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San Francisco proposes “IPO tax” on eve of Uber offering
- pushcx 7y agoFor anyone else immediately curious: the US's [ex post facto](https://en.wikipedia.org/wiki/Ex_post_facto_law#United_States https://en.wikipedia.org/wiki/Ex_post_facto_law#United_State...) law applies to retroactively deeming acts to be criminal. Challenges to retroactive tax laws on this basis have not succeeded.
- jedberg 7y agoGiven that is the case, what exactly stops a city from enacting a 100 year retroactive income tax? Are there limits to how far back they can go?
- ohazi 7y agoFear of citizens burning down city hall? It's usually difficult enough to pass ordinary tax increases. Trying something outrageously unpopular like that would probably be political suicide.
- malandrew 7y agoWhat politicians do is just narrowly target a proposed tax to apply to a small group of people that they can paint in an unsympathetic light. So rephrasing the question, "what exactly stops a city from enacting a 100 year retroactive income tax on those in the 1%?" Those with the most to lose are the least likely to burn down city hall.
- imgabe 7y ago"what exactly stops a city from enacting a 100 year retroactive income tax on those in the 1%?" They will have no funds for their re-election campaign. In an extreme case they may die of a mysterious stroke or have an affair suddenly made public.
- malandrew 7y agoWhat if they just pass the tax retroactively on those that are the 1% that moved out of the city and are no longer involved in funding the politics? The idea that something can be passed retroactively in any form is insane.
- mikeash 7y agoWhat stops a city from enacting a non-retroactive tax of equivalent value?
- jedberg 7y agoNot getting Re-elected. But if you tax dead people who don’t live there anymore that’s not a concern.
- tvanantwerp 7y ago"Fun" fact: tax law is the one domain where "innocent until proven guilty" does not apply. If the government says you owe money, the burden is on you to prove that you do not.
- randyrand 7y agoTraffic law is the same. If the government accuses you of j-walking or speeding, you need to go to court to prove your innocence otherwise they assume you're guilty. I've heard that civil forfeiture is the same way. These are all unfortunate.
- Erik816 7y agoThat is false. The government still has the burden of proof, although in some states it is quite low (preponderance of the evidence). That you need to appear in court does not mean you have the burden to prove your innocence.
- anthonybullard 7y agoIn many places in California you have to first pay the fine too contest the fine. Upon your contest being successful you'll eventually get your money back. This may take 9 months. Fronting the court $200 for 9 months might not hurt a software engineer, but for some people that might mean not paying rent. And asset forfeiture is more insidious. The case is made against the forfeited property, not it's owner. Hopefully the ruling in Timbs v Indiana will help reign that in.
- dragonwriter 7y ago> "Fun" fact: tax law is the one domain where "innocent until proven guilty" does not apply. No, it's not the one domain. “Innocent until proven guilty” applies only in criminal law (neither “innocent” nor “guilty” even applies outside of the domain of criminal law, much less that maxim about the relation between them.)
- 7y ago
- abtinf 7y agoFailure to pay taxes is not criminal. You cannot go to jail for not paying taxes. The most that can happen is additional penalties and fines. The only time taxes become a criminal matter is if you lie on the paperwork.
- CryptoBanker 7y agoThis unclear, the law states that retroactive laws are illegal both at the state and federal level
- dehrmann 7y agoI'm always suspicious of politicians who either lack this basic understanding of US law or fully understand it, but are posturing. And that doesn't even get into the ethics of changing the rules after the fact.
- ForHackernews 7y agoSure, why not? Uber fights dirty with municipal government, might as well fight dirty back.
- bob_loblaw 7y agoBut passing this tax will affect all future IPO's. If the city wants to take a hard line with Uber, then do that. But don't pass a tax that affects all companies going public. That just puts an incentive for startups to move outside the city before going public. Is that a good thing? Is that what the city of SF wants? I don't know, but giving a reason for all these workers to commute up and down the peninsula seems silly. Especially because CalTrain is already insanely crowded as are the roads.
- jedberg 7y agoIf SF wants more affordable housing, step one is to allow developers to build more freakin housing! Then sure, you can tax IPO lottery tickets if you want. Honestly it probably won't make any startup leave the city. The companies don't bear the tax burden, the employee does. And I don't think a company is going to lose out on employees simply because the employee doesn't want to lose an extra 1.2% in their stock comp.
