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Seattle votes to repeal new tax law following pressure by Amazon and other local businesses

  • Seattle city officials have voted to repeal the so-called "head tax" on Tuesday, following mounting pressure from Amazon and other local businesses.
  • The head tax, designed to help fund the city's effort to solve its homelessness problem, would have charged large companies $275 per full-time employee every year.
  • The about-face comes just four weeks after the city approved the head tax measure.
Lisa Werner | Moment Mobile | Getty Images

Seattle city officials voted on Tuesday to repeal a new tax measure on large companies following mounting pressure from Amazon and other local businesses.

Sitting in front of a raucous crowd, including many who opposed the repeal, the Seattle City Council members voted 7 to 2 in favor of overturning the law, which was just passed four weeks ago.

The so-called head tax, designed to help fund the city's effort to solve its homelessness problem, would have charged companies with more than $20 million in annual revenue $275 per full-time employee every year. The city was expecting to raise roughly $48 million a year through the new tax measure.

Some of the largest Seattle-based companies, including Amazon and Starbucks, sharply criticized the law and formed a coalition to launch the No Tax On Jobs campaign that would have put a repeal referendum on the November ballot.

Amazon temporarily stopped construction of an office building in downtown Seattle to protest the decision, and more than 100 local businesses signed an open letter last month to oppose the new law.

Amazon's spokesperson said in a statement that the repeal is "the right decision for the region's economic prosperity."

The coalition said through its spokesperson that it's glad to see the "Seattle City Council has heard the voices of the people loud and clear and are now reconsidering this ill-conceived tax," according to the Associated Press.

Seattle Mayor Jenny Durkan issued a statement on Monday acknowledging the city's decision to repeal the head tax proposal.

"It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis," Durkan said in a statement. "We heard you."

The controversy is Amazon's latest tussle against state and government tax policies.

Amazon is in a tax fight with a number of states, including South Carolina, on how to charge sales tax on products sold by third party sellers on its marketplace. Last month, Amazon also said it would block shoppers in Australia from buying from its international sites after the country said it would impose tax on products shipped into the country.

And then there's Amazon's plan for its second headquarters, which has has created a bidding war from cities and states offering tax breaks and incentives to win the bid.