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Voters may be asked to tax SF tech companies
- etjossem 10y agoSan Francisco's currently seeing a strange political alliance between homeowners - who want their valuable property in the Bay Area to appreciate - and well-meaning progressive activists earnestly trying to alleviate poverty. Supervisor Peskin has built up a reputation for walking this line; for instance, he generally favors increasing affordable housing (BMR) requirements to very high levels. That appeals superficially to progressives, but also causes fewer units to be created overall, leading to ever-higher market rates and single-family-home values. It's really bad news for anyone who ever wants to rent in a market rate apartment. This proposed policy follows a similar vein. It subsidizes everyone else - both asset-rich homeowners from earlier generations and those barely getting by - at the expense of San Francisco's newcomers, who have no reason to support him anyway. Coming from Peskin, this move doesn't surprise me at all. Great to see renters (of all income levels) finally banding together in the most recent election: http://www.sfyimby.org/ http://www.sfyimby.org/
- seibelj 10y agoPenalizing a single industry makes no sense. Either increase payroll taxes across the board for every industry, or you are literally saying that tech jobs are "worse" than other jobs and must be punished in order to make up for how they harm the city. Totally ridiculous, populist idiocy.
- fennecfoxen 10y agoCome now. When your politics are fair it means the politician doesn't have any power - and if you don't have any power, how are you supposed to give favors to the people who paid for your campaign to get elected?
- cmurf 10y agoOK so what sort of ridiculous idiocy would you call it when tax breaks were doled out just to the tech industry? And how is this not some form of recapture of previous incentives?
- gorkemyurt 10y agoNo, tax breaks were given to the mid market area not to specific companies, so even the restaurants and gyms get tax breaks in the area
- etjossem 10y agoAgreed - seems like more of an effort to get more businesses to move to the downtown corridor, which wasn't doing too well.
- seibelj 10y agoI also disagree with targeted tax breaks to specific industries, but at least they entice rather than repel companies. Taxing a specific industry via referendum smacks of pandering for votes.
- Cshelton 10y agoIf this passes, I can only see it as a net loss to the city. Higher payroll taxes, less disposable income from tech employees, less money put into the market by the private sector in favor of taxes put in by the government. It is highly understood about the effect of economic multipliers between private industry spending and government. When will progressives ever learn? On that note, businesses: There are many states who would give many tax incentives for moving your company to the city/state. Texas, Washington...even NY... SF and it's voters apparently do not want you...time to go somewhere that does.
- igorgue 10y agoCome on, nobody is going anywhere there's no tech investors. There are many states, that pay a lot less taxes (some only Sales and Property tax) and the SF Tech community always ignores because SF is so cool (there's no tech investors). You guys are staying, tax or no tax, stop whining.
- justizin 10y ago> SF and it's voters apparently do not want you...time to go somewhere that does. Everyone who thinks this way, please, yes, go!
- dcosson 10y agoIdk. It seems like the mistake was enacting these tax breaks in the first place, without putting the necessary effort into building enough housing to support the new jobs (or improving transit and building out more densely populated suburbs). The ideal solution was probably to invest heavily in housing 5 years ago. But since it's too late for that, at this point it's just damage control. Even if SF does finally get moving on building more housing, it's so far past having enough of it in the reasonably near future that a small incentive for jobs to go elsewhere probably would help things in the next ~5 years. As far as progressive redistribution schemes go, this one actually makes more sense to me than most (as much as I hate to agree with Peskin et al).
- nugget 10y agoI'm just an armchair economist but it seems obvious that this payroll tax (especially when combined with minimum wage hikes) will further incentivize companies to relocate entry level workers to lower cost of living areas, e.g. Yelp customer service moving to Phoenix. Companies will keep their most skilled (and highest paid) workers in San Francisco because access to those workers is why they HQ there in the first place. As a result, the middle class continues to hollow out and inequality is actually worsened, which likely puts additional pressure on homelessness and the other problems they were trying to solve in the first place. I wonder if these politicians think about the unintended consequences of their proposals - whether they don't know, don't believe it to be so, or simply don't care.
- coldcode 10y agoIf you only tax for workers above a certain wage and use that money to support rentals for lower income folks you might make it work. Maybe such a thing would incentivize tech companies to move elsewhere which of course has other side effects. There is no free lunch when using taxation to enact public policy.
