engineer, Ms. Sawant said she was seared by the disparities between the rich and the poor around Pune, India, which is near Mumbai and where she grew up. But she was also shocked, and radicalized, she said, by finding sharp income inequality in America when she immigrated here in her 20s.

Given that she is basically the same age as me, and came here for grad school, she probably ended up at NCSU in the late 90s… at the top of the dot-com boom. People in the RTP (Research Triangle Park) area were often “rich” on paper. A lot of my friends were in that industry (and laughing at me going to grad school… I could’ve been getting rich with them!), and many were millionaires on paper from their stock options.

Until suddenly they weren’t.

Thing is, though, there’s nobody really super-rich in Raleigh, or extremely few, and it’s not like they’re robber barons sitting atop everything else. I would really like to hear more detail about the income inequality she has in mind, exactly. I could get into my own experience of income & wealth inequality in RTP, as I knew people in government housing or trailers, on food stamps and other government assistance… and I knew people who founded and owned companies and were, at least momentarily, rich. I’m not sure what income inequality in the U.S. could shock someone coming from India. I would really like to know. This is something I know I’d ask about as a reporter.

In any case, I am embarrassed that such a person has come out of my alma mater (to be sure, I have physics and math degrees, one of which is a real science and other of which required proofs.) It’s sad that she never learned how capitalism has demolished absolute poverty.

Relative poverty… I’m not even sure that’s a real problem. Having to put up with extra violence if you live in poor neighborhoods, yes, that’s a problem, but that seems to me that the violence should get fixed… because I wouldn’t be surprised if the violence caused the poverty more than vice-versa.

Coda: Parting Thoughts

If you want to get that nasty socialist taste out of your mouth, read this interview with Renato Cristin about the Appeal for Nuremberg Trials for Communism. An excerpt:

This initiative is necessary so that the massacres and genocides by various communist regimes and movements can be formally submitted to a judgment that up to now has not taken place; so as to purify our collective historical consciousness of the toxins that communist ideology has spread everywhere; and so as to rebalance the Western world’s moral conscience, the conscience of the free world that too often, out of sloth or bad faith, hides the truth of communism, concealing the criminal essence of an ideology that is still active and deadly.

Hear, hear!

via GIPHY

In any case, let’s see how long this “Amazon tax” lasts. Or if Amazon decides to leave before they manage to get rid of this tax. They should take a hint.


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