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Seattle Poised to Repeal Tax on Amazon and Large Employers (bloomberg.com)
63 points by petethomas 8 months ago | hide | past | web | favorite | 80 comments

The real problem is the incentives the tax creates. It's per head, which means every time you hire someone, your taxes go up, and every time you fire someone, your tax bill goes down. It's a tax incentive for destroying jobs, specifically low wage jobs held by the most vulnerable people, since the tax is a drop in the bucket for executives, but much more significant percentage wise when hiring low skilled workers.

It should have been a tax based on revenue, so that it targeted the financial footprint of the company, rather than punishing companies for employing lots of people.

Eh, it's just a (relatively small, per employee) flat tax on each employee. That's like saying that having to buy a chair is a disincentive to hiring.

In saying that, I tend to dislike 'special' taxes like these.

> That's like saying that having to buy a chair is a disincentive to hiring.

Is that not a bad thing? A chair might be a bad comparison, because a chair is essential to workplace ergonomics and therefore the health of employees, but this tax has no direct benefit to the workplace. If our assumption is that hiring employees is one of the most important functions of our society, then shouldn't the barriers to hiring employees be kept as absolutely low as possible?

> but this tax has no direct benefit to the workplace

Which taxes do?

Sure they do ... they (ostensibly) go to paying for the infrastructure that supports that workplace: the roads and mass transit that leads from the worker's home to the workplace, the police and fire brigade that protect's the workplace's capital investments, etc.

That's not to say that tax funds are always perfectly allocated ... of course they're not. But they're not worthless either.

I think the point was that the chair viewed as a per-employee "tax" has benefit to the employer, but this head tax doesn't.

The tax has a benefit because we'll have better infrastructure to take care of things that make the city better. In this case helping homeless. I do want to help everyone, but for people that must have a personal improvement getting homeless people treatment and places to stay helps you because they aren't in the way. Having roads, cops, buses, and ambulances helps me too, but I also value those because I want to live in a better society that takes care of all its members.

Whether the tax has value to the employer is not well defined one way or the other. I suppose it comes down to the balance between utility derived and cost as with all economic issues.

Wouldn’t a company’s taxes/costs go up with each new hire whether there’s a head tax or not though? Social security for example is half paid for by employers.

Payroll taxes scale down as the employee's pay rate scales down. This was a flat amount per employee-hour.

Exactly, the Seattle tax punishes low-margin employers of blue collar workers much harder than it hits employers of high-salary white collar workers. It's as if it were a carbon tax on labor designed to speed to adoption of automation.

I wouldn't call it paid for by employers. It's a tax on your employer to employ you. It goes directly into the cost of your employment along with your salary and your benefits. If it weren't for this tax you could make more money. You are paying it just as much as you are paying "your half" of social security.

Maybe that was impossible because Washington State's constitution forbids an income tax?

No, that's just personal income tax. It doesn't affect B&O taxes.

That's kind of weird, right? If you're charging a percentage of wages, it doesn't make a difference if the employer or employee pays it.

It's easy to define the number of employees within the city. How do you define the revenue?

Or do you mean global revenue?

In other news, the mayor of New York "increased spending on homeless services by about 60% since he took office nearly three years ago, reaching a historic $1.6 billion this year." [1]

Despite (or because?) of the increase in spending in homeless services in NYC, the number of homeless has increased significantly close to a high of around 76k on a single night in 2017 [2]

Is the Seattle plan [3] somehow different (aside from the dollar amount) from that of New York?

[1] https://www.wsj.com/articles/nycs-homeless-spending-surges-t...

[2] https://patch.com/new-york/new-york-city/nyc-homeless-popula...

[3] https://3y7tq440s8xk37pci616zkly-wpengine.netdna-ssl.com/wp-...

Free services accompanied by the relaxing of penalties on habitual rule breakers (elimination of background checks, injection sites with free supplies, regular vacation of all misdemeanors and gross misdemeanors, limiting police patrols, obstruction of DEA and ICE) encourages more people to move in from elsewhere. Measures that may have accommodated the original homeless population fall apart with the massive influx, and the street environment for the local lower and middle class worsens with all the new opportunists.

1. You should tax what you want less of.

2. Tax should be evenly distributed

If you want jobs, don't tax jobs.

Amazon may be a large employer, but its not the only employer. Everyone should be taxed in proportion.

