Does Seattle Have the Solution for America's Crippling Income Inequality?
On July 10, 2017, the Seattle City Council unanimously passed a law taxing the rich. Individual incomes over $250,000 and $500,000 for married couples will pay a 2.25% tax. Funds raised, estimated at $175 million, will go for affordable housing, education, transit, and other services. Seattle is home base for tech behemoth Amazon, the world's largest internet sales company. The tech force of employees drawn to the city is turning Seattle into a city only affordable for those high-income techs. Will Seattle maintain affordability for its middle and low-income population, or will it continue a path like San Francisco, pricing and forcing out thousands of poor and people of color?
Many cities face loss of revenues as states reduce budgets and pass on the costs of programs and services. Cities entice corporations with incentives, allowing companies to forgo paying their fair share of taxes. Tech corporations are especially coveted and courted, yet what are the consequences?
San Francisco, tech capital of the world, is our lesson to be learned. The city's once-vibrant culture has shifted from its diverse population and now panders to high income, mostly white male techs. San Francisco enacted an incentive program granting payroll tax exclusions up to 10 years for technology companies. In 2015, the city estimated a loss of $56 million in tax revenue from Twitter alone, including exemption on income tax not collected from its stock market initial public offering (IPO).
Along with corporations engulfing your city come gentrification and evictions. Amazon, like other tech companies, changes the economy and population makeup. From 1997-2017, nearly 6,000 evictions occurred in San Francisco's mostly Latino Mission neighborhood. Families of low-income renters were replaced by high-income people able to pay outrageously increased rents. This is a national phenomenon fueling economic and racial inequality and eviscerating neighborhoods.
Amazon is a "prime" example. The Institute for Local Self-Reliance, a 42-year-old national nonprofit research and educational organization, has compiled a definitive report on Amazon's increasing dominance and control of our economy. Local merchants are unable to compete with Amazon e-commerce. In 2015, Amazon sales displaced the equivalent of 39,000 retail storefronts and 220,000 retail jobs. Amazon has eliminated about 149,000 more retail jobs than it created in its 190 warehouses and pays its employees 15 percent less on average than other warehouse workers in the same region.
Consumer Watchdog filed petitions with the California Attorney General, the Federal Trade Commission and the Department of Justice charging Amazon with price scheming. Amazon displays "post prices, before-sale prices or was prices" to manipulate true costs and con consumers into thinking they are getting bargains.
With no concern or boundaries, Amazon invades every facet of our lives: Buying Whole Foods for $13.7 billion; pushing sales of clothing to disrupt department stores; delivering meals, a service to members of Amazon Prime for $99 yearly plus a $10 delivery fee; operating the cloud, a computing backbone for much of the country; delivering packages for itself and others. Amazon Prime will deliver anything immediately to your door, including in one instance a single lemon wrapped in lots of non-recyclable packaging. And in 2013, Jeff Bezos, Amazon's founder, purchased the Washington Post.
Amazon started out as an online site to purchase books, adding to declines and closures of countless bookstores. Following that initial hit, however, the number of independent bookstores has increased by 35 percent since 2009. Local entrepreneurial small businesses are growing and they help to sustain, not drain, local economies.
Seattle and San Francisco activists give us part of the solution. Seattle Mayor Ed Murray declared, "Our goal is to replace our regressive tax system with a new formula for fairness, while ensuring Seattle stands up to President Trump's austere budget that cuts transportation, affordable housing, healthcare, and social services."
Will other cities wake up to corporate takeovers of their local communities and their economy?