Amazon won a major battle in Seattle, but a Big Tech 'head tax' could still happen for Apple and Google
- This week, the Seattle City Council repealed a $275 per-employee tax for larger companies amid pressure from Amazon.
- Mountain View and Cupertino, California - the homes of Google and Apple - are considering similar head taxes.
- Mountain View Mayor Lenny Siegel predicts that his city will pass the tax, which would fund primarily fund public transit projects.
- Siegel believes that Cupertino could see more pushback from Apple.
Amazon is the largest property taxpayer and private employer in Seattle. Since 2000, the metro area has added nearly 100,000 new jobs, leading to an influx of high-skilled workers and a thriving tech industry.
But some residents and local officials believe Amazon's growth has been the catalyst for several problems, including affordable housing and homelessness crises, since its arrival in the late 1990s. To ease those issues, the Seattle City Council unanimously passed a "head tax" in May requiring large businesses to pay $275 per employee for the next five years. The money would go toward affordable housing and homelessness projects.The city received pushback from Amazon, which at one point threatened to halt construction of a 405,000-square-foot office tower. Following the tax's passage, Amazon, Starbucks, and other large companies also quietly poured hundreds of thousands of dollars into a signature-gathering campaign, called No Tax on Jobs, for a referendum against the tax on November's ballot.
Fearing this and more pushback from Amazon, the city repealed the tax.
While Amazon may have won its battle, there could be more Big Tech head taxes to come. Multiple Silicon Valley cities are considering similar taxes, and Amazon's win in Seattle doesn't seem to be stopping them. The decision to repeal could set an anti-tax precedent in Silicon Valley cities that are considering similar legislation.
Mountain View, California - the home of Google, LinkedIn, and Microsoft - may tax big companies like Google, which has 23,000 workers in the city, $150 per employee. On June 26, the city council will decide whether the initiative will appear on the November ballot.
Less than 10 miles away, Cupertino - the city that houses Apple's headquarters - is also polling the public on reopening a head tax proposal after one was shut down by business interests in 2016.
Mountain View Mayor Lenny Siegel - a proponent of the proposed head tax - told Business Insider his city is dealing with affordability issues that mirror what's happening in Seattle. Mountain View's tax would go primarily toward transit projects, and a sliver of the revenue would help finance affordable housing developments."It's hard for people in other parts of the country to visualize what our situation is," he said. "Everyone else wants to be in a position of having lots of good jobs, but they bring their own problems. And it's up to cities working with our business communities to solve those problems or we will kill the goose that laid the golden egg."
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If the head tax passes in Mountain View, Google would need to pay up to an additional $3.45 million annually, based on its current number of employees.
The rate for large companies in Cupertino is not set yet, but in 2016, former Mayor Barry Chang angled for a $1,000-per-employee tax that was struck down. Siegel considers these figures a drop in the bucket for the two companies, which collectively generate more than $300 billion in revenue each year.
Siegel predicts that Mountain View will pass the tax, since Google - its largest taxpayer - has not tried any intimidation tactics in the city. Since the city has been considering the tax for three years, Siegel said it's hard to compare what happened in Seattle to the debate in Mountain View.
However, an earlier version of Mountain View's head tax would have required Google to pay $300 per employee - double what the city is planning now. In early June, after Amazon halted construction on a Seattle office tower pending a vote on the tax, City Council members decided to lower the rate to $150 per Googler (The timing may be coincidental).
Google has stayed silent on the tax
According to Siegel, city officials have a relatively pleasant relationship with Google, which has a history of funding public works projects.
Since 2014, the tech giant has given more than $14 million to Mountain View nonprofits, including a $1 million grant for homelessness prevention and rehousing. In 2017, Google funded 2.5 miles of bike, pedestrian, and infrastructure improvements in the city.
In September, Mountain View's city council had a brief spat with the company over an approval to create nearly 10,000 units of affordable housing on Google property. The next morning, an executive from Google called Siegel to apologize.Siegel said Google has stayed silent on the subject of a head tax, which he interprets as an optimistic sign. (Google declined to comment on its policy position to Business Insider.)
"They just keep saying, 'We'll get back to you,'" he said. Siegel acknowledges that other large, local employers have openly opposed the tax. "Although we don't agree on everything, we have a long history of working with employers."
Siegel argues that Google and other Silicon Valley giants could benefit from the legislation, because it would allow more workers to commute into the city from elsewhere. One project Mountain View may pursue is a bus line that would connect downtown to Google's campus, he said.
When asked whether he fears Google would move if Mountain View passed a version of the tax, Siegel said it would be unlikely. In any case, Siegel said, Mountain View's housing and infrastructure struggles are acute enough that "it wouldn't hurt if [Google] moved."
Apple has a history of pushing back against Cupertino
In Cupertino, Apple has not been as accommodating to the city, according to Siegel. The company has made few announcements of local philanthropy beyond its "Global Volunteer Program," which launched in 2011 to encourage employees to volunteer in local communities. The company has also planted over 9,000 trees at its headquarters.
Cupertino may have fewer bargaining chips than Mountain View in a head tax battle, because Apple accounts for an even larger share (three-fourths) of the workforce. That means the city is more dependent on the company for tax revenue.
Cupertino has paid a firm to begin polling residents about the tax and explore how the city could spend the revenue, City Manager David Brandt told The San Francisco Chronicle.
"Apple is not willing to pay a dime [for public projects]," Chang said. "They're making profit, and they should share the responsibility for our city, but they won't."
Siegel shares a similar view.
"Apple, unlike Google, doesn't donate a lot to the community," he said.
Apple did not respond to Business Insider's request for comment, but the company's past views on corporate-civic responsibility may offer a clue regarding its future attitude on a head tax .
In a now-infamous video from 2011, Steve Jobs presented his vision for a new headquarters (which opened in January 2018) to Cupertino's City Council. At one point, a council member asked how Cupertino residents would benefit from the campus, and whether Apple would consider granting the city free public wifi.
Jobs denied the possibility.
"As you know, we're the largest taxpayer in Cupertino, so we'd like to continue to stay here and pay taxes," he said. "Because if we can't, we'd have to go somewhere like Mountain View, and we'd take our current people with us and over the years sell the land here. The largest tax base would go away. That wouldn't be good for Cupertino, and that wouldn't be good for us either."
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