What they should tax is land use per sf of lot (not sf of the building).

Now people who use a lot of land, or who use the land inefficiently, pay the penalty.

It should also apply equally to everyone who uses the land from large private home owners to small bookstore and cafe owners.

I know there is property tax on the value of the property, but that is a different incentive (to build cheap). This is the incentive to use the space efficiently. So use some amount per sf of lot (say $0.5? I don't know how much that would raise).

> 1. You should tax what you want less of.

Do you think all taxes should be punitive? Are you against personal income and sales taxes, and business profit taxes?

This was a descriptive statement. Taxes act like friction and DO reduce the activity that they are attached to.

So if one is planning a tax regime, you should think long and hard about the first and second order effects of your planned taxes. Unfortunately too many in government and politics don't think about this.

"Taxes act like friction and DO reduce the activity that they are attached to."

This is why it's interesting to consider taxes that aren't tied to activities, or activities that are extremely resistant to change, e.g.

- taxing land doesn't impact the supply of land, as (aside from melting ice caps and land 'reclamation' projects) the amount of land on Earth is fixed.

- taxing human existence (e.g. an annual per capita flat tax) doesn't impact the number of humans

The government has to have a source of income, and it has to get that from productive activity.

However, there is a trade-off in these cases. Look at the examples you gave: personal taxes are progressive and sales tax is regressive.

I think they are discouraging whether or not you want them to be.

In this case there was a distinct purpose behind the tax (helping those who cannot afford housing costs).

The land use tax might work, however it will punish the non-wealthy corporations, small businesses, etc. I think Seattle's problem has an even easier, obvious solution that the state of Washington, pretending to be more liberal than it is, refuses to enact: an income tax on the rich.

A very modest tax on the highest income tiers, provides the funding necessary to build new low income housing, keep improving transportation, and to combat homelessness, while not negatively targeting the jobs for the non-rich.

They have a very nice, gilded problem, of trying to not die from economic gorging. The people of Seattle should be putting their considerable resources behind aggressive lobbying in the state, to convince voters to enact a state income tax.

Taxing the rich would work if you want to redistribute wealth in general.

But this is a very specific effect you are after: the wealthy spending less on housing.

That is to say, suppose there is a wealthy person and they are choosing between a new yacht and a new house, you want this policy to very specifically move them from the house to the yacht because of the scarce land.

Nonsense. Taxation as social policy is of dubious effect. Also, to take #1, you want people to earn less? To spend less of their earnings? The former will discourage/lower incomes, the latter will damage the economy. Progressive taxation is also a bedrock of "fairness."

> 1. You should tax what you want less of.

You said you this matter or factly, but it's a core point in the debate between left and right political economics, at least in America. The demotivating effects of taxes are said to be offset by the moral imperative for those with to help those without. The amount of relative positive and negative added by each policy is difficult to quantify, confusing the already difficult philosophical argument.

“What should the government tax?”, “How much should the government collect in taxes?”, and “What should the government spend money on?” are all distinct questions. “You should tax what you want less of” is a statement related almost solely to the first question; helping those without is mostly related to the third question.

No one in the US argues that taxing something reduces the amount of it that (legally) occurs.

No, I am certainly not engaging in that debate.

I am not suggesting taxing or not taxing, or lowering or raising the tax.

I am advocating a change in the form of the tax.

This preserves the moral imperative.

So its not the behavioral effects of the policy that are confusing the philosophical argument, it is the philosophical argument confusing the study of the effects.

I liked this Weeds episode on the land tax: https://www.vox.com/2016/5/2/11533936/the-weeds-land-value-t...

While sold as a tax for the homeless, we've seen over and again how $50M entrusted to 6 people with little oversight really turns out.

This is the right move

Bezos said he literally cannot think of anything better to do with his money than waste it going to space. While his employees suffer due to lack of water, air-conditioning and such. So no, its better to put the 50 million in the hands of 6 elected councilors instead of a private corporation who is just going to hoard it and waste it.

No, it’s not better to give the money to elected officials - they have no incentive at all to spend the money wisely. When you’re spending other people’s money, the incentive to do what’s best for the money disappears.

Further, when discussing politics, giving money to politicians leads to corruption, kickbacks, and other waste.

