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By Wall Street Journal Editorial Board,
Twenty cities are competing for Amazon’s second headquarters. Then there’s Seattle, Amazon’s current headquarters, which the city apparently wouldn’t mind driving away.
Seattle’s city council unanimously approved a $250 “tax” per full-time employee on businesses with more than $20 million in annual revenue. Progressive council members had originally proposed a $500 jobs tax that would have turned into a 0.7% payroll tax in 2021, but then Seattle’s businesses revolted.
Amazon suspended two building expansion projects. More than 100 large businesses including Expedia , Alaska Airlines and Redbox wrote a letter warning that the tax sends the message “to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished,” which “will cause far greater damage to Seattle’s growth prospects than the direct impact on the businesses being taxed.”
Three hundred or so small businesses also warned that “continuing tax increases and regulations will only hurt the small business community and will vastly change our city.” Even trade unions begged the council “not to tax our jobs away.”
After the council scaled back the head tax, Amazon said it plans to resume work on one of its expansion projects, but a spokesperson noted that “we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
The head tax is merely the city council’s latest depredation against business. In 2015 the council allowed Uber drivers, who are independent contractors, to collectively bargain. A Ninth Circuit Court of Appeals panel on Friday declared that the ordinance violates antitrust laws. The council last year imposed a 2.25% income tax on high earners, which a state court has blocked.
Many businesses have located and expanded in Seattle because Washington state doesn’t impose an income tax. Last year Washington’s GDP growth led the country at 4.4%. But Seattle’s city council seems to think this growth will continue no matter what it does. Ask Connecticut how that turns out.
Liberals are bashing Amazon for wielding its political and economic clout to blunt a tax hike that would hurt all Seattle businesses and workers. Local leaders from Chicago, Denver, Dallas and Austin, among other cities, wrote a letter denouncing Amazon for “threatening Seattle over this tax.” Amazon should cross these cities off its second-headquarter list.
Seattle businesses deserve credit for promoting a pro-growth climate rather than seeking special treatment for themselves. Companies in Illinois, Connecticut and New Jersey have threatened to bolt to obtain lucrative tax subsidies. Businesses in those states would be better off if they collectively bargained with politicians for lower taxes and more favorable regulatory conditions.