Amazon’s spat with the city of Seattle over a job tax on big employers to raise money to purportedly ease homelessness raises questions about the ramifications if the e-commerce goliath were to choose Dallas for its HQ2.
Amazon (Nasdaq: AMZN) had halted plans to build a 17-story tower at its headquarters after the Seattle City Council seemed set on imposing a $500-per-employee tax on the city’s biggest employers. Construction resumed on the tower last week after Seattle reached a compromise for a tax of about $275 per full-time employee.
By that time, however, tempers had flared by people on both sides of the tax, calling attention to the relationship between Amazon and its hometown, and raising questions about what responsibility, if any, Amazon bears for Seattle’s homeless problem.
Dallas, which has a growing homeless problem of its own, is one of 20 metro areas that Amazon shortlisted for what it’s calling its second headquarters, or HQ2. Amazon has said the $5 billion second headquarters will be as big or bigger than its first, employing 50,000 in jobs that pay $100,000 and up.
While most folks in the Dallas business community would consider landing the massive project to be a godsend, others caution that downsides of the deal would include rising traffic congestion and housing costs, among other negatives.
An influx of high-paying jobs creates demand for luxury housing, which encourages developers to build high-cost units instead of affordable units that are required for people experiencing homelessness to recover, said David Woody, president and CEO of The Bridge, a Dallas shelter and homeless assistance center. The center serves about 8,500 people annually.
“Seattle’s problem is worse than ours, but we are catching up to them quickly because of the extreme poverty and lack of affordable housing in Dallas,” Woody said in an email response to questions from the Dallas Business Journal.
The DBJ focused on poverty, homelessness and a growing income gap in this week’s cover story.
Some 4,140 homeless people were counted in Dallas and Collin counties on Jan. 25, 2018, according to data collected by Metro Dallas Homeless Alliance. That’s up from 3,789 in 2017.
In Seattle, the most recent homeless census available was 11,643 people in 2017.
To address the homelessness crisis in Seattle, the city government formed a task force that recommended that employers with annual revenue in excess of $20 million per year be taxed to generate additional revenue to provide affordable housing.
Several companies, including Microsoft and Boeing, criticized the tax. Amazon went so far as to halt construction on a downtown Seattle building that would add about a million square feet of office space and support up to 8,000 new jobs.
Amazon and other large companies should not be viewed as a socially insensitive for their opposition to the tax, said Mike Davis, economist and business strategy professor at Southern Methodist University’s Cox School of Business in Dallas.
Davis called the tactic of taxing employers based on the number of employees and their salaries “economic illiteracy on the part of Seattle.”
“Money is fungible,” Davis said in an interview with the DBJ. “Seattle can take tax money from any source and apply it to anything they want. So to say that somehow you should be happy about this tax because it’s a tax for homeless people is nonsense.”
Davis said he doubts that a tax like the one being imposed in Seattle would fly in Dallas.
“The stereotypical Texas conservative view is, hey, this isn’t a government problem at all, and we should have low taxes because we shouldn’t have to be spending money to do these kind of things,” he said.
North Texas Economic Development Agencies
Ranked by Value of Deals 2016
Rank Agency Value of Deals 2016 1 City of Arlington Office of Economic Development $1.55 billion 2 Grapevine Economic Development $900.00 million 3 Plano Economic Development $675.42 million View This List