Blog

Amazon’s New York HQ2 & the Seattle Head Tax

November 6, 2018

As we’ve seen time and time again, cities and states always find new ways to generate additional revenue. No matter what else, governments always try to impose new taxes on their citizens.  That’s because they largely seek to provide public services and create a more equitable society.  With Long Island City a leading contender for Amazon’s HQ2, New York would do well to learn from the Seattle Head Tax.

Health, welfare, infrastructure and defense are common recipients of tax revenues.  In some cases, though, taxes are used to fund homeless shelters and outreach programs. This is a good thing.  That’s what Seattle tried to do with its Employee Hours Tax, more commonly known as the “Seattle Head Tax.

We Americans love to extol the virtues of free enterprise, but we also try to use our resources to help vulnerable citizens.  Improving the lives of the less fortunate by helping them get back on their feet eases the burden on the rest of society.  This is the story of Seattle’s failed attempt to do just that.  Maybe New Yorkers can learn a lesson from it.

The Employee Hours Tax

In early 2018, in the City of Seattle, a curious new tax was passed and, almost immediately, repealed.  It’s intent was to provide help for the city’s growing homeless population. The tax was officially known as the “employee hours tax” but commonly referred to as the “Seattle head tax.” It was aimed at City of Seattle employers that annually grossed $20 million or more. Given its humanitarian purpose, the tax initially garnered wide support.  Within a month of its passage, though, it was dead in the water.  The Seattle business community, (read Amazon and Starbucks), saw to its demise. This post will look at the background and details of how that happened.  Thereafter, we’ll discuss its implications for the future in New York. 

The Rise of the Seattle Head Tax

The Seattle head tax passed in May of 2018. After several revisions, the Seattle city council agreed that the tax should consist of an annual $275 payment per employee. The tax would only apply to those businesses within Seattle with gross receipts of at least $20 million. This would’ve meant that the tax would affect approximately 500 businesses, or roughly 3% of the businesses in Seattle. Okay, so more than just Amazon and Starbucks, but you get the idea.  Council members estimated that the tax would generate about $47 million annually in revenue.  

Seattle Mayor Jenny Durkan  substantially contributed to the development of the tax and pushed it through passage in its final form. In addition to providing funds to aid homelessness, Mayor Durkan specified that the tax would also assist the city with other important services.  Durkan specifically referenced programs such as job training, behavioral health programs, and other rehabilitative services. 

The Fall of the Seattle Employee Hours Tax

Shortly after its passage, Seattle businesses began organizing to oppose the novel employee hours tax and have it overturned. As referenced, Amazon and Starbucks, two of Seattle’s largest businesses, were at the forefront of the assault against the tax. Both would’ve been heavily impacted by the measure.  Amazon, for instance, would’ve annually contributed approximately $10 million, given the fact that it counts nearly 45,000 employees in the city. An organized campaign quickly began to gather signatures in opposition to the tax.

Opposition to the tax came from the “No Tax on Jobs” campaign.  It was specifically portrayed as a tax overly burdensome to businesses. The opposition campaign raised roughly $325,000 and nearly 2,000 volunteers joined in the repeal effort. On June 11, less than one month after its introduction, the new law was dead.  Sufficient signatures were submitted to the Seattle city council to cause the council to repeal the tax. The ultimate council vote was a full 7-2 in favor of repealing the measure.  

Though it never actually took effect, the repealed Seattle head tax has already inspired several other cities to consider implementing a head tax.  Their ostensible purposes are to solve certain  internal issues. San Francisco, Mountain View, Cupertino, Tacoma, and other cities have all put forth proposals to implement a Seattle-esque head tax.  It’s likely, then, that other cities on the West Coast will follow this trend in the near future.  In particular, cities currently grappling with significant homelessness issues appear most likely to follow suit.

Mixed Impressions

In the case of this head tax, it’s hard to not come away with mixed impressions.  On the one hand, no one would debate the basic desirability of a tax aimed at helping the homeless and providing outreach services for them.  On the other hand, though, businesses need to stay profitable.  It’s tough to argue that this tax wasn’t too narrowly tailored to those affected by it. Conversely and, perhaps a bit more cynically, this may simply be a case of a measure struck down by those with economic power.

As it stands, those who would’ve benefited from the tax now won’t receive its benefits,.  Local businesses flexed their economic and political muscle in opposition to the tax. Hopefully a compromise of competing interests can be reached in the near future.  Hopefully a positive impact can still obtained for the homeless, perhaps with a less onerous tax.

Amazon Will Select HQ2 in New York’s Long Island City

As this post makes clear, the New York City tax attorneys at Mackay, Caswell & Callahan, P.C., do more than simply memorize black letter law.  We stay involved with cutting-edge issues, such as the repeal of the Seattle employee hours tax.  We predict that Long Island City will be Amazon’s HQ2.  Accordingly, it’s important that New York understands the important policy considerations recently in play in Seattle.

New York City Tax Attorneys’ on the Cutting Edge

We feel that we can bring the best possible tax service to our clients by staying up to date. The more we do, the better able we can deliver effective counsel and optimal results. Amazon’s move to Long Island City and the demise of the Seattle Head Tax is one such issue.  If you have a tax or business matter to discuss, please reach out to us.  One of our top New York City tax attorneys will get back to you right away. 

Image credit: Wonderlane 

As seen on

Client reviews

How can I help you?

You can contact us using this form day or night, 24 hours a day, 7 days a week, 365 days a year. You will hear back from one of our attorneys the same day or next day.





    If you would like to speak with a team member immediately, we are available 24/7 via this form — or via phone toll-free from 6am – 8pm EST M-F at: 844 - MCC - 4TAX

    schedule an appointment with us

    Call Toll Free
    844 - MCC - 4TAX
    send a message
    Contact Us
    send a message
    Contact Us