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Schwab Leaves San Francisco for Texas (wsj.com)
216 points by Reedx 5 days ago | hide | past | web | favorite | 305 comments





This is part of Schwab's merger with TD Ameritrade. Relevant bits from Schwab's FAQ [1]:

Q: Where will the combined company be headquartered?

A: As part of the integration process, the corporate headquarters of the combined companies will eventually relocate to Schwab’s new campus in Westlake, Texas. Both companies have a sizable presence in the Dallas-Fort Worth area. This will allow the firm to take advantage of the central location of Schwab’s new campus as the hub of a network of Schwab branches and operations centers that span the entire U.S., and beyond.

Q: What does the headquarters move mean for the future of Schwab’s presence in San Francisco?

A: Schwab was founded in San Francisco and has maintained a longstanding commitment to the Bay Area, which will continue. A small percentage of roles may move to Westlake over time, either through relocation or attrition. The vast majority of San Francisco-based roles, however, are not anticipated to be impacted by this decision. Schwab expects to continue hiring in San Francisco and retain a sizable corporate footprint in the city. Any additional real estate decisions will be made as part of the integration process, over time.

[1] https://www.aboutschwab.com/announcement


TD Ameritrade is headquartered in Omaha. The HQ location choice is not driven by existing Ameritrafe footprint, or by the merger itself. The FAQ is simply addressing what will be, not starting that there was a cause and effect because of the proposed merger. Also, Schwab was already reducing SF headcount for years.

Also, afaik the merger is still in the prices of regulatory review.

All this being said, the merger likely gives a tactical opportunity to move HQ out of state without triggering a governmental review of some kind by pairing it with the merger event.


There is nothing wrong with moving to a better tax jurisdiction because you want lower taxes. It is perfectly legal, happens all the time, and is not something subject to a 'government review', because firms are expected to optimize their behavior in order to avoid taxes as much as possible, and even legally required to do so if they are to meet their obligations to maximize shareholder value. The whole idea that people change their behavior to avoid taxes is the basis of sin taxes - this is how things are supposed to work.

> and even legally required to do so if they are to meet their obligations to maximize shareholder value.

This is a solid comment overall, but I really wish this particular widespread canard would die already. It's flatly untrue, the kind of myth that lives on because there are so many people who aren't capable of processing the benefits and costs of corporations and treat them as one-dimensional boogeymen out of a children's bedtime story.

(to be clear, that doesn't appear to be the case for you).


It is not a canard. The purpose of a corporation is going to be specified in the corporate charter, and while some corporations are non-profits or have explicit charitable requirements, most have a charter that focuses on maximizing shareholder earnings. Almost no company has a charter that focuses on maximizing taxes paid.

That charter is a binding contract that governs the behavior of the officers of the company and shareholders, when they buy shares of a company, do so with their rights and the obligations of officers encoded in that charter. They are not buying blind -- they are buying into that charter. That is a contract that they expect to be followed.

The idea that a corporation can do whatever it wants and ignore shareholders is a fashionable myth in some lefty circles and has absolutely no basis in reality or corporate law. If you want to found a corporation whose charter is to help the poor, or to provide high paying secure jobs to workers, you can certainly do that, but then it goes in the charter and if a corporate officer were to start turning the company into a for profit venture she could get sued by the shareholders just as an officer turning a for profit company into a non-profit can get sued.

In addition to the legal obligation of abiding by the charter (in the sense that it is a contract and you can get sued for breaching it), most corporate charters are structured in such a way as to allow shareholders certain operational control: to replace board members who they don't believe are acting in their (the shareholder) interest, require shareholder approval for major things like executive pay, issuance of corporate debt, issuance of more stock, etc. This is another way that corporate officers are bound to serve shareholder interests and again these rights are all promised to the shareholder in the charter before they purchase stock, so that a shareholder knows what they are buying and what rights they have.

In addition to the daily operational controls that shareholders exercise, the charter also specifies what is necessary to change it -- usually a shareholder majority of some kind. This means if you displease the shareholders, they will sell your stock, lowering your stock price, allowing a hostile shareholder to buy up the company and throw management out and also rewrite the charter. Maybe even take the company private so they become the sole owner of the entire company. All of that is hanging, like a Damocles sword, over management, forcing management to cater to shareholder preferences.

If you don't like the current shareholder focus -- and there is a case to be made that we are too focused on the shareholder -- then you can go company by company and propose a vote to amend the current charter, assuming you can get the shareholders to agree -- but what you can't do is pretend that the vast majority of corporate charters aren't structured in such a way as to force corporate officers to maximize shareholder value. They are.


