Seattle's City Council Belatedly Got It Right for Wrong Reason

Seattle’s City Council belatedly got it right, but for the wrong reason. When they recently repealed their ill-conceived employee tax, they left in place their mistaken philosophy motivating it. As long as liberals believe free markets and businesses are “taking away” from their communities, they will repeatedly return to anti-business proposals.

Less than one month after unanimously passing an onerous “employee tax,” Seattle’s City Council abruptly voted 7-2 to repeal it. Initially, the tax was to be $500 per employee annually, but was scaled back to $275. Scheduled to take effect in 2019, it would apply to businesses with annual revenue of $20 million or more (600 estimated businesses) and raise about $47 million to address Seattle’s housing homeless crisis.

The City Council’s first warning should have come from the city’s past. Seattle’s former employee tax of $25 per employee had ended in 2010. Resurrecting an expired tax at eleven times its former rate is unlikely to be well received.

Another should have been the obvious: You get less of what you tax. This is government’s rationale behind “sin taxes” on smoking and alcohol. Getting less of something harmful and getting less of something helpful are vastly different.

As Chicago’s mayor, Rahm Emanuel, Obama’s former White House chief of staff and hardly a conservative, said when campaigning in in 2011 against a much lower employee tax: “The head tax is a job killer. Eliminating the head tax is the right thing to for businesses big and small… “

Capital’s high mobility should have been another clue. The Council need have only looked at many localities that have unwillingly lost factory and business jobs. Modern technology has only makes relocation easier — a point that should be thoroughly understood in tech-laden Seattle.

Yet somehow, all these alarms did not ring. Nor do they still appear to have. Even in their hurried rush to reversal, the seven council members who switched their votes said in a statement: “It is clear 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.”

Cost/benefit analysis is as welcome as it is rare from government officials; however, here it is also telling. Seattle’s City Council’s cost/benefit analysis was based on politics, not economics. They reversed themselves because they were about to lose. In four weeks following their initial vote, tax opponents secured 45,000 signatures — well above the 17,000 needed — to get on November’s ballot.

The takeaway here: They did not rush to reverse themselves because they thought the tax wrong. The tax may be gone, but its underlying philosophy remains. That Seattle’s City Council would tax jobs, the way others tax vices, says everything about that philosophy.

Implicit in the Council’s belief that businesses must give back to their community, is the sentiment that they are taking something away in the first place. If you believe the latter, it is not hard to understand the City Council’s comfort with an intended “enforced give back.”

If there is any lesson here it is insight into liberals seeing capitalism as a zero-sum game. For them, the free market resembles a pyramid, only the apex of which comprises winners, with losers spreading out increasingly below.

That a for-profit private sector company actually benefits its community by simply existing is unthinkable. That it employs people, pays taxes in the community, and produces a product consumers willingly purchase at a price yielding a competitive profit that allows the business to continue its productive cycle — is all of no consequence. Instead the liberals see progressively more exploited victims here.

Far from the solution, the private sector is “the problem” for which government is their real solution. That an employee tax could be proposed to correct “the problem” a business creates is no contradiction. Rather, it is the logical conclusion to liberals’ illogical thought process.

Seattle’s City Council simply reversed itself, not the philosophy guiding their misguided action. That the tax — or something equally erroneous — will resurrect itself, just as the City Council sought to exhume the city’s earlier employee tax, is certain so long as the philosophy supporting it stands.

However if Seattle’s City Council has not learned anything, then the city’s voters have. Getting almost three times the necessary signatures to put an issue on the ballot is impressive. The seven council members who reversed themselves certainly thought so and little doubted the outcome.

Even though Seattle’s tax was repealed before it was implemented, perhaps it struck a nerve in the interim. Taxpayer revolts can be potent. And they are never just about the tax alone, but how poorly the government is using the taxes it receives. Four decades ago in California one reshaped the nation’s political landscape. Perhaps one could even reshape the deep blue of Seattle.