AMAZON Bristles at Tax Proposal by its HQ1 Hometown SEATTLE

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No, there is still as of this moment, no official word as to which of so many aspiring cities in North America has been selected by global online retailer Amazon to become the site of its second corporate headquarters, the highly-coveted HQ2. The latest news however, concerns a particular issue that is currently ongoing between Amazon and its HQ1 hometown of Seattle. Both company and city have been at loggerheads recently owing to a tax proposal that Amazon finds unpalatable. The competing would-be HQ2 locales had better be observing the following developments closely, as they might be experiencing these themselves.

USA Today reports that the city of Seattle in Washington State is engaged in a civic showdown with online marketplace platform Amazon, which has its HQ1 corporate headquarters in its locality. The Seattle city council has proposed a new tax that would mandate its largest businesses, specifically those that earn over $20 million annually, to have to pay 26 cents more taxes per hour of everyone on their payroll, each. A single Amazon employee would then cost the company about $500 a year in taxation to the city, to say nothing of its fellow high-earners, comprising 3% of Seattle businesses.

A rough estimate of the city council puts the additional tax money raised from Amazon to be $75 million out of the e-commerce giant’s annual profits, which last year amounted to $3 billion. Seattle intends to put 75% of the $75M into the city’s affordable housing fund while 25% goes to the homeless in terms of shelters and emergency services. After two years of taxation by employee headcount, it will transition to a tax on payroll, making larger Seattle companies saddle more of the burden than smaller ones. Amazon is contesting this proposition, leading to a workers’ union rally in front of HQ1, with a socialist-leaning city councilor leading things.

In response to Seattle’s tax proposal, Amazon had put a stop to its construction of a new office tower across the street from HQ1, which would house an additional 7,000 to 8,000 employees in its 17 stories. This pause on construction is pending on the results of the council vote on the tax. Analysts are of the opinion that the struggle between Amazon and Seattle can teach a lesson to the prospective HQ2 cities, on whether or not netting plenty of new jobs and local investment is worth an increase in housing and rental prices.

The Amazon HQ2 project will deliver a $5 billion investment and 50,000 new jobs to the lucky city. The new headquarters is supposedly an equal to the original Seattle HQ1, but if the situation with “home” gets too out of control, things might change more.

Photo courtesy of The New York Times

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