Business

Amazon plays tough ahead of Seattle tax vote that could cost it $20 million

Posted May 2, 2018 3:49 p.m. EDT

— Amazon is playing tough in a political debate in Seattle over a proposed new tax on big businesses.

This week the company indicated it is temporarily halting construction of a new 17-floor tower on its large Seattle campus and may sublease its space in a major downtown development.

The two projects combined are expected to create 7,000 Amazon jobs plus more in construction and other industries.

At issue is a plan in the Seattle City Council to impose a "head tax" on businesses to fund programs to address homelessness and affordable housing. Companies would pay 26 cents per working hour for each employee it has in Seattle, or roughly $540 a year for every full-time employee.

Amazon is the city's largest private employer and in the bull's eye of the proposed tax: With more than 45,000 employees, Amazon could pay more than $20 million a year.

"I can confirm that pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased [Rainier] Square building," Amazon Vice President Drew Herdener said in a statement.

The City Council is likely to vote on the proposal on May 15, according to a spokesperson for the council. The council declined to comment on Amazon's actions this week. The Seattle Times editorial columnist Brier Dudley first reported the company's decision to pause construction.

The money from the head tax is intended to help alleviate the city's homelessness crisis and affordable housing shortage.

Big businesses like Amazon create revenue and jobs wherever they locate. But co-sponsors of the proposed tax argue that a major cause of Seattle's affordable housing crunch is the higher cost of housing that results when workers move to a city for jobs that pay more than long-time residents have been earning.