Seattle can't tax its way out of the homelessness crisis

This post originally appeared in the Puget Sound Business Journal on March 23, 2018.

Seattle is in the throes of tremendous prosperity, which brings both opportunities and challenges. We have a homeless problem, created both by our welcoming policy of inclusion and our under anticipating a need to create affordable living solutions in the Puget Sound region.

The contrast between the haves and the have-nots is starker than ever, and the juxtaposition of the Teslas and million-dollar townhouses against the itinerant villages of men, women and children living under bridges is glaring. Solutions to address homelessness need to be provided; however, taxing employers for providing jobs is not a solution. 

The proposed tax on job creation is a political flash in the pan looking for a meaningful application. 

Unfortunately, the so-called “head tax” currently under consideration by the Seattle City Council is showy, political posturing without a plan to prove it can deliver the desired results. 

The proposed tax would go after Seattle’s highest grossing companies based on their number of employees. A task force looking at the issue recommended taxing businesses enough to generate up to $75 million a year.

Seattle has increased its spending on homelessness by 40 percent over the last four years to $63 million and approved a $30 million housing bond in 2016. In the same year, voters also approved a $290 million affordable housing levy. With so many task forces, commissions, and ideas, it is difficult to keep track of who is being asked to pay for what, and most importantly, how it will actually help those in need.

Mayor Jenny Durkan said of the One Table Regional Task Force for King County that we have to have an idea that we think will work before we fund it: “We can’t reverse engineer this — it’s not the taxes first, and then do the services that fit the taxes; let’s find the solutions, then scope the resources to fill that gap.”

That sentiment is so foundational that it is amazing it needs to be said. In our capitalist economy, we post prices to take into account the subjective market value to allow the consumer to decide if they have the means and the desire for that product or service. It is even a cliché: How much will that cost? How much have you got?

The councilmembers, even if they do not wish to override a possible veto, may feel pressured to avoid the wrath of activists who seem intent on silencing all dissenting voices on the subject of untethered spending (Trump, anyone?). It would be very hard for Durkan to be effective if she is branded as an unfeeling corporate apparatchik just because she thought we should have a plan before asking for more money from Seattle businesses.

The Task Force assigned to make recommendations looked at asking for $25 million to $75 million. The recommendation is at the high end of that range (read $75 million). Task Force member Lisa Daugaard thinks that $75 million is only the starting point. According to KUOW, she said, “The amount of new revenue needed is so great that the $75 million recommendation is understood to be only a down payment, so we cannot step further back from that.”

Just to be clear, this proposed tax increase is only the beginning of others to come. Taxing business for creating jobs is shortsighted. About 60 percent, or $700 million, of the city’s $1.2 billion general fund comes from taxes Seattle businesses already pay. If this anti-business behavior continues, others will join the ranks of Amazon looking to create jobs outside of our city.

We need a thoughtful plan, not reactionary one-off’s. Seattle should not have to go it alone and should have a regional plan with regional solutions. Seattle has raised and spent millions on homelessness. Where is the analysis of the investment when there’s uncertainty of its effectiveness? Let’s look to a broader base and demand skin in the game from everyone so the city council can face some accountability. 

The question isn’t “Why are we taxing to fund solutions to the homelessness crisis?” 

The question is “Why are we taxing job creators who are part of the solution to solve homelessness?”