Amazon played chicken with the city of Seattle, and the city flinched — but didn’t bow down completely.
Less than two weeks after Amazon flexed its muscles by pausing construction planning on an expansion of its new headquarters in the city, the Seattle City Council voted in favor of a new tax on large employers that was at the center of the dispute.
The City Council voted in favor of the so-called “head tax” — a $275-per-employee tax on Seattle businesses that gross at least $20 million annually. The initial proposal called for the tax to be $500 per employee, but the city’s mayor had threatened to veto it, the Seattle Times reported.
The majority of the new tax revenue will be earmarked for new low-income housing units in an attempt to stem the city’s housing and homelessness crises. Other pieces of the new revenue pie will go toward homeless services.
In a statement, Amazon spokesman Drew Herdener said that Seattle city revenue growth over the last seven years “far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem — it has a spending efficiency problem.”
“We are disappointed by today’s City Council decision to introduce a tax on jobs,” the statement also said. “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.”
Earlier this month, Amazon had said it had paused construction planning for a new giant office tower — Block 18 — on its new downtown city campus, and was evaluating whether it might sublease other office space it planned to take over. The company is still evaluating whether it might sublease the additional space.
Amazon’s other leverage in the dispute with Seattle is its plan to build out a full second headquarters in one of the 20 cities it has selected as finalists in the HQ2 contest. Amazon could choose to relocate more employees there if its relationship with Seattle continues to deteriorate.
A group of other Seattle tech leaders — startup founders, venture capitalists and big-company CEOs — also opposed the head tax.
This article originally appeared on Recode.net.