The City of Seattle recently dodged a bullet. Weeks after voting in a regressive $275 head tax on the city’s largest companies, the resulting civic uproar got the best of them and they backed themselves out of a tough corner. The goal was admirable: fund services to solve the housing and homeless crisis in the city. But as an economic development strategy, the solution was nothing short of idiotic, pandering to special interests and demonizing successful corporations as a cause of the problem. And that is coming from a liberal.
As any economic developer knows, this is the quickest way to chase a company away. Why on earth would any successful corporation facing this tax stay in the city limits when it could easily move to another town – even one in Washington – that would welcome them with open arms and probably offer them an irresistible incentive package? Why would any large business want to even think of relocating to a city that imposed a head tax on its most successful job-creating companies? What would be next? An arm tax? A leg tax? How about an arm and a leg tax, especially for the wealthy?
This reminds me of a very similar event that ended with a disastrous result. For those readers that remember 7th grade history (or read Flynn’s Harp ), the Stamp Act of 1765 was a tax imposed by the British Parliament on every piece of paper used in the colonies. It was supposedly designed to raise funds to defend and protect the Americas. (Or as they say in today’s limbo, “national security”)
What the colonists saw was taxation without representation, since the colonial legislatures didn’t vote on it. Great Britain just imposed it on the colonies. Colonists knew that if the Stamp Act were allowed to stand, it would open the floodgates for future taxation.
Well, we all know what happened then. A revolution. The colonists said goodbye to Great Britain. Just substitute 600 corporations employing tens of thousands employees for the colonists and the Seattle city government for Parliament.
Roughly 60% of Seattle’s budget is paid for by employers. These taxes are necessary to support infrastructure, public safety, human services and other activities that create healthy communities. They also help pay for $12 million bike lanes, but let’s not go there. (Sorry, I couldn’t resist).
The truth is, corporations already contribute millions of dollars to community development that include homeless programs. They not only pay their fair share of taxes but contribute to programs and services throughout the year, often without fanfare. In 2017 alone, Microsoft gave $58 million to various causes, Boeing $17 million, and Starbucks $10 million for programs like the No Child Sleeps Outside campaign, Amazon just donated more than 47,000 square feet of Class A space to Mary’s Place to serve as a family shelter.
In addition to supporting economic development through taxes and contributions, most of the 600 companies encourage their employees to volunteer with local social service agencies and non-profits, going so far as to offer paid time off, allowing use of company facilities and equipment, and change their hours of work to accommodate volunteering.
Many of the targeted companies donated at least 1.3 million volunteer hours to best practice organizations like YouthCare, Union Gospel Mission and Mary’s Place. These companies are not the enemy nor are they the problem. They are an important part of the solution. Corporate philanthropy, whether in the form of giving or volunteering, are encouraged in most large and small businesses in Seattle and are an important part of any economic development strategy. They have truly walked the talk with money and body parts.
The first rule of economic development is to create a healthy community. When it comes to recruiting a business, economic developers should not just look for companies that will create jobs or pay taxes but seek companies that will become an integral part of the community in terms of corporate philanthropy and citizenship. If companies want to continue to receive incentives, tax abatements, free land and other perks, they must be willing to give back to the community in the process and not just with job creation.
To paraphrase President Kennedy, “Ask not what you can do for businesses, ask what businesses can do for you.”
I applaud the efforts by Seattle to tackle the homeless and housing situation. It has become not only a community problem but has evolved into a human crisis. But to make matters worse, the issue has turned into a war between the classes. This is not the way to create a healthy economic development community.
Instead of playing the blame game and treating businesses as part of the problem, economic developers should be working with them to find sustainable solutions. Economic developers should tap their tremendous capacity for being innovators and problem solvers rather than asking them to open their wallets by paying additional taxes. Economic developers should ask for their help in finding new ideas, identifying best practices, leveraging resources, engaging residents, maintaining accountability and eliminating duplication. That’s what healthy communities do. Government should not be run by or like a business but it should at least be accountable like one.
The city of Seattle should be proud of corporate visionaries such as Bill Gates, Jeff Bezos, Paul Allen and Howard Shultz as well as those leaders who came before them like the Nordstroms and Blethens. We are lucky that they have chosen to bring their innovative ideas and thinking to Washington State. They have not only rained prosperity on our communities but they have also created socially responsible businesses that give employees the opportunity to be compassionate citizens.
I’m glad that cooler heads finally prevailed on this issue and we didn’t kill economic growth in our state. Puget Sound’s historic prosperity has a large spillover effect throughout the state. Bad economic development decisions can be contagious and have unintended consequences for less fortunate people and communities far from where the damage takes place. We have already learned hard lessons that companies don’t have to just sit there and take what is handed to them by well-meaning, but misguided public officials. Economic developers know they can always take their headquarters and jobs elsewhere. Or they can work together to resolve the difficult issues facing communities.
Communities don’t have to be held hostage in the process either, but treating businesses as valued members of the community rather than as the Evil Empire will go along way to building bridges, bridges that tap into the very best a community has available to collectively tackle the complex problems growing cities face today.
If the city of Seattle insists on taxing their way to solutions, they should consider a tax on an individual’s happiness. Maybe that’s the key to the Nordic countries of Finland, Iceland, Sweden, Denmark and Norway. After all, these countries all have two things in common: They are all named in the top ten for the happiest nations on the planet and they are all highly taxed. Even their paper.
Many years ago, two wags famously put up a billboard on the way to Sea-Tac Airport that said: “Will the last person leaving Seattle – Turn out the lights.”
May that thought always haunt us in our economic and community development efforts, reminding us daily of both the power and fragility of even the strongest of local or regional economies.
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