On Sunday, KOMO aired an interview with Jasmine Donovan, executive vice president of Dick's Drive-In Restaurants, about the proposed employee "head" tax that is currently turning Seattle Nice into Seattle Go Fuck Yourself. If you haven't been paying attention, the Seattle City Council is debating a per employee tax on Seattle companies with the highest annual revenue, which will be used to raise $75 million for housing and other services for the city's poorest residents. This is wildly unpopular among many (but not all) business operators: Last week, pending the City Council's vote on the head tax, Amazon pitched a hissy fit and halted construction on a new tower downtown, and they aren't the only ones opposed to it. Some smaller local companies argue that it will hurt their bottom line and force them to raise prices for their customers and/or lay employees off.
On KOMO, Donovan said that Dick's—which is known locally for providing free insurance to their employees as well as childcare assistance and scholarships—would rather give to charities directly than pay the city tax. As Dononvan (along with Rachel Marshall of Rachel's Ginger Beer and Seattle Hospitality Group's H.S. Wright III) wrote in an op-ed in the Seattle Times last week, "The city has proved that spending money in an effort to improve the homeless crisis in Seattle is not its core competency. We think a jobs tax is a bad idea and will hurt job creation in Seattle." Rather, she told KOMO, "we want to be able to directly give that money to the charities we see as being successful and innovative in the city."
In theory, this makes some sense. Last year King County spent over $190 million towards ending homelessness. Spoiler alert: people are still homeless, Seattle is still unaffordable to all but top wage earners, and those with formerly middle class occupations like teachers, social workers, and civil servants don't make enough money to live in the very communities they serve. It's easy to argue that the issue isn't the money, it's the way the city itself spends it. Just look at the transportation levy for an example of poor government spending—the 10-year, $930 million property tax is wildly over budget. As the Seattle Times reported last month, the city originally estimated that the bike lanes would cost about $860,000 to build per mile—a number that has now ballooned up to $13 million per mile. With overruns like this, it's not hard to believe that the city isn't capable of doing simple math, much less effectively allocating the head tax.
But the alternative—simply asking wealthy people to pony up—is so much worse.
In the 19th century, steel magnate Andrew Carnegie argued that because capitalism leads to great disparities in wealth distribution, the rich have not just a moral obligation to give to the poor, it's in their own self-interest; the poor are less likely to eat the rich if they have food on their own plates. During just the last two decades of his life, Carnegie gave away an estimated $350 million to charity, or the equivalent, in today's dollars, of over $4.5 billion. And a number of rich folks have followed in his footsteps, including Warren Buffet and Bill Gates, who together founded the Giving Pledge, a campaign that encourages rich people to give away the majority of their wealth. The pledge has been signed by over 150 of the world's richie richies, including Elon Musk, David Rockefeller, and Tim Cook. (Jeff Bezos, however, is noticeably absent.) It's a nice idea, and one I'm glad they've embraced. But during Andrew Carnegie's lifetime, the need to give away wealth was imperative because, until 1913, just six years before Carnegie death, the income tax rate in the United States was zero percent.
Until the passage of the income tax, America's robber barons—the Carnegie, Rockefellers, Vanderbilts, etc.—extracted massive wealth from American soil while giving little back to the state. Of course, some donated generously, which may be partly why we remember their names today (they're stamped on buildings: Carnegie Hall, Rockefeller Center, Vanderbilt University, etc.). Then, after the passage of the income tax, things changed: From 1913 until the Reagan years, earners in the top income bracket in the U.S. were taxed at a rate of between 70 and 90 percent. That, today, is unthinkable, when top earners, under the GOP tax plan pay a maximum of under 40 percent. (In Washington state, of course, the tax burden is even lower than the rest of the U.S., thanks to state prohibitions on an income and capital gains tax.)
In Dononvan's vision of the world, the wealthy will give money out of the goodness of their hearts and with generous tax deductions to boot. But we cannot live in a city or a state or a country that just asks rich folks to pay up. Yes, some wealthy businesses and individuals do give back (Dick's, as Donovan told KOMO, started the No Child Sleeps Outside campaign, which is raising $1.5 million this year to provide food and shelter to needy kids.) But that's not enough. This city is gleaming with wealth, but we can't simply hold out our hands and hope rich folks pony up. Sure, some will, but others simply won't. We can't just rely on them to give; we must demand it instead.
None of us get to decide where our tax money goes. In some ways, this is unfortunate. I would rather none of my tax dollars go to pay for Scott Pruitt's phone booth or Ben Caron's new dining set or a single one of Donald Trump's meals. But just as I don't get to pick and choose where my tax dollars go, neither should Dick's be able to circumvent the tax system just because they think they know better than the city where their money is spent. What's next, refusing to pay taxes for public schools because you think religious schools do it better? That's not how this system works.
What's more, charities and philanthropic organizations can't be voted out of office. If the City Council approves the head tax and squanders the funds, they can actually lose their jobs. They are, at least in theory, accountable to the people of this city. They have to tell us where our money goes; Dick's or Amazon or Microsoft or anyone else fighting the head tax, on the other hand, does not. We need more accountability, not less, so while Dick's burgers and shakes may be the best pre-hangover cure in the land, when it comes to tax policy, their heads are stuck in the fryer.
That said, in a city with giants like Amazon within its borders, targeting small businesses like Dick's makes little sense. Unlike Amazon, Dick's isn't driving up the cost of living and they are actually making this city a better place for more than just their own employees. I know this will never happen, but I'd like the head tax to target only the richest of the rich: Companies with revenues not of $20 million annually, but of, say, $20 billion. Should the head tax pass as currently written, according to the Times, Amazon's share of the burden would be $43 million by 2021—which is couch cushion change for a company with revenues of over $50 billion in the first quarter of this year alone. And if companies worth billions want to take their balls and go home, so be it. Actually, perhaps they should leave the balls, which will make a fine public biodome when they're gone.