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Seattle Lawmakers Push 'Amazon Tax' For COVID-19 Relief

By James Nani · Mar 18, 2020, 6:40 PM EDT

Two Seattle council members who have proposed a payroll tax on the largest companies in the city, a so-called Amazon tax, are urging its immediate passage, saying the millions of dollars in potential revenue could be directed toward COVID-19 relief.

Council member Kshama Sawant, a member of the Socialist Alternative Party, told Law360 on Wednesday that thousands of workers will lose working hours, or their jobs entirely, depending on the timeline of COVID-19's impact. Those workers will struggle to pay rent and afford basic necessities like groceries, she said, and the proposed payroll tax that she and a fellow council member have proposed could help pay for relief. 

"We are demanding that the City Council immediately pass at least $500 million of taxes on the 3% largest corporations so that we can urgently fund cash assistance for the workers," Sawant said.

Sawant emphasized that after tax revenue was used for economic relief from COVID-19, the disease caused by the novel coronavirus, the tax should remain in place to fund a major expansion of social housing and a local Green New Deal program because of climate change and Seattle's housing affordability issues. But even if the tax were passed immediately, Sawant said, collection could take months, and therefore, she said, the city should issue bonds to raise cash fast and then pay them off with the proposed tax revenue.

Two weeks ago, Sawant and Council member Tammy J. Morales released draft legislation that would impose a 0.7% excise tax on the payrolls of certain Seattle businesses, which is estimated to raise $300 million annually. That measure, which has not yet been formally introduced to the City Council, would affect about 800 companies with payrolls of more than $7 million annually, the statement said.

Amazon, which is based in Seattle and which would be subject to the tax, did not respond to requests for comment.

In a statement issued Sunday, Sawant and Morales said immediate needs from the new tax would go toward cash assistance for working people, testing and treatment, tiny-house villages for the homeless and relief for struggling small businesses.

"Big business has long been enjoying a tax haven in Seattle and Washington state. They need to immediately start paying $500 million/year as the Amazon tax to fund COVID-19 emergency relief fund," the statement said.

Sawant said she is gathering signatures in support of the measure and working to organize supporters to push city leaders into supporting the measure. But despite the demand for immediate action, Sawant said there's been a struggle to formally introduce the measure to the council under a committee she can chair

"The establishment is attempting to deny that opportunity to me," Sawant said. "And we have to be clear, this is not some sort of personal agenda against me. This is, by attempting to deny me as a chair of a committee on this legislation, is an attempt to undermine the movement but without the movement actually realizing that that's happening."

Mayor Jenny Durkan's office, as well as those of other City Council members, did not respond to requests for comment Wednesday.

Some tax policy experts on Wednesday said they disagreed with the measure.

Jared Walczak, director of state tax policy for the right-leaning Tax Foundation, told Law360 that while the ongoing crisis is requiring all to make sacrifices, a permanent tax on large businesses for employing those in Seattle "makes even less sense at a time when jobs are so precarious."

"A punitive tax on Seattle's largest employers has been the proposed solution to just about every problem the city has faced over the past few years, so it's unsurprising that the coronavirus pandemic has made the list," Walczak said.

Nikki Dobay, senior tax counsel for the Council on State Taxation, told Law360 that COST generally opposes any taxes that target big business.

"Although we understand the need for states and localities to provide funding during a difficult time, the imposition of a discriminatory tax is never the answer," Dobay said. 

In 2018 Seattle leaders enacted and then repealed a month later an annual $275-per-employee tax on companies making more than $20 million a year under pressure from business interests, which vehemently opposed the tax. 

--Editing by Vincent Sherry. 

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