- oarabbus_ 7y ago>If SF wants more affordable housing, step one is to allow developers to build more freakin housing! This... it's absolutely astounding how difficult it is to build housing in SF, then everyone complains about the lack of affordable housing and proposes all kinds of pretzel-twist solutions instead of adjusting supply towards meeting demand.
- malandrew 7y ago> The companies don't bear the tax burden, the employee does. When employees increasingly leave the SF Bay Area or refuse to relocate to the SF Bay Area, driving up the cost of acquiring talent, the companies most certainly are bearing the burden.
- rsanek 7y agoRight, but the point is that this is a very slow feedback loop, at least compared to e.g. taxing corporations directly.
- overpricedhouse 7y agoI hope this dissuades any more startups from locating in SF. It's gotten to the point where even highly paid software engineers cannot afford to live in the city. The Caltrain is packed every afternoon with engineers evacuating to the safety of MTV and Sunnyvale. The lack of affordable housing is the reason I moved from SF, since my wife and I wanted to start a family. I just wish more companies would do the same.
- Apocryphon 7y agoThe rest of the Bay Area from Berkeley to Morgan Hill is not much better in terms of price. Perhaps more livable in terms of less density and less flagrant poverty as S.F.'s urban environment, but the region in general is already glutted.
- kenneth 7y agoSan Francisco is one of the most mismanaged major cities in the world and it's on such a negative trajectory. It's blessed with an incredibly successful homegrown tech industry, but there's only so much that can do to hide the underlying disfunction and the cracks are starting to show. As a VC in San Francisco, I've recently given up my residence here, and am increasingly looking outward for tech and culture. I see many of my peers doing the same, moving east, south, or out of the country entirely. It's bittersweet. I used to love San Francisco, but have recently entirely lost faith in it ever getting better. I've given up. And honestly, I feel a weight lifted from not having to care and constantly deal with the frustration anymore. There's so much tech & entrepreneurship worth promoting outside of SF, and it's so often overlooked.
- Waterluvian 7y agoWith the University of Waterloo and Conestoga College, Kitchener-Waterloo is a hot bed of engineering and CS talent. And the whole area is quite underpaid and pretty affordable despite a massive shoot up in housing prices. I think my point, other than boosting my hometown, is that there's a lot of really affordable talent out there if startups and VCs would just dare to look elsewhere a little harder.
- thenewwazoo 7y agoContrariwise, I see San Francisco as a city that is struggling with some of the worst demographic issues in the nation, mostly stemming from having an absolutely absurd amount of wealth inequality for various structural and temporal reasons, and doing an admirable job of it. The "homegrown tech industry" was intentionally fostered in response to the valley turning the city into its bedroom community, so the idea that the city is somehow corrupting your vision of what SF could be is disingenuous. I suspect the SF in your recollection is the SF you yourself had a hand in changing into what it is today.
- bamboozled 7y agoAgree entirely, maybe if some of the billions of dollars available went to providing the homeless with good, free mental healthcare they would be a good start to making San Fran a better place. I’ve never seen anything so sad as the streets of San Fran on a cold night, disgusting. Edit: Go for the downvote button, most of the world thinks the state of the valley , San Francisco and the living conditions and poor infrastructure are a joke given the insane amount of wealth housed there. You can take ownership of it or blame someone else (which it seems many of you are doing a great job of).
- logicx24 7y agoSan Francisco legislators' complete inability to understand economics never fails to amaze me. There are twenty different taxes and bonds proposed every single year by the city to "build affordable housing." And every year, that money is squandered in regulation and red tape, while housing prices continue to rise. The issue here is, first and foremost, supply and demand. San Francisco has made the process of building new housing so incredibly onerous that, once a developer finally succeeds in erecting a building, the only ones they can sell to are the wealthy. If it was easier to build in SF, with less regulation, less restrictive zoning, and less expense, then housing would be built for the middle class. Then, the city could apply affordable housing policies to reserve units in middle income buildings, and the housing crisis could be averted. But instead, our legislature continually enacts nonsense like this, which accomplishes little beyond rabble rousing.
- hellllllllooo 7y agoIt might effectivly reduce demand.
- halflings 7y agoHow? How many people would not come to the Bay Area because they might get taxed if they IPO?
- hellllllllooo 7y agoPeople move to SF to work. If companies decide to start elsewhere it spreads out demand for housing.