- raldi 10y ago> If you only tax for workers above a certain wage [...] you might make it work. Actually, payroll taxes usually do the opposite: "It only applies to the first $110K in earnings. That way, it makes sure to capture a significant portion of the earnings of all poor-to-middle-class people, and then cut off before capturing a significant portion of the earnings of any rich people." http://gawker.com/5986230/the-unfairness-and-stupidity-of-the-payroll-tax http://gawker.com/5986230/the-unfairness-and-stupidity-of-th...
- nugget 10y agoYou run into the same problem as means-testing social security and similar ideas -- turns out that income is a very pyramid-like distribution and there's just not a ton of it at the top, relative to the base and the middle. It wouldn't surprise me if 75% of this proposed tax would be collected from the component of salaries below the FICA limit ($118,500 for 2016). Another question is do you consider RSUs to be part of payroll on which tax is due? What about options? These can be 50% or more of compensation in many of these large firms.
- protomyth 10y agoFor the purpose of this bill, how is "tech company" defined?
- Hydraulix989 10y agoI was thinking the same thing. Is Uber a taxi company or a "tech company"? Is Airbnb a lodging company or a "tech company"? Don't all companies nowadays involve some sort of "technology"?
- protomyth 10y agoIt got answered in the article for the follow-up thread https://news.ycombinator.com/item?id=12003570 https://news.ycombinator.com/item?id=12003570 "The measure identifies tech companies by the type of tax code they use under the Internal Revenue Service’s North American Industry Classification System. Companies classify themselves. They may face penalties if a government audit finds they are misidentifying themselves."
- jonathankoren 10y agoProbably isn't "tech company" at all. Twitter's payroll tax break which this would resend is actually for companies in Mid-Market, which are the big tech companies. It's not really different than NYC giving a tax break to investment banks by defining the tax break as being "a Lower Manhattan Wall Street address." http://www.sfgate.com/business/article/Companies-avoid-34M-in-city-taxes-thanks-to-6578396.php http://www.sfgate.com/business/article/Companies-avoid-34M-i...
- protomyth 10y agoI'd have thought the same thing, but it looks like they went with their IRS designation. Odd choice, really.
- geofree 10y agoSF has a massive annual budget, about $9B (http://sfmayor.org/ftp/uploadedfiles/mayor/budget/SF_Budget_Book_FY_2015_16_and_2016_17_Final_WEB.pdf http://sfmayor.org/ftp/uploadedfiles/mayor/budget/SF_Budget_...). To put this into perspective our city has a larger budget than 12 individual US States (https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets). The default position of the city is to consistently raise taxes. Is it possible to utilize our current resources more effectively?
- skyrw 10y agoThinking like this is considered bigoted nowadays.
- dragonwriter 10y ago> To put this into perspective our city has a larger budget than 12 individual US States It also has a larger GDP than something like 36 individual US states (don't have same year numbers, but only 14 states -- and, obviously, one of those is California -- have 2015 GDP [0] higher than SF's 2014 GDP [1]) -- and that's not just because its bigger in population than some states, since only four states (Wyoming, Vermont, Alaska, and North Dakota) have smaller population than SF. > Is it possible to utilize our current resources more effectively? Seems to me SF is doing something right. [0] https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP [1] https://en.wikipedia.org/wiki/List_of_cities_by_GDP https://en.wikipedia.org/wiki/List_of_cities_by_GDP
- dguaraglia 10y agoSF could do much better with the amount of taxes we pay. I have no idea where the taxes go, but the state of some roads (let alone public transportation) is pretty bad. San Francisco is only doing so well because it's the only "lively" city around Silicon Valley.
- yardie 10y agoI have no idea where the taxes go I'd wager a good chunk of it goes to ensuring the money is being spent correctly. When I was an undergrad my boss was the grant writer. Half the money (and a lot of time) went into compliance and accounting. Another example is the joke about construction projects; 1 guy digs the hole, another guy supervises the guy digging the hole, a union rep watches over the guy digging the whole, government rep makes sure the guy digging the whole is to spec, environmental guy makes sure the guy digging the whole isn't causing environmental damage. Individually, all these people are necessary, but as you add more requirements and more compliance it takes up a lot of money. And that's what happens when people say I don't know where the tax money goes. Another committee gets formed, more forms to fill in are created.