Finally, politicians have shown time and again they are awful businessmen. Boston’s Big Dig, Seattle’s tunnel under the city, California’s high speed rail, and I could go on and on and on.

Time to play other foot shoe!


No, it’s not better to give the money to corporate executives - they have no incentive at all to spend the money wisely. When you’re spending other people’s money, the incentive to do what’s best for the money disappears.

Further, when discussing business, giving money to businessmen leads to corruption, kickbacks, and other waste.

Finally, executives have shown time and again they are awful businessmen. HP's Itanium, Tharanos' nanotainers, and I could go on and on and on.

That usually works, but Jeff Bezos owns his company. The wealth he’s acquired is his.

So, tax breaks which boost amazon profits are 'his', but taxing him is 'stealing'?

I actually agree. The solution is of course anarchism. No bosses, no masters, no corporations. Only workers associations that democratically decide how to control the companies.

It's laughable that we pretend to care about democracy, but most of us spend a large part of our lives in these dictatorships we call work.

>they have no incentive at all to spend the money wisely

This is very obviously not correct

>Further, when discussing politics, giving money to politicians leads to corruption, kickbacks, and other waste.

Thus we should give no money to governments at all! What societies have flourished under this ethos in human history?

>Finally, politicians have shown time and again they are awful businessme

So are many businessmen! 9 of 10 startups fail. Humans are not good at things. The success of a project depends less on whether it is run by a government or a private enterprise, and more on who is running it and how good of a job they do. NASA landed men on the moon when computers were made of cheese, they have been landing robots on mars successfully more recently, the roads get built, we drive on them, europe is smashing atoms in a huge collider learning how the universe works, the police have kept order, the US military stopped the nazis.

Yeah! I don't approve what he's doing with his money either! We should take it from him and give it to others we like better! What could go wrong?


Yes, actually we should take all his money from him. Because he earns it by abusing his employees, going so far they require ambulances. Due to that he should be put in jail (because he knows this happens and refuses to do anything about it).

A generic attack on politicians is orthogonal the main argument, by your logic, taken to its conclusion is that the government shouldn't be funded.

The opposing logic, taken to its conclusion, would mean that government should get all of your money. Yeah, now we're back where we started. Nobody is saying the government should be de-funded. This is a red-herring.

No where did I say that. But the argument that the tax should be repealed because the city won't spend it well is not germane to the discussion.

>But the argument that the tax should be repealed because the city won't spend it well is not germane to the discussion.


Let's break this down.

You're implying that 6 city councillors, elected and paid into the position are inherently not trustworthy enough to manage city funds, simply by vice of being part of government?

And yet, Amazon, who will spend nothing on these schemes and are even less accountable than the councillors, will make better use of it?

This sounds like you want to eliminate all government and tax.

Would be amusing to see I suppose.

And you’re actually implying that these people, who have not done anything even remotely successful in terms of business, elected by roughly 4% of the population of Seattle, who meet once a week for a few hours, who have split incentives to both “help the city” and get continually re-elected, who need to fundraise for elections from entities they could potentially benefit with the money...these are the people you trust more with money than one of the 5 most successful businessmen in the last 100 years?

> these are the people you trust more with money than one of the 5 most successful businessmen in the last 100 years?

Yes, because I don't equate being rich and 'successful' with having a social conscience. If anything I'm more inclined to believe that rich and successful person didn't do it by being a paragon of virtue.

And what exactly do you think Amazon's incentives are?

To the city? Come on now.

Amazon, the corporation, should only have 1 incentive - to maximize shareholder value.

This is good for people who are Amazon shareholders and sometimes good for people who are Amazon customers.

There are many people in Seattle who stand to benefit more from having better roads, schools or provision for homeless people. Some of them, shockingly, are not Amazon shareholders or even Amazon customers. Why would they trust Jeff Bezos to help more than even an unusually inept public official with their problems, when providing such services to the people of Seattle without charge is manifestly not in the financial interests of the average Amazon shareholder?

Corporations are part of the communities from which they hire. They have ethical, if not legal, obligations to their workers and their communities.

Also, do you think it's interesting how everyone who disagrees with you is downvoted into low-contrast?

I mean, that's not a legal requirement and in the past companies were expected to maintain some kind of social conscience.

Not sure when that changed.

I think in the past companies were far less concerned with social conscience than they are today. The entire reason for the EPA is because too many companies were dumping toxic chemicals into the water supply (1).

