Amazon just scored a major win in Seattle, and it shows HQ2 is already doing what it was likely designed to do

  • Seattle’s city council voted for a new tax on large employers in the city in May. On Tuesday, it voted to repeal the tax, according to the Seattle Times.
  • Amazon was a vocal critic of the so-called head tax and said it would halt construction on two towers in the city center if it went through.
  • The quick about-face shows the power of Amazon and the advantages its HQ2 project is already offering the company.

Amazon was a vocal opponent of Seattle’s controversial new “head tax” from the start, and now it appears the company has gotten its way.

Seattle’s city council had approved an annual tax of about $US275 for each full-time employee, and it was expected to take effect later this year. The so-called head tax was meant to raise millions in city funds to help fight homelessness in Seattle.

But on Tuesday, city leaders voted to stop the tax before it was implemented, the Seattle Times reported.

Amazon, one of the city’s largest employers, applauded the repeal, with Amazon vice president Drew Herdener releasing a statement saying it was “the right direction for the region’s economic prosperity,” and reiterating the company’s commitment to the fight to end homelessness.

While Amazon was not the only company that lobbied against the tax, it was probably the most vocal. It paused construction on two massive towers it’s developing in the city, resuming construction on only one of them after the vote passed.

“We are disappointed by today’s city council decision to introduce a tax on jobs,” Herdener said in a statement after the vote to implement the head tax passed in May. “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.”

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

The implication was clear: Amazon could continue its rapid growth elsewhere, outside Seattle, if it wants to.

Most businesses don’t have much leverage against city government. Moving headquarters is a long, expensive, and lengthy process. But it isn’t an empty threat for Amazon, which is planning a second headquarters.

Though the company’s new headquarters, known as HQ2, is not even shovel-ready by any stretch of the imagination, the city council’s about-face suggests it is already having a measurable impact on Amazon’s relations with Seattle.

This impact was exactly what HQ2 was designed to do, according to at least some experts closely observing the selection process. Some have said Amazon is trying to learn from its struggles in Seattle, where it has been viewed as a scapegoat for many of the city’s ills.

Others have said the HQ2 selection process is meant to pit two city governments against each other, with the winner ultimately being the company’s bottom line and future growth, as Glenn Fleishman writes in Fast Company.

Before Amazon has even selected the city that will host its HQ2, HQ1 is reaping the benefits.

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