
Voters may be asked to tax SF tech companies - enra
http://www.sfexaminer.com/voters-may-asked-tax-sf-tech-companies/
======
etjossem
San 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/)

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seibelj
Penalizing 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.

~~~
cmurf
OK 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
No, 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
Agreed - seems like more of an effort to get more businesses to move to the
downtown corridor, which wasn't doing too well.

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mc32
Yes, 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.

~~~
justizin
> Yes, please tax these companies out of town so they can take their corp
> taxes

I'm confused. You think the companies are valuable because they pay taxes, but
shouldn't be taxed?

Truthfully, this is only a return to the previous state of affairs, a 1.5%
payroll tax isn't that painful - the impact on Twitter would be less than 5
headcount.

The reason companies like Twitter originally sought a tax break is because of
how stock options are taxed. If you work for twitter for several years and
never cash in your stock options, they have to bank the potential payroll tax
they would pay on the purchase value of these options. So many employees never
cash in on options that this creates a kind of snowball that freezes a ton of
capital. In effect, this means that current investors in a company like
Twitter are banking money to pay the taxes of future potential employee-
investors.

I agree this doesn't make economic sense, I don't think wholly opposing
payroll tax is a reasonable reaction to it. I don't know what the solution is,
but it's amusing to see this come full circle.

~~~
mc32
NYC used to have one... Maybe it still does. I don't agree with it. Tax them
on profits, whatever, but be fair. Don't go out of your way to tax a class of
business in special ways, unless you're trying to disincentivize them.

So, of course all companies should pay taxes their fair share of taxes. Just
don't construct special schemes to tax a class of businesses.

Imagine Detroit saying, we're broke, let's tax car companies by the amount of
potential pollutants their end products could produce. Hey, they'd have a
windfall till Tennessee says, hey, GM, wanna come over here? We'll tax you as
a normal state would (as an exaggerated example).

------
nugget
I'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
If 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
_> 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-
th...](http://gawker.com/5986230/the-unfairness-and-stupidity-of-the-payroll-
tax)

------
geofree
SF has a massive annual budget, about $9B
([http://sfmayor.org/ftp/uploadedfiles/mayor/budget/SF_Budget_...](http://sfmayor.org/ftp/uploadedfiles/mayor/budget/SF_Budget_Book_FY_2015_16_and_2016_17_Final_WEB.pdf)).
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?

~~~
dragonwriter
> 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
SF 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.

~~~
dragonwriter
> I have no idea where the taxes go

[http://www.sfmayor.org/index.aspx?page=880](http://www.sfmayor.org/index.aspx?page=880)

~~~
dguaraglia
Thanks!

------
gorkemyurt
Aaron 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..

------
rm_-rf_slash
This 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
The 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
Employment 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.

------
Cshelton
If 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.

~~~
dcosson
Idk. 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).

------
capkutay
Worth 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
This is why it may be up to the voters to decide in the November election.

~~~
capkutay
Right 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).

------
protomyth
For the purpose of this bill, how is "tech company" defined?

~~~
jonathankoren
Probably 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-i...](http://www.sfgate.com/business/article/Companies-avoid-34M-in-
city-taxes-thanks-to-6578396.php)

~~~
protomyth
I'd have thought the same thing, but it looks like they went with their IRS
designation. Odd choice, really.

------
o0-0o
San 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
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". 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-
repea...](http://readwrite.com/2013/09/27/massachusetts-tech-tax-repealed/)

~~~
gyc
>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.

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igorgue
The same industry that incorporate in a different state mainly to avoid taxes,
doesn't like taxes... Big surprise. Move to Delaware guys lol.

------
igorgue
Trump / Peter Thiel 2016!!!

~~~
dang
Please don't do this here.

We detached this subthread from
[https://news.ycombinator.com/item?id=11996105](https://news.ycombinator.com/item?id=11996105)
and marked it off-topic.

