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Partners Take Dim View Of Seattle's Corporate 'Head Tax'

O'Ryan Johnson and Mark Haranas

Solution providers are criticizing a new per-employee tax passed by the Seattle City Council that would charge companies $275 for every full-time worker.

"It seems ironic that a company like Amazon is going to hire 10,000 people in Seattle, then they're going to be charged an extra tax for the fact that they hired all these people in the same city,’ Dan Serpico, CEO and president of solution provider FusionStorm, ranked No. 46 on CRN's Solution Provider 500 list. ’You think those people would want those jobs. I don't know what the answer is, but it seems like an unfortunate strategy,"

The tax applies to the city's 585 businesses with $20 million or more in annual sales. It is expected to raise $47 million that city councilors said will be used to build affordable housing. Those businesses must pay $275 for full time employees based in the city, every year until 2023, at which time the tax is scheduled to expire. The measure passed the board unanimously and Seattle mayor Jenny Durkan said she would sign it.

"Our goal is to have a successful and vibrant business community–one of the best in the country–and at the same time, assist our most vulnerable and strategically invest in affordable housing," Seattle City Council president Bruce Harrell said. "One does not exclude the other. Our investment strategy must balance these objectives without demonizing advocates or businesses. Today, we have reached a compromise that accomplishes this goal.’

FusionStorm's Serpico said there needs to be a balance between taxes and philanthropic efforts by businesses and individuals that do well financially well. The CEO said FusionStorm tries hard to give back to society and its community through things like various charities and helping struggling employees.

"Certainly the government requires tax revenues in order to support infrastructure and other needs, some of which go to people who are disadvantage and down on their luck," Serpico said. "Somewhere along the way we want to keep a balance between making sure everybody has an opportunity and we aren't overburdening the companies that are successful that at the same time are employing those people."

One top executive from a U.S.-based solution provider said the so-called "head tax" is "rather counterintuitive."

’I don't support a head tax anywhere in the country,’ said the executive who did not wished to be named. ’I think it's a misplaced strategy."

Officials at Amazon, and Starbucks, blasted the move saying Seattle doesn't have a revenue problem, it has a spending problem. In a statement released to CRN, Amazon vice president Drew Herdener, called the move "anti-business" and "a tax on jobs."

"We remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here," Herdner said. "City of Seattle revenues have grown dramatically from $2.8B in 2010 to $4.2B in 2017, and they will be even higher in 2018. This revenue increase far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem – it has a spending efficiency problem."

Mountain View, Calif., the home of Google, and Intuit, is also mulling a "head tax," according to published reports. There, Mayor Lenny Siegel wants to put the measure on a November ballot, with the goal of raising $10 million for transportation infrastructure.

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