Housing plants in giant spheres: cool! Housing the homeless: outrage!

Praveen Seshadri
6 min readMay 21, 2018

I have to shake my head at the outrage among the business/tech elite of Seattle when it comes to the new head-tax. Some who signed this petition are my friends and business acquaintances. I agree with parts of their logic, but I cannot disagree more with their approach.

I am CEO at a tech startup in South Lake Union. After a few years of operation, we are now breaking even. We are nowhere near $20M in annual revenue, but let me say this clearly: I would be happy to pay $275 per employee to help (in a tiny way) address the homelessness crisis in Seattle. I encourage the signatories to the petition to say this first and say it loudly. It will make it easier to hear and absorb the rest of their petition.

As for Amazon, please fire whoever is advising you on this! In the last couple of years, Amazon has started to sponsor a couple of homeless shelters in Seattle. Kudos! Really! This would have been a great opportunity to double-down on that. Why not do a ten-fold increase in that investment? Instead, they threaten to leave town. Let’s do the math. Amazon’s annual extra charge from this head tax will be $12.5 million. Hmmm. They just put up the Spheres at the cost of ~$1B (I can’t find the exact cost online, but their whole urban complex is ~$4B). That sum would pay the head-tax for 80 years and house some of the homeless. But no, that would be socialism. But it is apparently worth it to house plants from all over the world for the Amazon employees to enjoy. If you saw that in a movie, you’d know which side to root for.

First, let’s deal with the facts. Then my personal opinions.

Fact: $275/employee/year is a small cost for a tech company

To be honest, even for a small startup like ours, $275 per employee per year is no crippling burden. Parking per person costs $300/month (more than the annual head tax). Office costs per person in South Lake Union are astronomical, but of course we pay it. We pay full health insurance for our employees and families (costs a lot more than the head-tax). Every day when each of us buys lunch somewhere in SLU, we leave a 15%-20% tip (more per day than the head-tax).

Fact: $275/employee/year is a really small cost for Amazon

Recruiting costs per new hire at a big tech company can run approx 25% of annual employee salary. $275 per employee is just noise. I don’t for a minute believe Amazon’s threats to leave Seattle to go someplace instead because of that cost. Relocation costs for existing employees or new hires will swamp the cost of this tax by multiple orders of magnitude.

Fact: tech success is a burden on Seattle’s civic resources

Without a doubt, the massive growth of tech jobs is straining the city, driving up property prices and rents and parking costs. Generally making it unaffordable for non-tech people to live here, and pushing more people down the slippery slope towards homelessness.

Fact: Seattle’s civic expenses are growing unsustainably

Expenses have grown ~39% since 2012 and this is sustained by an increase in tax revenues of ~35%. This cannot continue, when the main sources of tax revenue are on building construction (cannot last) and property tax levies (only so much they can be increased). Leads to necessary questions on efficiency of expenditures that have to be asked and addressed.

Fact: the tax structure in WA state is fundamentally regressive

An income tax is apparently illegal due to the regressive laws of WA state. A head tax is a coarse approximation of an income tax. If a head tax is branded as this terrible thing “a tax on jobs”, then this entire country with its federal income tax system should be a terrible place for business. So enough with the meme that this is a “tax on jobs” and some kind of ridiculous socialist idea.

Opinion: we have an obligation

As a tech entrepreneur, it is sheer hubris to think our success is all our own doing. We benefit from a healthy city and we have a responsibility to help with it. Young tech-savvy people _want_ to live in Seattle because of the progressive values it espouses. We moved our business from Bellevue to Seattle because that is where the young tech talent is, and wants to be.

Yet, Seattle has people living in tents along the darn freeway in one of the richest cities in the world! Our success is contributing to the problem and the disparity should give us pause and lead us to act to avoid it getting worse.

Opinion: the homeless should not be targets

While the business leaders who wrote the petition are making arguments based on economics and principle, they must surely read the ugly comments that follow the various articles about their efforts. They must know that some of those who support their efforts liken homeless people to “rats”, that some of them believe that they are just moochers who will flock from all over the country to Seattle (because no doubt, it is just wonderful to be a homeless person in Seattle camped by the highway). I’m reminded of the dehumanizing undercurrent in the conversations about immigrants/Mexicans/the Wall during the 2016 election. Please, please: recognize the sentiments you are unintentionally giving voice to, and explicitly disown and reject any sign of this ugly rhetoric repeatedly as you campaign to overturn the head-tax. Winning the campaign is just not worth the cost.

Opinion: a challenge to the CEOs and VCs who signed that petition

I have a fulltime job and cannot work to address homelessness myself. But I am sympathetic to the cause and would be happy to pay the head tax.

If you are sympathetic to the cause (and I know many of you are!), I challenge you to say: “I realize that there is a growing homelessness problem and our enormous success is exacerbating it”. You sort of dance around that in your petition but you never actually acknowledge responsibility. If you did, then everything else you say becomes more reasonable and credible.

I understand that you do not like the proposed solution. You object on the grounds that the money is not spent efficiently. Ok, that is fair. Then focus on ways to spend the money efficiently. Maybe one of you will volunteer to apply your entrepreneurial spirit to making a significant dent in this problem. Run for city council even! I would support you if your priorities were around social equality and doing it more effectively with the resources available.

Opinion: the real issue is how to equitably share the cost of growth

The people who materially benefit the most should also make the greatest material contributions back to the common good. If you want to brand that principle as “socialism”, then hey, nice knowing you. I call it decency and the majority of people in this country agree (otherwise, we wouldn’t have a tiered federal income tax). The real debate is how to structure taxes to achieve this principle.

It is unfair and unsustainable for property owners to share the lion’s share of the cost of handling Seattle’s growth. Some approximation of a tiered income tax is the more reasonable model (“benefit the most” == “earn the most”). Given the limitations of the state’s tax laws, we are forced to try an approximation like a head tax. It is unfair for a company (like Dick’s burgers) with a lot of low-income workers to pay the same head-tax as a tech company (like Amazon) with high-income workers. Perhaps it is better that the tax be based on median employee salary rather than on total revenue. I haven’t the faintest idea if that is legal or not, though it sure feels more “right”.

That is the sort of discussion we should be having, and yes, along with a discussion about increasing efficiency in government spending.

Update: I liked Redfin CEO Glen Kelman’s reasoned blog about this topic. He makes a thoughtful and nuanced argument. One that I could find quite a bit to agree with.