Seattle Head Tax is Unfair
May 12, 2018
by William P. Meyers

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Lawyers Laugh as they Loot the City

Tax the rich? I don't mind that at all, as long as by "rich" you mean people richer than me.

The Head Tax proposal before the Seattle City Council would change a tax of $500 per employee to businesses with more than $20 million in revenue. The money would be directed to help create affordable housing and to help the homeless. It is expected to raise $75 million per year, or $0 million per year after these businesses relocate outside the city limits.

In theory the money would come out of the profits that go to business owners (individuals or, more likely, shareholders). In fact it will lower wages for the businesses that are taxed. First, on new hires, and then by refusing wage increases to current workers.

It does not matter what the income level of worker is whose having $500 taken our of their hide, except perhaps minimum-wage workers. A $1 million per year worker will cost $500 per year, as will a $30,000 per year worker.

A more sensible plan, if the money really must be raised by new taxes, would be to put the head tax on any worker or business person who makes over a certain amount per year.

Lawyers are laughing at the proposal, many of them spending more than the $500 celebrating with a fine whiskey or champaign. They may make well over $1,000,000 per year, but are organized in small businesses that are (or can be restructured to be) below the $20 million threshold.

So are doctors in private practice. So are CPAs. So are owners of other small, but highly lucrative businesses. Even many of the people who run "non-profits" make over $100,000 per year.

So are highly paid government workers. Many make over $100,000 per year, and quite a few make over $200,000 per year. No head tax on them.

Partly this proposal is aimed specifically at Amazon, but it is illegal to target a specific business with a law, so it was widened to include a few other charismatic business megafauna.

The average wage of an Amazon worker? Nationwide it is under $16 per hour. But Amazon would only pay the tax on Seattle workers, who typically work at headquarters and are better paid.

One thing you can be sure of: the City Council members all make more they do not have to pay $500 a year to help the homeless.