You moved the goalposts. Corporate officers may indeed be motivated to maximize profits by the threat of being thrown out by shareholders. But they are not legally required to do so, or at least they have no meaningful risk of losing a lawsuit over it; the business judgment rule creates a presumption that they are acting in the corporation’s best interests, a presumption which is hard to overcome. The main exception is if they sacrifice the corporation’s interests for personal financial gain (self-dealing), but that’s not what’s being discussed here.

As I pointed out, if they violate the charter, which explicitly says that shareholder returns is the purpose of the corporation, then they are liable to be sued by either shareholders or state’s attorneys. That charter is a legally binding obligation. The requirement to disburse profits, have shareholders approve executive pay, etc which is also in the charter also becomes a legal obligation. It’s not a question of preferences but rather contracts that are heavily regulated.

https://smallbusiness.chron.com/consequences-violating-corpo...

“ State laws require the board of directors to act in the best interest of the corporation and its shareholders. Part of that responsibility is managing the affairs of the business according to certain legal standards. Once a director takes a seat on the board, he has various duties as the representative of the shareholders that the law places upon him, such as the duty of care and loyalty, that determine if he's doing his job properly. Even if your small corporation has few shareholders and all of them also sit on the board of directors, the shareholders in their capacity as directors must take action and make decisions that comply with the law and the corporation's governing documents, including the bylaws.”


Corporate charters don't generally include clauses requiring that profits be maximized, profits be disbursed, and executive pay be approved by shareholders.

Rather they tend to include maximally expansive language such as "all business activities legal in the state of XXX". It's a placeholder, delegating responsibility to the directors to the greatest extent permitted by law. This is the standard, for good reason.

Are the charitable donations of the Fortune 500 evidence of widespread violation of fiduciary duties?


> Corporate charters don't generally include clauses requiring that profits be maximized, profits be disbursed, and executive pay be approved by shareholders.

This is false.

Corporate law requires that Board members faithfully represent the interest of stakeholders, and the corporate bylaws define who those stakeholders are. Generally they will he creditors, holders of preferred shares followed by holders of common shares. By defining the stakeholders, the corporate charter is defining who owns what and whose interest the board must represent. This is where all the activists who insist that corporations have stakeholders like "the environment" hit a road block -- they aren't going to get shareholder approval to list the environment as a stakeholder.

Corporate bylaws, which must be voted on and approved by shareholders, do spell out voting rights for shareholders, approval of executive pay, approval of debt issuance. This is very common.

People misunderstand how heavily regulated corporations are, because it is a funny ownership structure, where the owners -- the shareholders -- are distributed and don't actually run the company. This creates all sorts of principle agent problems and thus corporate law grants shareholders many rights and imposes many obligations on corporations. Shareholders can audit the books. Shareholders can sue. All the ways that the business does anything from make a decision to issue debt must be spelled out in bylaws that shareholders must approve. Corporations must have a board. The board must be elected by the shareholders. The board has to act in their interest. The board gets to appoint the CEO, etc.

State law also defines the liability shield, that as long as board members are acting faithfully in the interests of shareholders, they can't be sued, but as soon as they are not they can be.

Things like corporate donations are generally justified as helping the bottom line by improving the brand. But you do need to show how they are helping shareholders, otherwise it would be a breach of fiduciary duty and the liability shield would be lost at which point shareholders could sue.

But even apart from this, when the shareholders turn against you they can sell, and if someone buys a majority of the shares the company becomes theirs, they own it, they can take it private, they can throw out management, etc. This ensures that the board be focused on keeping shareholders happy above all other concerns.


You're changing the subject to substantially narrower claims, none of which I disagree with. The claim wasn't that corporations aren't free to explicitly optimize for goals other than or contrary to shareholder value (this seems trivially true AFAIK). It was that corporations are forced by law to take specific steps like "doing everything they can to optimize tax avoidance", and are legally prohibited from leaving any optimization opportunity on the table (as long as it's legal). Corporations are afforded far more discretion in this area, legally speaking, than your OP comment states.

I never said that they couldn't do it. But I said that these tradeoffs were governed by the corporate charter, which itself needed shareholder approval to change.

Thus shareholders can agree to bring in other stakeholders. They can agree that a certain business should maximize its taxes. They can agree to turn the company into a non-profit. But they have to be the ones to agree to do it, and it needs to be spelled out in the various bylaws that define who the stakeholders are that the Board members must faithfully represent.

