Big Tech’s battle with Seattle is just getting started — and it could have implications nationwide

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Protestors carried signs that read ‘Tax Amazon’ on the company’s campus during the 2018 ‘head tax’ fight. (GeekWire Photo / Monica Nickelsburg)

Bernie Sanders reveled in Amazon’s defeat. Elizabeth Warren issued a warning about Jeff Bezos. And that was all before the week even began.

Over the weekend, it became clear that Seattle voters have elected an ultra-progressive City Council, despite a massive financial push by Amazon to pull the government in its hometown away from the far left. The news has been reverberating across the country as national politicians hold Seattle up as an example of effective resistance to corporate influence in politics.

In some ways, the election was the denouement of a two-year conflict between the current Seattle City Council and Amazon, the city’s largest tech company. But the election was also just the beginning.

Seattle’s new leadership is arguably more progressive than ever before as Amazon continues to grow in size and power. Meanwhile, officials are still looking for revenue sources to tackle the city’s housing and homelessness crisis and fund transit. As these factors converge in the next year, the Seattle City Council and the tech industry could be poised for a fight. It’s a battle that progressive politicians across the country will be watching closely as they campaign on promises to rein in corporate power and income inequality.

Top of mind for the tech community is whether the new City Council will resurrect the so-called “head tax,” a controversial piece of legislation that first pitted Amazon against elected officials in its hometown in a major way.

The plan was to tax businesses with more than $20 million in annual revenue on a per-employee basis to fund housing and services for the homeless. Seattle’s homelessness crisis has been branded a state of emergency since 2015, as the tech industry has flourished and the population has boomed. With more than 50,000 employees in Seattle, Amazon would have been the biggest source of revenue under the tax.

Related: Tech companies step up to fund affordable housing, but experts say it’s not enough to curb shortages

While the City Council was debating the head tax last year, Amazon paused construction on its last big office tower in Seattle and said it was reconsidering moving into the Rainier Square building, pending the city’s vote. The City Council passed the head tax, then repealed it a few weeks later in an abrupt reversal. Councilmember Lisa Herbold, visibly upset, said the head tax was “not a winnable battle,” at the time. Amazon subleased Rainier Square to other tenants anyway.

A lot has changed since that day in June 2018. Tech companies and workers have stepped up their engagement on the housing crisis in Seattle. Amazon is opening a homeless shelter for families at its headquarters. Microsoft launched a $500 million initiative to spur more affordable housing development in the Seattle region. And rank-and-file tech employees have self-organized, forming groups like Tech 4 Housing.

At the same time, the national political discourse has elevated issues like Big Tech’s power and income inequality. Amazon and its founder, Bezos — the richest person in the world — have become emblematic of those issues.

That broader conversation served as a backdrop last month when Amazon donated $1 million to the Seattle Metro Chamber of Commerce’s political action committee in an effort to elect a new Seattle City Council that the business community said would be less ideological and more pragmatic.

Sawant declares victory. (Photo via KshamaSawant.Org)

The last-minute donation appears to have backfired. Just two of the seven Amazon-backed candidates were ultimately elected. Amazon’s top adversary on the council, Kshama Sawant, declared victory over the weekend in a stunning comeback.

“Our campaign was a referendum on the Amazon Tax,” Sawant said in a statement. “I look forward to working with this new, progressive Council to pass a tax on Amazon and Seattle’s biggest businesses.”

Amazon declined to comment for this story.

“It’s time to turn the corner from campaigning to effective governing,” said Seattle Chamber CEO Marilyn Strickland in a statement Monday. “The challenges facing our growing city and dynamic region require civic leadership based on collaboration.”

Seattle City Councilmember Kshama Sawant protests corporate spending in Seattle elections at Amazon’s headquarters. (GeekWire Photo / Monica Nickelsburg)

The political headwinds that Amazon faces could embolden the new Seattle City Council to play hardball with the company as it pursues new revenue sources next year. In addition to financing housing and homeless services, city officials may need to make up for lost transit funding.

Last week, voters approved Initiative 976, which caps car registration fees at $30, slashing funding for a broad range of transit projects across the state, including Seattle’s planned expansion of light rail service. Amazon, and others in the tech industry, spent hundreds of thousands of dollars on the campaign to defeat I-976.

Seattle’s new and ongoing funding needs make it likely that a progressive City Council will consider new business taxes next year.

“Between homelessness relief, other social services, affordable housing, and transit, this council will feel like they can tax big business, whether it’s a payroll tax or a head tax,” former Seattle Mayor Michael McGinn told GeekWire. “The real question is, of those things, what will they prioritize?”

The new Seattle City Council isn’t likely to stop at taxes, McGinn said. Other issues germane to the tech industry — like protections for gig economy workers — could also be on the table.

Seattle is already seen as a test lab for the types of progressive policies that politicians like Sanders and Warren want to see implemented nationwide. It was the first major city to enact a $15 minimum wage and allow Uber drivers to unionize, though that ordinance is jammed up in lawsuits. The city is also a leader on worker protections.

The incoming City Council is well-aware that their work resonates beyond Seattle.

“Seattle is hailed as the most progressive city in the country,” said Councilmember Lorena Gonzalez, speaking at a rally at Amazon’s headquarters ahead of the election. “That has been in large part because of the work that the Seattle City Council has championed over the years … we cannot lose ground on broad systemic changes to the greatest issues affecting our working families, and the working class in this city, who everyday struggle to continue to find their footing and their place in the city where prosperity is not shared with us.”

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