Seattle set to run out of money but keep homeless

Two powerful companies failed to stop a new tax in liberal Seattle, a city that can't get enough taxes to waste according to an economist.

Mega-corporations Amazon and Starbucks watched this week as the far-left Seattle City Council voted 9-0 for a new tax that affects the two biggest employers in the city.

Amazon, in fact, is currently expanding beyond its 45,000 employees and plans to add 7,000 more employees and build a new skyscraper. Those plans, however, made be put on hold, the company has announced. 

"Seattle is a tax-to-the-max jurisdiction," observes economist Paul Guppy of the Washington Policy Center, responding to the city council's "head tax" on companies making at least $20 million in gross revenues.

The city council plans to use the new tax revenue to help fund affordable housing and address homelessness in Seattle, which is among the most expensive places in the country to live.

Seattle also has one of the highest rates of homelessness in the nation.

An original plan to add a $520 tax per employee was scaled back to $275, which was seen as a compromise by city leaders.

Political blog Hot Air noted that Amazon's threat to end its expansion plans was described as "blackmail" by one city council member, and a labor group claimed Amazon was committing a crime and demanded an investigation. 

Amazon has suggested the city's coffers have grown in recent years and Starbucks, meanwhile, is suggesting the city has a spending problem.

"This City pays more attention to the desires of the owners of illegally parked RVs than families seeking emergency shelter," a spokesman for Starbucks told CNNMoney.com in a statement. 

Jonathan Williams, speaking for the American Legislative Exchange Council, tells OneNewsNow that Seattle is about to learn that even liberal, left-leaning companies will "vote with their feet" if they are forced to do so.

"Vote with their pocketbooks," he says, "like we've talked about for so many years, and go places with more economic opportunity." 

Guppy tells OneNewsNow that he doubts the City of Seattle will address homelessness despite a $200 million annual budget to do so. 

"The reason I say that," he says, "is the city has spent over a billion dollars on homeless programs over the years, and a program to end homelessness ended in failure."

This new source of revenue, he predicts, won't help it get any better.