Amazon’s Escobar Approach to Local Government Tax Rulings

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Just as late cartel leader Pablo Escobar convinced the Colombian government to change laws to benefit his company, Amazon has taken a similar approach with its local lawmakers. The Seattle City Council voted unanimously last month to tax the city’s biggest employers, including Amazon, to help tackle homelessness. In the blink of an eye, board members flip-flopped and reversed their decision due to what they claim was “bullying by Amazon.” Is the e-commerce business undermining efforts to help people get off the streets?

The breakdown you need to know

The “head tax,” also commonly referred to as the Amazon tax, required a statutory expenditure of $275 per employee. This tax would be annual on for-profit businesses that bring in at least $20 million a year to Seattle. With more than 45,000 employees in the city, Amazon could have paid more than $10 million a year.

Seattle has the third largest homeless population in the United States, after New York and Los Angeles. In 2015, the city declared a state of emergency for homelessness. Last year, a one-time count found more than 11,600 homeless people in King County, which is the area of ​​Seattle where Amazon is located. CultureBanx notes that blacks make up 6.2% of King County’s population and have the highest homelessness rate at 29.2%. This represents a 23% overrepresentation of African Americans in Seattle’s homeless community, according to the US Department of Housing and Urban Development’s American Community Survey.

The political waters are quite murky around this abrupt 180 by the council. Amazon donated $350,000 last year to a group of companies that supported Seattle Mayor Jenny Durkan’s mayoral campaign. Mayor Durkan had already convinced council to reduce the tax from $500 per employee to $275.

In a harsh attack, an Amazon spokesperson accused city leaders of failing to spend effectively on homelessness. “We don’t really know if the city council’s anti-business stances or its spending inefficiencies will change for the better,” said Drew Herdener, vice president of Amazon. The New York Times.

Last month, the company abruptly halted construction of a new campus in downtown Seattle, primarily due to passing taxes. Now that the head tax has been repealed, Amazon said it was the right move and also reaffirmed its commitment to help solve the homelessness crisis. “We are deeply committed to being part of the solution to end homelessness in Seattle and will continue to invest in local nonprofits like Mary’s Place and FareStart that are making a difference on this important issue,” wrote Amazon on Twitter. For the moment, no solution is proposed to replace the Amazon tax.

Business Taxation

Since Seattle first voted for the tax, it has raised questions about whether Mountain View in California should have its own “Google tax” and Cupertino its own “Apple tax.” About 3% and 585 Seattle businesses would have been taxed and raised about $47 million a year, according to the council. Some of the other companies that would have been taxed include Starbucks and Seattle weather. The additional tax was to end after five years.

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