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Seattle Lawmakers Formally Introduce 'Amazon Tax' Proposal

By James Nani · April 7, 2020, 5:39 PM EDT

Two Seattle council members have formally introduced a proposed payroll tax on the largest companies in the city, a so-called Amazon tax, and presented a petition signed by more than 5,400 residents to support the measure.

After weeks of promoting a draft of the measure, council members Kshama Sawant and Tammy Morales introduced the bill Monday to the City Council's Select Budget Committee. The legislation would impose a 1.3% excise tax on businesses with more than $7 million in annual payroll, an increase from the 0.7% rate those legislators had pitched a few weeks ago.

To generate funds to help the city deal with the novel coronavirus pandemic, the tax would go into effect on June 1. While the tax is estimated to generate $500 million annually, a fiscal note for the bill said payments for 2020 would be due with the final tax payment for 2021. Partial payments for 2020 are expected to raise about $286.4 million, the note said.

The lawmakers originally proposed the tax in March with a Jan. 1, 2021, start date, but the pandemic prompted them to seek a June 1 effective date to provide payments to low-income households affected by the virus, which causes the respiratory disease COVID-19.

Sawant and Morales also put forward a petition demanding the tax, a petition they said was signed by more than 5,400 people.

The taxes first would be used to repay a loan to support emergency cash payments in 2020. Four months of cash payments of $500 would be distributed to up to 100,000 low-income households, Sawant said.

Beginning in 2021, tax revenue would help pay for affordable housing and other housing investments related to a local Green New Deal, according to a fiscal note.

Exempted from the tax would be grocery stores, federal and state governments, nonprofits and those preempted from taxation by city, state or federal law, according to the fiscal note.

In a statement, Sawant said that while wealthy corporations are getting bailouts, others are exploiting workers by denying them hazard pay, paid leave and protective equipment. Sawant, of the Socialist Alternative Party, specifically called out Amazon, a company that is based in Seattle and that Sawant has targeted before for increased taxes.

"Now, more than ever, this city's politicians need to tax big business to address the unprecedented economic collapse working families are now facing," Sawant said. "After the pandemic has ended, the tax must be continued to fund social housing and the Green New Deal, and create thousands of jobs during what will be a deep recession."

Morales, a Democrat, said unemployment rates in Washington have risen drastically since the onset of the pandemic, increasing need.

"There are many cascading effects that involve food insecurity, eviction, lack of health care, foreclosure threats, cultural loss and so on," Morales said. "We know our existing resources are not enough; we must act swiftly to provide relief."

Amazon did not respond to requests for comment. Democratic Mayor Jenny Durkan's office, as well as the office of other City Council members, did not respond to requests for comment Tuesday.

The proposal comes about two years after Durkan and a majority of City Council members repealed an annual $275-per-employee tax on companies making more than $20 million a year, having enacted it about a month before. The repeal represented a remarkable turnaround for a tax, a development that made headlines nationwide, drew vehement opposition from Seattle corporate giants Amazon, Starbucks and others and sparked a "No Tax on Jobs" campaign aimed at overturning the tax via ballot measure.

The proposal also comes a few days after the Washington Supreme Court declined to review an appeals court decision invalidating Seattle's so-called wealth tax and voiding a 35-year-old piece of state law, allowing cities to levy a flat property tax on income.

--Additional reporting by Abraham Gross and Paul Williams. Editing by John Oudens.

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