How Seattle’s New Tax To Fight Homelessness Could Ruin Its Economy…(Socialist Nuts!)

Sunday, May 20, 2018
By Paul Martin

by Travis Brown, op-ed via MSN.com,
ZeroHedge.com
Sun, 05/20/2018

In a shortsighted effort to fight homelessness, Seattle’s city council has approved a new employee “head tax” on companies based in the city. The policy pits growth and progress against each other in a zero-sum game that will do far more harm than good.

The head tax is exactly what it sounds like: >a straight levy of $0.14 per hour per employee—about $275 a year for a full-time worker—targeting every business in Seattle with revenues of $20 million or more. The proposal’s backers aim to raise around $48 million per year to fund various affordable housing initiatives in order to combat homelessness and provide low-income families with affordable options in the city.

These are laudable aims, but it’s hard to imagine a more destructive strategy for realizing them. The potential damage to Seattle’s economy from this blunt instrument runs into the billions of dollars. Some may believe that California businesses could still flee their high-tax environment for Seattle, but in reality, Seattle is competing with many other cities for this income. One example is Phoenix, which has posted the best income growth of any Metropolitan Statistic Area (MSA) since 1992. Phoenix has capitalized on its proximity to California by luring businesses and people with a low-tax environment that nets them $1,539 in income every single minute. Compared to Seattle, this is nearly $1,200 more per minute, or $70,348 more per day. The numbers are staggering, and Seattle can’t risk putting itself further behind.

Seattle’s $20 million benchmark for the new tax refers to gross receipts, not income, meaning it will hit high-volume, low-margin businesses (think grocery stores or construction wholesalers) just as hard as more lucrative counterparts, promising price increases for consumers as businesses pass along costs. Service industries with big headcounts are firmly in the crosshairs, threatening this key employment category for young and low-skilled workers. The list includes Starbucks — no surprise, there are quite a few coffee shops in Seattle — as well as big retailers like Walmart and grocery store chains, both national and regional. Other big, low-margin employers, including logging and agricultural cooperatives, are also on the hook. And the relatively low cutoff means hundreds of medium-sized enterprises are on the hook too.

The Rest…HERE

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