It is not up to management. It is not up to employees. Only the shareholders decide this. The broader claims come from the assumption that shareholders generally support their own economic interests exclusively. My own observation of the world is that this is the case. Even if a shareholder cares about the poor, they would rather have the maximum return from their assets and then donate some money to the poor themselves, rather than asking their investments to donate to the poor and lower their return.

So the technicalities are that yes, shareholders can give up these claims if they want to. Admitting this is not, IMO, backing off from my broader claim, but recognizing that shareholder supremacy also empowers shareholders to direct a corporation to include other factors than profits.


> The whole idea that people change their behavior to avoid taxes is the basis of sin taxes - this is how things are supposed to work.

What sin taxes are at play here?

Edit: Or just downvote I guess, it was just a question.


No sin taxes are at play here. Their reference to sin taxes was to show that tax minimisation is expected behaviour.

Ameritrade has always been based in Omaha, but the T in TD stands for Toronto. So headquarters locations is a pretty malleable designation.

Yep, and after this the new company will have nothing to do with Canada. Toronto Dominion shares in TD Ameritrade will be cashed out. Though it will be interesting to see if they still get their back end cut like they do now.

TD Ameritrade is a subsidiary of TD Bank. Subsidiaries have separate HQs from their owners. See BRKA for other examples.

Why would the government review a headquarters move?

States and cities often give large corporations preferential treatment to maintain a footprint there. I'm not sure if this is the case for Schwab/SF, but if they are getting a break then announcing a move might be a time for SF/California to start clawing back benefits.

It sounds like they'll be keeping a sizable amount of staff in SF still. SF has a gross receipts tax on certain companies with HQ's in the city. As such auditors will want to ensure this isn't just a tax avoidance gimmick. By pairing this move with an acquisition Charles Schwab has a stronger defense against such an accusation.

Tax avoidance "scam". Moving to Texas to reduce taxes, especially SF taxes which are basically useless to the payer [1], [2] is a "scam"? What's the legal framework preventing moves out of SF? Is it indentured slavery to the city council if you ever open an office in SF?

[1]: https://www.newsweek.com/san-francisco-district-attorney-pub...

[2]: https://www.forbes.com/sites/adamandrzejewski/2019/04/15/map...


The problem is perception. If a company seems to only move their headquarters in name only (IOW most of the staff still stays in SF), then that seems sketchy. If they make a clean separation and shutdown their SF presence, that doesn't appear as dodgy.

And these companies are not just moving to Texas. I live in Oakland, CA and many of these companies are relocating here. I don't care if they leave SF, but if they're cheating on their taxes, that's just not right.


How are they "cheating"? It appears like the city is the one cheating, refusing to enforce criminal law, which taxes are paying for. The city is cheating so much that they make some of the highest per capita tax revenue disappear without providing commensurate services

Maybe you can mention the statute relevant to HQs? I'm not aware of any


This was one of the most contentious ballot initiatives for 2018. The text called headquarters "adminstrative offices" FWIW: https://ballotpedia.org/San_Francisco,_California,_Propositi...

This measure was pretty well known. It was one of the most controversial local measures in 2018 (even gaining substantial regional coverage: I'm in Oakland not SF and heard a lot about it).


I see this (like a lot of things) as a negotiation tactic:

1. SF levies taxes on companies headquartered in SF. The message: “Pay us for the privilege of being in SF”.

2. SF companies move their headquarters but promise not to cut jobs in SF. The message: “We already provide lots of middle-class jobs in your city, providing tax revenues. It is not in your interest for those jobs to go away.”


No one cares. Have you ever made a decision as a customer based on the company’s tax resident status?

It's not the only decision point, but I try to avoid companies that exhibit a pattern of scummy behavior such as Wal-Mart, Nestle or Uber. Further I'm not only a consumer. I'm also a potential (small time) investor and employee of these companies. The bar for acceptable behavior is even higher if I'm going to work or invest with them.

When will the people of SF learn you cannot tax yourself to prosperity

The City & County of SF has the seventh highest median income of all U.S. counties [0]. The GDP of the Bay Area ranks ahead of all but 16 countries [1]. If taxes are correlated with prosperity it'd seem as though SF had found a way to tax itself to prosperity. (Of course in reality economics and tax policy are far more complicated than this).

