Amazon had some tough words for its hometown Monday after the Seattle City Council approved a tax on major employers to help fund services for the homeless. And those words are resonating in Boston and other cities where the retail giant is growing fast, and considering a second headquarters.
An Amazon executive said the company was disappointed and “very apprehensive about the future” in Seattle after city councilors voted 9 to 0 to impose a tax of $275 per employee on large companies, to raise an estimated $47 million a year for housing and services for the city’s nearly 12,000 homeless people.
That will cost Amazon, which employs about 45,000 people in Seattle, at least $10 million a year. Leading up to the vote, it campaigned vigorously against the measure, temporarily halting planning for a 17-story office building in the city and saying it might sublease — rather than occupy — a skyscraper already under construction.
To appease Amazon and other big employers that opposed the tax measure, including Starbucks, councilors cut the per-worker levy nearly by half before voting on Monday. Still, Amazon said it was reevaluating expansion plans in its hometown, citing the council’s “hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
Meantime, Amazon is rapidly expanding in other cities, including Boston, where last month it opened a new office on Melcher Street in Fort Point. The company has about 1,200 technology workers in Boston and Cambridge — up from just a handful six years ago — and is hiring hundreds more. Last month, Amazon signed a lease for an office building in the Seaport District that will house 2,000 workers. Construction is expected to begin this year.
“We like the places where we can hire the people we want to hire,” said Mike Touloumtzis, an engineer who leads Amazon’s Boston and Cambridge operations. “They’re here.”
Boston, of course, is also considered a strong contender for Amazon’s so-called second headquarters, an $8 billion, 50,000-job campus.
The debate over Seattle’s tax, and Amazon’s sharp response, is a reminder that while cities are right to ask companies to pay their fair share, they should be careful not to go too far, said Sam Tyler, president of the Boston Municipal Research Bureau.
Boston already charges a higher property tax rate on commercial real estate than on residential property, and voters recently approved an additional property tax levy to pay for housing, parks, and historic preservation. Beyond that, the city makes developers of new buildings contribute funds for affordable housing and job training and leverages new buildings to fund a host of other community benefits, such as parks and public space — costs that are typically passed on in the form of higher rents.
Thus far, developers and the companies that fill their buildings have been willing to absorb those costs, in return for the benefits of being in Boston — as evidenced by the city’s surging real estate market. But there is a limit, Tyler said.
“The business community is already asked to do a lot,” he said. “How do you balance all our needs, and how much more do you ask businesses to pick up?”
There’s nothing quite like Seattle’s “head tax” on the horizon in Boston, but city officials are considering increasing the affordable-housing requirements that come with development. And a so-called millionaires tax, which would raise the state’s tax on incomes above $1 million, could go before voters in November, though the Massachusetts High Tech Council and other business groups are suing to keep it off the ballot.
In an interview Tuesday at Amazon’s Fort Point office, Touloumtzis said he hadn’t been following the tax fight in Seattle. Nor did he know if Amazon might engage more in policy debates on Beacon Hill and at City Hall. The company, he said, is more focused on the technology it builds here, including its popular Alexa speech software programs.
Several local business groups declined to comment on what the tech giant’s stance in Seattle could mean for Boston’s relationship with the company.
Indeed, the state’s economic development secretary, Jay Ash, whose office recently negotiated $20 million in street and Silver Line improvements to encourage Amazon’s expansion in the Seaport, said he hasn’t been following the contretemps across the continent. But, he said, Amazon is one of many companies that have grown in Massachusetts without fighting over taxes, willing to pay to access the state’s talented workforce. He’s confident that won’t change any time soon.
“We’re pretty comfortable with what we have to offer,” Ash said, “and we’re comfortable with what we ask in return.”Tim Logan can be reached at firstname.lastname@example.org.