Amazon halts Seattle expansion over city tax proposal

Even as Amazon continues to grow at a staggering rate, it is pumping the brakes on its long-planned hometown expansion. The retail giant threw down the gauntlet this week when it announced that it would stop construction on a new building because of a proposed city tax.

The new law is designed to address Seattle’s housing crunch, charging large companies $500 per head. The proposal is pretty clearly aimed at Amazon’s own expansion, and the company is taking the move to heart, potentially abandoning construction on a new building and just moving into a pre-existing space instead.

A spokesperson for the company told The New York Times that it’s “evaluating options” and has “paused all construction planning,” pending the results of the vote. The move apparently caught Seattle city council off guard, ahead of the May 14 vote.

“I’m deeply concerned about the impact this decision will have on a large range of jobs — from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers,” the city’s mayor Jenny Durkan told the paper. “At the same time, our city must urgently address our homelessness and affordability crisis and lift up those who have been left behind.”

It’s hard not to see echoes of San Francisco’s own housing and homelessness crises in the rise of Seattle’s tech industry. And while $500 a head would be a drop in the bucket for Amazon, the company clearly understands its leverage as the city’s largest employer. The move comes as various cities around North American have tripped over themselves to house Amazon’s second headquarters. Wherever the company ultimately lands seems likely to sweeten the deal with some manner of corporate tax cut.

Amazon, meanwhile, is facing scrutiny from a number of angles, including, notably, the president, who has called out the company’s shipping deals as part of a larger, ongoing feud with Washington Post owner Jeff Bezos.

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