- mc32 10y agoYes, please tax these companies out of town so they can take their corp taxes and workforce with them so we can return to the grime of the 80s and 90s! Great idea only visionary supervisors could have! Seriously, this is how they address issues of utmost importance? Never thought I'd say this, but I almost want technocratic politicians over these reactionaries st this point. The larger issue, the elephant in the room is we need an integrated regional government with teeth and foresight. But all the pols in all these cities will not want to give up their power in exchange for a better planned and governed future.
- o0-0o 10y agoI find it interesting that you can argue that government is the solution & the problem at the same time. Wouldn't it be easier to remove the beaurocrats, regulations, and taxes?
- mc32 10y agoI think they are incentivized to think too parochially.
- f3llowtraveler 10y agoThe bottom line is, these tech companies all heavily support the Democratic party and Democratic causes. Therefore it's cosmic justice that they should be subject to Democratic policies. Put your money where your mouth is!
- freehunter 10y agoDidn't Tim Cook just throw a fundraiser for Paul Ryan?
- telotortium 10y agoYep: http://9to5mac.com/2016/06/28/nancy-pelosi-tim-cook-paul-ryan-fundraiser/ http://9to5mac.com/2016/06/28/nancy-pelosi-tim-cook-paul-rya....
- gorkemyurt 10y agoAaron Peskin is doing everything to fuel hatred against tech workers in the city; he reminds me of populist Latin American leaders who antagonize the population against a certain group to grab media attention and get votes.. How do you decide if a company is a tech company? They use computers, they must be a tech company..
- igorgue 10y agoThe same industry that incorporate in a different state mainly to avoid taxes, doesn't like taxes... Big surprise. Move to Delaware guys lol.
- igorgue 10y agoTrump / Peter Thiel 2016!!!
- o0-0o 10y agoSan Francisco should not do this. Instead, they should enact a city tax, much like New York City. Anyone that lives within the city should pay an extra tax. Now, this assumes they have to do this in the first place. The easiser / cheaper thing to do would be to elimiate the social safety net that lets the problem fester.
- seibelj 10y agoA city tax makes far more sense than saying, "Anyone who works for a company in industry XYZ pays more taxes because we hate your entire business category". I have no comment or opinion about your "social safety net" idea. What kind of signal does this send to tech companies? Also, see the failed Massachusetts tech tax that caused lots of controversy before being repealed [0] [0] http://readwrite.com/2013/09/27/massachusetts-tech-tax-repealed/ http://readwrite.com/2013/09/27/massachusetts-tech-tax-repea...
- gyc 10y ago>A city tax makes far more sense than saying, "Anyone who works for a company in industry XYZ pays more taxes because we hate your entire business category" Not if you're trying to take advantage of resentment by a certain portion of the population towards industry XYZ.
- rm_-rf_slash 10y agoThis measure seems strangely punitive. I think the better option would be a progressive payroll across-the-board tax above a certain level, say $100,000. The proposal as it stands seems to imply that tech alone is responsible for widening income inequality, particularly in San Francisco. The more accurate perspective is that tech these days has allowed small numbers of extremely skilled people to perform work that half a dozen moderately skilled workers could not accomplish as well on their own. As a result, it makes a lot more sense to pay one person $200,000+ a year than six people at $100,000. The biggest income gains are near or at the top, and the taxes should follow. Taxing an engineer making $85k just because they work in tech only makes an already very expensive city less worth living in.
- justizin 10y agoThe employer is actually taxed, not the employee, and it's a 1.5% tax, which is the same amount of the original payroll tax which was rolled into gross receipts a few years ago. This is hardly armageddon.
- marcosdumay 10y agoEmployment taxes are always paid by the employee. When the employer is the one actually transferring the money to the government, market economics make it sure that they pass the cost on to the employee.
- capkutay 10y agoWorth mentioning that this requires a 2/3 vote to pass which means it has pretty slim chances. The proposal has yet to pass through Board of Supervisors which always introduces its own amendments as well.
- dannyr 10y agoThis is why it may be up to the voters to decide in the November election.
- capkutay 10y agoRight it will be up for voters to decide. But a 2/3 majority victory is almost impossible in SF. . The ultra-progressive ballots have been relatively unsuccessful in SF lately even with 1/2 vote required to win (anti-Airbnb measure lost, Mission moratorium lost).