Danny Westneat: False advertising: They call it the 'Amazon tax,' but it's so much more

Apr. 11--Whatever one may think of the policies of Seattle City Councilmember Kshama Sawant, she is as savvy as they come at making a sales pitch.

Take her "Amazon tax" proposal, formally introduced last week. It's by far the biggest tax increase in Seattle history, making it a huge political lift at any time, not to mention during an economic meltdown.

So she never misses a beat to stress that you won't pay the $500 million yearly tax. Amazon will.

"We're in a pandemic. Tax Amazon now," reads the bumper-sticker slogan on her council webpage.

At the kickoff for her plan last week, she got even more specific. She noted that the lockdown economy isn't hurting a certain someone.

"Even after the precipitous plunge in stock prices, Amazon CEO Jeff Bezos has increased his wealth by $6 billion," she said. "This is absolutely shameful ... so it's even more pressing that we tax those who have extreme wealth."

It's a powerful message. The problem -- just as with the last head tax that eventually failed -- is that it's a bait and switch.

It's true that Bezos' wealth seems immune to pandemic malaise. As of midweek his personal holdings were up a cool $10 billion since January -- the only one in the top five whose total net worth hasn't fallen. Getting a slice of that to help families struggling right now, as well as to build affordable housing later, is probably a popular idea in Seattle, as Sawant senses.

But her proposal doesn't just tax "Amazon," or the company's amorphous cousin, "big business." The way it's structured, it would tax almost any for-profit business in the city with 100 to 150 employees on up (it exempts nonprofits). That's based on it being a 1.3% payroll tax on labor costs of $7 million annually or more (so a business paying the per capita Seattle salary of $56,000 would pay the tax if it had 125 or more employees).

This means it could hit, say, some nursing homes and senior assisted living facilities.

Aegis Living runs five assisted living and memory care homes in the city, with four more planned. The Puget Sound Business Journal's Book of Lists says it has 1,219 employees in the state, with about a third of its homes in Seattle. Merrill Gardens, a senior living company that has its corporate HQ here as well as three facilities housing 325 seniors, may also be subject to the tax. (There is no list by name of the 800-plus businesses subject to the proposed tax because payroll information is confidential.)

According to state data, though, there are 89 businesses in the health care sector in Seattle that have more than $7 million in annual payroll. Many are non-profit, but in addition to some for-profit long-term care homes it would likely include medical clinics such as Seattle's Polyclinic and Kindred Hospital as well as medical device and research firms such as NanoString Technologies. That's a lot of health care getting caught up by a tax that is billed as the "Amazon Tax."

"We're in a pandemic. Tax senior living now" -- doesn't quite have the same ring to it.

Some of these facilities may need help before all this is over. "COVID-19 crisis threatens beleaguered assisted living industry," was a headline this past week in Kaiser Health News. That story called them "the front lines" of the coronavirus battle, which it suggested may trigger a rash of senior home bankruptcies.

This sort of mismatch between marketing and reality is what happened the last time the Seattle City Council went for Amazon, too. The controversial Seattle "head tax" of $275 per job on high-revenue firms in 2018 was accompanied by bullhorn rallies at the Spheres. But when the public face of the opposition turned out to be the local family that runs Uwajimaya grocery, it was game over politically (grocery stores have been wisely exempted this time).

It isn't just health care that seems off this time. Others that are reeling that could be taxed under this proposal include big restaurant groups (think Tom Douglas or Ethan Stowell). And also -- ahem -- your family-owned newspaper for the past hundred-plus years, The Seattle Times.

"Across the country and around Washington state, newspapers large and small are staggering under the loss of revenue as some of their regular advertisers evaporate," wrote The Spokesman-Review of Spokane, about its decision to stop printing a paper on Saturdays for the first time in more than a century.

We're in a pandemic. Tax the free press now?

Seriously, Seattle City Council, we're all good liberals out here who love to pay our taxes. But this proposal is arbitrary and scattershot. Oh also, please get a new marketing pitch.

One that's more true.

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