(1) http://time.com/4696104/environmental-protection-agency-1970...


Friedman argued it was good for corporations to be greedy, and corporate America liked that idea.

The more I learn about Friedman and Hayek the more I hate them and the politicians that still cling to their hack theories in the face of overwhelming evidence that they don't work for anyone but the amassers of capital.

Their views on people as individual self-interested rational actors are so narrow and simplistic.

I don't understand your point. Amazon has no incentive to help the city. What do you mean when you say you trust them with the money. Trust them to help themselves? How does that help the people who don't work at or own Amazon shares?

"you trust them with the money" -> "you trust them with THEIR money"

Why is Amazon, the corporation, with offices in 30 countries, under any obligation to help people in a city where they're headquartered, who don't work there or own shares?

Depends on what you mean by "trust with money" - trust them to spend it on something that will give back to society? In that case, yes...I trust almost anyone more than Jeff Bezos.

Having worked for him, yes I'll trust the Seattle city council.

You sure seem to be on this thread frequently with some hard opinions and loose facts.

2 posts is posting frequently?

Don't make it personal about another HN member

What does Seattle currently spend on the homeless? Genuinely curious if you know any of the numbers.

I looked it up at the beginning of the year but I think it was around 180 million. There was something around 10 million of private funding. So close to 200 million. Is this a quiz? Am I right?

Edit: these number are for 2017.

When I see numbers like this, I start to understand these 'no big government' and tax minimisation people.

I don't live in the US, and I've never been to Seattle, but if you can't 'solve' homelessness with 180 million, what's an extra 50 million going to do?

Don't let the perfect be the enemy of the good. That money could be keeping tens of thousands of people off the streets and out of hospitals.

If we're throwing cliched adages around, don't throw good money after bad. People flock to places like SF and Seattle in part because they have all of this spending and infrastructure for the homeless.

Any evidence for that? I have a hard time believing people are moving to 'Rain City' to live outside.

We host the county jail and courthouse, and in many municipalities it's illegal to be homeless, so they get picked up there, jailed here, and released here.

If I were homeless I'd try to go to a place that helped homeless people.

You have no idea the scale of the problem here. It's not just a few people camping under an overpass. If you walk around Pioneer Square there are encampments on many of the blocks. There are encampments on Seattle anywhere there's grass. Drive on I5 through the city and you'll see encampments starting and ending at the city limits.

$230 million is a lot of money!

I'm not saying the problem isn't worth fixing - it definitely is! But Yikes, that sure does seem like a lot doesn't it.

180 million doesn't seem that much for a city like Seattle.

Even if it was the solution isn't to stop paying taxes and get rid of the government. That's throwing the baby out with the bathwater.

Not to pick on Amazon, but isn't Bezos someone who would support Seattle's intent here? And how much would it have cost Amazon, considering their revenues and the fact their Seattle workforce is ~10% of their total workforce?


According the article, Amazon chipped in $25,000 towards the campaign to repeal a tax that would cost it $12 million a year. That's an amazing ROI.

As someone travelling though pioneer square every day I can see homelessness is a problem.But I am not sure how the tax can help,lot of the homeless that I encountered seems to be the under the influence of drugs and interestingly lot of them recently moved to Seattle area.

A local partisan magazine, The Stranger, is a big apologist for this tax. Similarly, it also supports carbon taxes for speeding up adoption of renewable energy technology.

Perhaps the idea is to tax labor to speed up the adoption of automation technology?

Kudos to Seattle for recognizing that they had made a mistake.

I'm not sure if this is really the case. There was already an effort underway to repeal this through a vote by the citizens. This seems more like the city council heading off the vote to save face.

> citizens


Amazon might be the loudest employer, but they are not the only employer impacted by the tax. The person leading up the signature drive isn't even an Amazon employee: https://www.linkedin.com/in/james-maiocco-a9520

This would be a vote by all Seattle residents to determine the need for the tax. Are you saying that Amazon is going to somehow rig the election?

I'm just pointing out that it's interesting that the day after articles started coming out that the signature effort was way over their goal of getting this tax on the ballot for November election the city council decides to vote on a repeal. https://www.king5.com/article/news/politics/head-tax-repeal-...

Somebody needs to tell these guys that if you subsidize something, you're going to get more of it.

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