Amazon's bitter fight with Seattle over a new tax shows just how important HQ2 will be to the company

  • Seattle’s city council voted for a new tax on large employers in the city.
  • Amazon criticised the new tax in a blistering statement from vice president Drew Herdener.
  • Amazon’s dissatisfaction with Seattle ups the ante for whichever city gets tapped for the company’s second headquarters.

A new tax targeting big businesses with large headcounts in Seattle is set to take effect – and Amazon isn’t happy about it.

The tax was approved by Seattle’s city council on Monday at $US275 per employee per year, according to the Seattle Times. That’s lower than when it was first proposed at $US500 per employee, but it is not quite as low as the $US250-per-employee compromise that was voted down on Friday.

The tax only affects companies with more than $US20 million in revenue in the city. Seattle says it will get $US47 million in new revenue from the tax, according to the Times. Amazon, individually, will have to pay about $US10 million. The city says it will use the new funds to combat homelessness.

Amazon, one of the largest employers in Seattle, has opposed the new tax from the start. But, it has agreed to resume construction on at least one of its new towers in Seattle – with provisions.

“We are disappointed by today’s city council decision to introduce a tax on jobs. While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here,” Amazon vice president Drew Herdener said in a statement, setting an ominous tone for the company’s continuing commitment to Seattle.

He continued: “We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better.”

The conflict is growing at an interesting time for Amazon, with the company now moving full speed ahead with its plans to start building its second headquarters as early as next year.

When HQ2 is fully operational with its 50,000 workers and $US5 billion in investment in place, Amazon will have far more cards to play in negotiations with the local government. Herdener’s statement is Amazon’s clearest message yet that it won’t hesitate to reduce its commitment in Seattle going forward, using HQ2 as leverage.

Seattle leaders were not daunted by Amazon’s strong position.

“I am quite confident that as we move forward, we can continue to have the best city anywhere for people to do business,” Mayor Jenny Durkan said at a press conference.

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