Seattle companies voice opposition to proposed tax to fight homelessness

The fight over a proposed tax on big business to help lessen Seattle's housing crisis just got more heated.

Business leaders from 131 Seattle-based companies have signed a letter voicing their objections to the tax.

The letter was signed by the CEOs and co-founders of companies large and small, including Expedia, Alaska Airlines and Payscale. Only companies generating at least $20 million in revenue a year in Seattle would be affected by the tax.

At issue is a proposed "head tax" on large businesses to fund programs that address homelessness and affordable housing. Companies would pay 26 cents per working hour for each Seattle employee, or roughly $540 a year for every full-time staffer.

Amazon, the city's largest private-sector employer, was not among the companies that signed the letter. But last week Amazon said it was "pausing" construction on a new office tower pending the Seattle City Council's decision on the tax.

Also missing from the letter was Starbucks, another large Seattle-based company. But the coffee giant told CNNMoney that it shares other Seattle employers' concerns about the impact the tax could have have on jobs.

"Rather than raising more taxes, we believe that the city and county should implement the reforms its own experts provided 24 months ago, show progress, and then consider new sources of revenue," the company said, noting its role in raising money to help the homeless.

Related: Amazon plays tough ahead of Seattle tax vote that could cost it $20 million

Proponents of the tax contend that a major cause of Seattle's affordable housing crunch is the high cost of real estate, which they say resulted when more workers moved to the city for jobs. They also note the lowest paid workers of Seattle's big businesses often qualify for state-funded Medicaid programs.

The 131 business leaders acknowledged the housing problem. "Rising housing costs and homelessness affect our entire community. ... It will take collaboration and dialogue to come up with innovative solutions," they wrote in their letter posted on Medium.

But they oppose the head tax, they said, "because of the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished. Sending this message to entrepreneurs, investors and job creators will cause far greater damage to Seattle's growth prospects than the direct impact on the businesses being taxed."

News of the letter was first reported by the Seattle Times.

Related: Amazon profit more than doubles

Meanwhile, on Wednesday, 10 organized labor groups sent a letter to the Seattle City Council in support of the proposal.

"As the most regressive taxation system in the country, we should have ample room to work toward shared responsibility by ensuring corporations and the wealthy also participate in our civic life in the most fundamental of ways: paying appropriate taxes," the groups wrote.

The city of Seattle does not impose an income tax on businesses or individuals. Instead, its principal sources of revenue come from property and sales taxes — which both individuals and businesses pay — as well as a business and occupancy tax.

The Seattle City Council is expected to take a final vote on the head tax proposal early next week.

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