Amazon just scored a major win in Seattle, and it shows HQ2 is already doing what it was likely designed to do

Business Insider | Jun 12, 2018, 09.29PM IST

Amazon Seattle

AP/Elaine Thompson

A Seattle resident advocates for the head tax at a meeting of Seattle's city council n May.

  • Seattle's city council voted for a new tax on large employers in the city in May, but it now looks ready to repeal the tax before it goes into effect.
  • Amazon was a vocal critic of the so-called "head tax" and said it would halt construction on two towers in the city center if it went through.
  • The quick about-face shows the power of Amazon and the advantages its HQ2 project is already offering the company.

Amazon was a vocal opponent of Seattle's new "head tax" from the start, and now it looks like the company will get its way.

City leaders are looking to stop the tax before it's implemented, the Associated Press reported on Tuesday. Seattle's city council had approved the tax at $275 per employee per year in May, and it was expected to go into effect later in the year. The head tax was meant to raise millions in city funds to help fight homelessness in Seattle.

While Amazon was not the only company that lobbied against the head tax, it was probably the most vocal. It paused construction on two massive towers it's developing in the city, resuming construction on only one of them after the vote passed.

"We are disappointed by today's city council decision to introduce a tax on jobs. While we have resumed construction planning for Block 18, 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," Amazon vice president Drew Herdener said in a statement after the council vote passed in May.

He continued: "We are highly uncertain whether the city council's anti-business positions or its spending inefficiency will change for the better."

The implication is clear: Amazon can continue its rapid growth elsewhere, outside of Seattle, unless the city council enacts more business-friendly policies.

Unlike most businesses though, that isn't just an empty threat. Most businesses don't have much leverage against city government. Moving headquarters is a long, expensive, and lengthy process. Amazon's second headquarters process, while not even shovel-ready by any stretch of the imagination, is already having a measurable impact on its relations with Seattle.

This impact was exactly what HQ2 was designed to do, at least, that is, according to some experts closely observing the selection process. Some have said Amazon is trying to learn from its struggles in Seattle, where it is the scapegoat for many of the city's ills.

Others have said the HQ2 selection process is a plan to pit two city governments against each other, with the winner ultimately being the company's bottom line and future growth, as Glenn Fleishman writes in Fast Company.

Before Amazon has even selected the city that will host its HQ2, HQ1 is reaping the benefits.

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