After Seattle Ditches Its Amazon Tax, Silicon Valley City Mulls a Google Tax

Employee head taxes are enjoying an undeserved popularity.



As Seattle repeals a literal tax on jobs, a similarly bad idea is taking hold further south.

Passed by a unanimous vote of the city council in May, the city's so-called Amazon tax, which imposed a $275 annual fee for every worker employed by a company grossing over $20 million a year, was on the books for barely a month before city elders nixed it, hoping to avoid a bruising voter initiative campaign that sought its repeal.

The move provoked howls of betrayal from some of the tax's most ardent supporters. Councilmember Kshama Sawant called the repeal a "shameless capitulation." One impassioned activist told the city council in a public hearing that "when it's our turn, we won't make excuses for the terror." Accusations like bootlicker were thrown around with liberal abandon.

Yet while the Amazon tax might be dead for now in the Emerald City, a Google tax is gaining steam in Mountain View, California.

Last week the Mountain View City Council gave its preliminary endorsement to putting an employee head tax on the upcoming November ballot. The proposal would levy as much as $150 per employee for firms that employ more than 50 people in the community.

This is projected to raise $6.1 million. Over half of that—roughly $3.4 million—would come from Google, which employs 23,000 people in the town.

The idea is to get Google to kick a little back to the town for the problems their growth has wrought.

"We want everyone to pay their fair share. We're asking for something that can begin to cover the impacts that we're seeing," one tax proponent tells the Mountain View Voice, comparing Google to a restaurant patron ordering the most expensive meal at the table and then slipping away to the bathroom when the check arrives.

"If we're lucky, some of the companies won't expand here and they will expand elsewhere, where the workers live," Mountain View Mayor Lenny Seigel says in the San Francisco Chronicle. (Seigel has previously described his town's problem as having "too many good jobs" and not enough transit.)

Seigel's hope is precisely the fear of many Mountain View businesses, who worry that they'll be the ones to suffer should Google decide to shrink its Mountain View workforce.

In a survey conducted by the Mountain View Chamber of Commerce, 54 percent of local businesses say that they oppose an employee head tax, with 38 percent in support and 7 percent undecided. If larger corporations skip town to avoid the tax, 62 percent of local enterprises say they would be negatively affected.

Similar uneasiness from the wider business community, along with unions and other city stakeholders who don't see economic growth as a bad thing, was enough to kill Seattle's head tax. Of course, the backlash there also had a lot to do with popular resentment toward a city government that people see as out of touch and ineffectual. Politics is presently less fractious in Mountain View, where a city-sponsored survey shows two-thirds of voters favoring an employee head tax.

The idea is catching on in a number of other Silicon Valley towns as well. Apple's hometown of Cupertino, like Mountain View, is mulling the idea of putting a head tax on the November ballot. San Jose, Redwood City, and Sunnyvale all have job taxes already.

Whatever their popularity, these taxes are bad ideas. They're predicated on the mistaken notion that thriving tech firms are growing at the expense of communities.

As opposition from the wider business community demonstrates, corporate behemoths are not hording all the growth to themselves. Other businesses benefit from their proximity to large corporate campuses and the customers they bring, as do the employees of those smaller businesses. Mountain View property owners are no doubt happy to see the value of their homes increase as a result of Google's growth in the town, even if they don't like the added traffic congestion.

The prosperity these companies bring, in short, is spread as widely as whatever negative impacts they might have.

Jared Walczak of the Tax Foundation says employee head taxes "are rare and for good reason."

Walczak thinks cities have legitimate concerns about the impact of large commuting workforces on their town's infrastructure. But the revenue projections for these head taxes are often based on the current levels of employment in the towns that are looking to adopt them. And as Walczak notes, "Tech firms tend to be mobile. The jobs themselves can be located elsewhere, whether that's down the street or across the country."

This is particularly true of companies like Google, which has large corporate campuses around the country. They would in all likelihood minimize the impact of a head tax by reassigning jobs elsewhere, just as Amazon promised to do in Seattle. When those employees go, so does the revenue the cities were going to rely on.