0: https://bea.gov/newsreleases/regional/lapi/lapi_newsrelease.... 1: https://web.archive.org/web/20171208145551/https://www.bea.g...


Your argument assumes the correlation, but you're arguing that the causation exists without even establishing the correlation.

When they move to Texas.

Where they will learn that Texas government pays for itself with oil and gas extraction taxes, which don't exist in California.

The Bay Area pays for itself with the tech industry.

Texas and the oil industry are one and the same, fully intertwined. God help the poor soul that owns land where a private oil company wants to build a pipeline or plant. Said land will be instantly seized by the company under eminent domain laws and the owner will get a pittance in return.

If you're cool with that, then Texas is a great place for you to live.

While this article is about Louisiana, the same laws (and practices) exist in Texas: https://www.nola.com/news/environment/article_75b4ff32-0d87-...


Yeah. Sadly you never really own your house. Even after you payoff the mortgage, which many won't because they always refinance and consolidate loans. But even if you do end up paying off the mortgage, then you have to pay rent to the government, which who knows when your neighborhood will be torn down to build a highway or high speed rail project.

Then if you own the land, you don't even own the water, oil or whatever else might be under it. Remember abou a decade ago seeing something where a guy was disputing the county in Oregon over water rights, and they even illegally entered his property with no warrants or anythings.


It wouldn’t, OP said the government would review the _merger_ - federal antitrust review pretty standard in mergers this large.

The companies may have contractual obligations to the city. So they'll check and see if the company is violating those.

This move was almost certainly planned long before the merger. They announced construction of a massive, headquarters-sized campus in Westlake several years ago, and they're already almost done building 3 of the huge office buildings (with 2-3 more to come). My guess is that the move is an entirely separate decision but was combined with this announcement for convenience sake.

Companies locate their headquarters solely on where their CEO wants to live.

As a San Franciscan, I am so happy to see this. SF needs negative feedback on the poor choices it makes, and so far the tech boom has somewhat obscured the consequences.

Yeah. The longer you live in SF and the Bay Area, the more apparent it becomes how much it skates on tech, history, and intrinsic advantages like the weather and beautiful geography. SF in particular has such incredible resources that it should be the most advanced city in the world.

But the people in San Francisco have got what they wanted. Maybe in 20 years SF will be able to change but right now the majority of people are actually in favor of the way the city is being run: to stay stuck in time as long as possible

If I had most of my net worth tied to my SF house, I would be a NIMBY as well. Don't blame them though.

I lived in SF in 1999, and that mentality was exactly the same then as it is today.

The long time residents of SF don't believe in _change_, and that isn't going to change.

It is just happenstance that the initial San Jose tech explosion happened near SF. ...but maybe other parts of the country are better suited to it going forward...


The negative feedback is all the people who moved from other states to SF over the years, voted for politicians that virtue signaled loudly enough to attract said transplants’ votes, and then moved to another (likely conservative) state after saving enough money to live comfortably with their new families. That’s ultimately one of the biggest issues in the Bay Area that no one ever talks about.

What about all the longtime existing homeowners who make it very difficult to build new/denser housing?

What about them?

Those longtime existing homeowners are trying to maintain the current landscape and don’t want new construction obstructing their million dollar views.

Yes many are NIMBYs, but so would most people if they grew up in a place that saw an influx of new people wanting to change the landscape with ugly high-rise all glass condos that blind you when the sun sets or change the feel of what they’re familiar with.

In a way, I don’t blame them. The majority of newer construction in the past 20-30 years in SF particularly is horrid.


> The company said Monday that “a small percentage of roles may move from San Francisco to Westlake over time, either through relocation or attrition. The vast majority of San Francisco-based roles, however, are not anticipated to be impacted by this decision. Schwab expects to continue hiring in San Francisco and retain a sizable corporate footprint in the city.”

Doesn't sound like they are leaving San Francisco, just building a new office in Texas (suburb north of Fort Worth).


From what I have read in the Local News, it is just the first phase. I am assuming they will eventually move entirely but don't want to spook their existing workforce in SF.

They'll keep outside facing functions here for the local markets, clients, partners, etc.

Corporate back office operations will move entirely


They're moving HQ and refraining from growing headcount here in the future

Yeah. Also from TFA:

> Schwab says it plans to retain a “sizeable corporate footprint” in San Francisco, but the brokerage firm has slashed its workforce in the city by 90% since 2000 while expanding branches around the country.

It sounds like this is just a good opportunity to cross another bridge.


