The Seattle City Council’s decision last month to impose a $275 dollar “head tax” on the city’s largest companies has been one of the most controversial policies to come out of the city in years. It’s about to become even more controversial now that it’s clear how those same officials plan to use a similar amount of money: to help the wealthy owners of the Mariners baseball team build a brewpub and other high-end features at Safeco Field.
“Good thing there are no more pressing needs for that money right now,” was the snarky response from Seattle Times columnist Danny Westneat, regarding the subsidy in the latest Mariners deal. It’s telling that the amount the proposed giveaway is “not all that far off the $237 million in new taxes the Seattle City Council approved with its radioactive head tax,” he added.
Indeed. Money is fungible, meaning that if you raise it for one thing it’s easy enough to use other dollars for another purpose. So while the head tax isn’t specifically earmarked for the Mariners, the new revenues from the tax will make it easier for the city to shower the Mariners with a $190 million windfall. It’s bad policy but even worse public relations. How tone deaf is the City Council to propose a sports subsidy in the midst of the head-tax fracas?
Seattle residents have long been debating the details of the new tax. The fee on the hours worked by each employee (roughly $275 per worker) is rightly described by critics as a disincentive to create jobs – and has even sparked an ongoing referendum effort. Most cities want to encourage job growth for obvious reasons. More jobs mean a higher standard of living and more revenues in a city’s coffers, so hammering employers will only send jobs out of town or encourage other employers to build new facilities in one of Seattle’s many suburban job hubs.
But supporters claim the tax is needed to fund affordable housing and homeless services as home and rent prices soar. They blame Amazon and other big tech firms for sparking the housing demand that has resulted in the unaffordable cost of living for people who aren’t employed in the high-income tech sector. “The corporations who are profiting most – the top 3 percent – should rightfully pay a fair fee to address the problems they create,” one union official told the Times.
Even though most Seattle union officials support the tax, many are appalled by the stadium subsidy. “It’s hard to make the case that any public resources should go to subsidize the operations of a for-profit sports franchise … especially at a moment when there is an urgent crisis facing our community around housing and homelessness,” said David Rolf, founder and president of SEIU Local 775.
I’d also argue that the Mariners subsidy deal focuses attention on a largely missing part of the tax discussion: the way the Seattle city government currently spends the money it has. Ironically, the tech-driven economic good times that is the subject of so much scorn has brought in an unprecedented amount of city revenues and has allowed Seattle to rapidly increase its budget, which it has spent in myriad ways – including on homelessness.
“The year 2013 was a clear turning point,” explained a KUOW report. “Seattle’s general fund started ramping up from $800 million then to $1.1 billion now. That’s 30 percent growth. Overall city revenue grew, too, from $4 billion to $5.6 billion. But overall revenue also contains the money gushing through Seattle’s utilities.” And the city, the report continued, “is spending pretty much all of it.”
It’s that spendthrift approach that explains how officials could be so eager to help fund club seating and a brewery at a baseball park. It’s just how City Hall operates. A recent city budget document warns of the possibility this year of slower economic growth. So it’s an odd time to spend money in such dubious ways – and even less comprehensible to threaten the source of that tax income by punishing the tech firms that have propelled the city’s growing budget.
The “No Tax on Jobs” campaign has until June 15 to submit enough signatures to place the tax referendum on the ballot. If it gets on the ballot, backers of the tax repeal might want to focus on city spending policies. After all, a City Council that proposes $190 million in subsidies for a brewpub and some other stadium improvements isn’t worthy of having extra cash.
Image credit: Eric Broder Van Dyke