Washington state has one advantage it shares with some prospering states closer to home. Like Tennessee, Florida and Texas, it has no state income tax. This combined with Washington's abundant beauty and pipeline of tech-savvy graduates from West Coast colleges has fueled a wave of prosperity. Last year the state's 4.4 percent GDP growth was the best of any state in the nation.
Unfortunately Washington also has Seattle, and more specifically, the Seattle City Council, which appears hellbent on changing all of that. This week the council ignored pleas of corporate citizens large and small, as well as labor unions. It voted unanimously to impose a "head tax" of $250 per worker on every enterprise in the city with more than $20 million in annual revenue. It plans to use the $47 million per year so extracted to build "affordable housing" for the city's homeless population.
Head taxes are rare in the U.S., for good reason. Chicago had one until Mayor Rahm Emanuel, a former chief of staff for President Barack Obama, scrapped it saying it was a "job killer."
Seattle trade union members attended this week's council meeting in force holding signs reading "Don't tax our jobs away." A group of more than 100 large businesses -- Expedia, Alaska Airlines and Redbox among them -- wrote council members saying the head tax sends a message "to every business: if your are investing in growth, if you create too many jobs in Seattle, you will be punished." A group of more than 300 smaller businesses warned the tax would "vastly change our city."
The council's message to all of them was this: Drop dead.
This is not new for Seattle, unfortunately. The Wall Street Journal reports that in 2015 the city council voted to allow Uber drivers (who are legally independent contractors) to unionize. That idea was too much for even the famously liberal Ninth Circuit Court of Appeals, which struck down the ordinance.
Then last year the council imposed a 2.25 percent city income tax on high earners. A state court has blocked that action as well.
Its latest action this week drew harsh rebukes from two of Seattle's largest corporate citizens, Amazon and Starbucks. Amazon halted work on two office development projects in the city and placed on hold plans to bring 7,000 new jobs to those locations. Ironically Amazon already contributes millions to assist Seattle's homeless.
Starbucks, which routinely advocates for liberal causes, said based on the city council's history of ineptitude and inefficiency "no one believes (you) will be able to make housing affordable."
The city commission was unbowed. Member Lorena Gonzalez said of Amazon, "Their tone in this message that is clearly hostile toward the city council is not what I expect from a business who continues to tell us that they want to be a partner on these issues."
Some people just have to learn the hard way we suppose. The problem here is not the tax itself. It is the attitude of Seattle's council that it can simply help itself to the treasuries of its corporate citizens to fund whatever noble pursuit the council divines.
The practice won't end here and the corporate world sees that clearly. This will eventually help Seattle's housing supply situation in one regard however. Corporations looking to expand in the future are sure to look somewhere other than Seattle.