- eanzenberg 7y agoNo, they would not move to SF when less SF jobs are created due to this law.
- davidw 7y agoAh, the "North Korea" strategy to make San Francisco affordable. Yeah, that would probably work. Kind of a roundabout way of doing things with a lot of other bad consequences, though.
- seibelj 7y agoYep - just a few more taxes and regulations will fix everything! And if these don’t work, add a few more!
- hashmap 7y agoThose silly legislators. Trying to pass laws to solve problems.
- s_y_n_t_a_x 7y agoThat's not what he said. You can pass a law to remove/consolidate/correct regulations, which is what they should be doing if they want more affordable housing...
- austenallred 7y agoIf something doesn’t work, try it 99 more times!
- throwawaysea 7y agoI would be OK with such a law if it only applies going forward, to companies that are headquartered in SF and formed only on this date or later. But to pass an IPO tax after hard-working employees have put in literally years of longer/more-stressful hours at reduced compensation levels (relative to working at established companies) to get to this payoff is unfair and unjust. Those employees have entered this arena (the startup game) with certain expectations and rules in mind, which made taking on risk and deferring gratification worthy to them. Pulling the rug out last minute to shore up the city's own finances is punitive and unreasonable, especially when the law is targeted so narrowly. And no, the fact that some of those employees will get large sums of money out of this does not make it less unfair or less unjust.
- hashmap 7y agoUber worked so hard at siphoning money from drivers, it would be unfair to tax those gains to support the housing those drivers depend on. Those poor millionaires.
- estebank 7y agoIt would actually be interesting if there was at least some reform that made exercising ISOs not have tax implications traded for a larger tax rate in the case of an IPO.
- jmpman 7y agoIf anything, this tax should go to repay San Francisco taxi medallion owners.
- 33MHz-i486 7y agowhy, the city sold a fresh batch of medallions to raise funds, took their money, then refused to give them a refund after CPUC legalized ridesharing across the state. Who's really at fault?
- jmpman 7y agoYou’re suggesting that Uber didn’t have lobbyists involved? My view is that Uber manipulated the system (I don’t agree with the previous system), and the people who suffered are the medallion holders.
- LanceH 7y agoThe whole reason there are medallions is that there is so much taxi money lobbying to limit entry to the market.
- jmpman 7y agoHow likely are disparate medallion owners to hire a lobbyist and influence the legislature versus Uber?
- LanceH 7y agoThe medallion restrictions and lobbying goes back decades before Uber. There would be no Uber without the taxi lobby backed, government enforced, artificial restriction on supply.
- chungleong 7y agoFrom a national security standpoint, it's probably a good thing if hi-tech firms are dissuaded from the SF. A magnitude 9+ earthquake is going to hit the area one of these days. It's simply inevitable. Making the city a critical networking hub is sort of crazy if you think about it.
- komali2 7y agoWhat datacenters are here? I thought everyone was throwing their servers out in Utah. Would be a bit mad to build a server farm on land you could make millions on building housing on instead.
- eismcc 7y agoSacramento
- komali2 7y agoThis wouldn't affect those data centers though
- chungleong 7y agoBy networking I meant business social networking. Key people could be killed or seriously injured in the quake. Or just preoccupied with recovery efforts.
- jdavis703 7y agoA magnitude 9+ earthquake most likely can't occur in California [0]. Even a magnitude 8 only has a very small chance of occuring. We're most likely to see 7.5 and below. 0: https://pubs.usgs.gov/fs/2015/3009/pdf/fs2015-3009.pdf https://pubs.usgs.gov/fs/2015/3009/pdf/fs2015-3009.pdf
- noego 7y agoCan someone explain why they are raising taxes specifically for stock-based-compensation and not for all high-income-compensation? What's so special about lawyers and bankers making hundreds of thousands of dollars in cash-compensation, that they deserve an exemption from these tax increases?
- woah 7y agoNot to defend the bankers and lawyers, but they are taxed at the income tax rate which is much more than 1.5% more than capital gains.
- gsusisjnd 7y agoIn California capital gains are taxed as ordinary income. You don’t get any benefit at the state level for capital gains. Also, under the new federal tax law, many lawyers are classifying their income as qualified business income so they pay much less than ordinary income. This is something that a software engineer working for a company couldn’t do.
