Seattle consistently ranks as one the most expensive housing markets in the nation with a median home price of $713,100 — a price tag that nearly 42 percent of residents can’t afford. That’s why Mayor Jenny Durkan has proposed a 51 cent tax on Uber and Lyft rides to fund more affordable housing projects.
The tax is estimated to generate $133 million in revenue by 2025, $53 million of which will be used to build 500 housing units for residents making between $15 and $20 per hour. The additional funds will go toward Seattle’s streetcar system, according to a report by The Seattle Times.
This is the latest in a number of moves made by Durkan to combat homelessness and housing insecurity in the tech hub. In May 2018, the Seattle city council unanimously passed a “head tax” for companies grossing more than $20 million a year.
Under the tax, high-grossing companies are required to pay $275 per full-time employee, with funds going toward affordable housing and homeless services. It’s estimated to generate $48 million per year, easily bringing the five-year total for Seattle’s affordable housing fund well past the $200 million mark ($53 million from ride-share tax if passed, plus $48 million per year from head tax).
The ride-share and head taxes have drawn ire from Seattle’s booming business community, which includes real estate giants such as Redfin and Zillow.
Last May, Redfin CEO Glenn Kelman penned a blog explaining his opposition of the head tax, saying there are better options to address Seattle’s housing issues.
“But the head tax is unreasonable, at the $500 level or even the $275 level,” said Kelman in a previous Inman article. “The goal of all government economic policy should be to maximize, not penalize, employment.”
Much like their predecessors, Lyft and Uber are opposing Durkin’s ride-share plan, which also includes a requirement that each company pay drivers a minimum wage — an echo of California’s AB5 bill, which passed into law on Wednesday.
“While Lyft fully supports a minimum earnings guarantee for drivers, the Mayor’s regressive tax proposal for riders will hurt the underserved communities that rely on affordable rideshare most,” said Lyft spokesperson Lauren Alexander told GeekWire on Wednesday.
“Lyft estimates that in low-income neighborhoods, the tax would increase fees by 300 percent “making it the most taxed ride-share city in the country.”
But there’s a silver lining (at least for Uber and Lyft) — unlike the head tax, there’s some dissent from city council members who are questioning the effectiveness of Durkan’s proposal.
Councilmember Lisa Herbold told The Seattle Times the part of the plan to fund streetcars “fiscally irresponsible.” Other council members refused to comment.