- noego 7y agoWhen my stock vests, it is treated the same as my salary, and I get hit with an immediate income tax. Capital gains tax only kicks in afterwards, if I decide to hold on to the stock.
- ummonk 7y agoWould a retroactive tax like this be constitutional?
- mrburton 7y agoImagine giving a child who is bad with money, more money to compensate for their mismanagement of money.
- zahreeley 7y agoTax them
- rkayg 7y agoI really hope this brings more jobs and businesses to Oakland. Oakland has a lot more undeveloped space, better major rail access (BART / Amtrak), and is way more open to newcomers (both business and individuals). Does anyone know what happened with the Square office (formerly Uber) in Oakland?
- rkho 7y agoSquare leased it at the end of last year and if this[1] article is to be believed, they won't move in until end of this year at the earliest. [1]: https://sf.curbed.com/2018/12/21/18151762/square-uptown-station-lease-oakland-uber https://sf.curbed.com/2018/12/21/18151762/square-uptown-stat...
- Proven 7y agoHaha, that’s funny! “An IPO a day keeps street feces away”
- xxdesmus 7y agoThe retroactive component will be tossed out by any sane judge. There’s no way that’ll hold up in court.
- ultrasaurus 7y agoEarlier article with more information: https://www.sfchronicle.com/politics/article/Here-come-the-IPO-s-and-here-comes-a-proposal-13790280.php?psid=3JjOR https://www.sfchronicle.com/politics/article/Here-come-the-I...
- fosk 7y agoSan Francisco's administration is the poster child of corruption and mismanagement. It's a controversial topic because it comes across as a strong and opinionated comment, but decades of failed policies, unaccountability and lies give strength to the truth that the city of San Francisco is inadequate to enforce law and order and help the people who are - in the tech capital of the world - literally dying in the streets. I wish this was a bad dream, a nightmare, but it's the real life. Banning electric scooters, taxing IPOs, soda taxes are all distractions that prevent the voters to focus on the problems that really matter: the needles, the drug abuse, the human feces, the absolute lack of enforcement of the most basic, essential, rules of society. San Francisco must enforce the "Broken window policy", and it needs to start from the broken politicians and local administrators that are betraying their fiduciary duty and, by doing so, hurting the community.
- deleted 7y ago[deleted]
- dmode 7y agoLol. We have the most corrupt President in the Federal government and a corrupt to the bone, bought and sold for Congress and you think SF's government is corrupt ? SF government actually responds to their citizen's demands than any other government. If they were actually corrupt, it would be far easier to take developer lobbying money and issue building permits.
- deleted 7y ago[deleted]
- Skywing 7y agoCompare decades of SF mismanagement to a president that has been in office barely more than 2 years. Seems legit.
- GreaterFool 7y agoI said it before and I'll say it again... Japan has a great idea: make rent deducible from salary before tax. Then if the city wants some tax revenue they'd better have affordable housing!
- shard972 7y agoJapan has a declining population. Easy to make housing affordable when you aren't simply importing millions of new people.
- mrosett 7y agoIf they want to change the law going forward, then sure - they can continue to cook the golden goose. I don't live there, so in the narrow sense it's not my problem. But changing it retroactively - dated to a few days before a particular company's IPO - is banana republic shit.
- varenc 7y agoHere's the actual proposal: https://sfgov.legistar.com/View.ashx?M=F&ID=7216619&GUID=22E765B8-90CC-45B5-9BC7-87E7C576F907 https://sfgov.legistar.com/View.ashx?M=F&ID=7216619&GUID=22E... It's very clearly targetting Uber's IPO by retroactively applying the tax to May 7th. Though even the legislation seems uncertain that's legal. It has a provision that if retroactive taxation is "held to be invalid or unconstitutional by a decision of a court of competent jurisdiction" then it will apply as soon as the new law is introduced...which seems the more usual way of doing things. (Was a pain to find...none of the news coverage linked to it.)
- baron816 7y ago>Opponents argue it will discourage startups from locating in the city This may not be a bad thing. And not from a cynical, anti-capitalist, “keep SF shitty so poor people can live here” point of view. The country would really benefit if tech companies were more spread out.
- dehrmann 7y agoSecond-order (mostly service sector) would, but the network effects and job flexibility of sector hubs is means concentration is better for the industry. Depends what you're optimizing for; there's pros and cons to specialization.