That's what they always say but overtime they "integrate" more of the operations to the new headquarters and then eventually they want everyone under the same roof.

That's not always true. Some companies want and have an intentional international presence, for example.

Many companies head quartered outside of the bay area create and hold parts of their company in the bay area. Not just companies from other states, but companies from other countries too. They do this, because they know how hard it is to get smart and talented employees doing difficult and cutting edge tech work outside of the Bay Area.

Now if you're an accountant or are in sales, ... yah you're going to TX or finding a new job.


Sell side sales will probably stay in SF for west coast clients. I doubt Schwab has much in the way of Asia customers, but I bet there's a lot of west coast whales.

This is better both for San Francisco and Texas, from a load-balancing perspective. Unless housing can catch up, large companies shouldn't be expanding in San Francisco.

Housing and taxes in CA are close to oppressive. The housing situation will not change unless CA voters agree to a change in property taxes and they won't.

I would also bet that the move will come at the expense of Texas tax payers and to the benefit of Schwabb.


Part of the problem with housing prices in California is that property taxes are too low. Prop 13 means existing homeowners are shielded from higher property taxes, so growing property values are only good for them, no matter how high. Thus, there's no incentive to increase housing supply, which could lower prices.

The problem with housing in California is that we do not build it because regulations prohibit new housing. Look at a zoning map in San Francisco. Housing is illegal.

I believe the full reasoning is that (1) if property owners paid property taxes on the full market value of their property, then (2) they would lobby for (or at least cease opposition against) upzoning for density, and (3) more dense housing would be legalized and built.

It would be a lot less painful and a lot less expensive for us if we just increased the density. But people have to have their beautiful bay views.

Can you help me understand how #1 becomes #2?

In most parts of the country, there's both an upside and downside to increasing property values to landowners. Upside: they're worth more, they could sell and move somewhere else cheaper, pocketing the money, or they could rent out their place for more. Downside: they have to pay higher ongoing property taxes. Most landowners still like increasing property values, but it's not all good for them.

With prop 13, the downside is wiped out. Increasing values are only good; they could increase 10x overnight and this would only make landowners filthy rich, there's no negative effect for them. Ergo, they have every incentive to keep housing supply constrained, to keep voting for politicians and policies that limit housing density.


And to bear specifically on the sub-point that blights the Bay Area -- by removing increasing property taxes, you are removing market pressure for highest and best use.

Another way to think about property taxes is that they're annual nudges to encourage best use of the property.

Without that pressure, as TulliusCicero notes, why would I ever sell before retirement? And furthermore, why would I even try to make money off the property (say, by renting)?

That's probably not in the city's (as in, all the people living there) best interest to have a substantial portion of homeowners so disengaged from the actual market.

PS: Which isn't to say there aren't gentrification and affordable housing debates to be had. Simply that Prop 13 doesn't really help with that -- it just removed risk from those who are already homeowners.


Existing homeowners don't care about new housing because their property taxes don't rise due to a constricted supply. If they did, I'd bet you those zoning laws would change pretty darned quickly.

Yes, and why is it illegal? It's almost like there's no political pressure to allow more housing, because there's no incentive existing homeowners to support that. Almost as if...

That's why it is sometimes necessary for state governments to step in and override local laws on zoning, regulations on housing etc, that just hasn't happened in California yet.

That’s not just part of the problem. That’s the single largest factor of the problem.

Unfortunately it won’t be changed until the State is at the brink of financial collapse. At that point I can see a “millionaires reassessment” suddenly being very popular.


The idea that California property taxes are too low is completely wrong, they are too high.

In Vancouver, my family’s house was paying around $6000/yr in property taxes and the house was worth 1.4M only because the housing market in Vancouver has been crazy for decades.

My friend in Toronto pays $3800 on her $700k single family home.

My house in the Bay Area I bought for $1M and my taxes were $12,000 and in the last few years it has gone up to $15,000.

The idea that Prop 13 is somehow damaging CA is false. Imagine if you were a retiree in the Bay Area and your property taxes were indexed you the house price? It would drive out too many senior citizens and low income families because house prices have double in the last 7 years.

Also before you say that Prop 13 has a negative effect if you look at the actual house purchases, in my area at least half of the houses have turned over in the last 10 years meaning that the taxes being paid were reset drastically. Prop 13 protects homeowners by keeping consistency but doesn’t stop them from selling.


So that's your anecdote - and now mine: the building I live in is worth well over $5 million, and the property tax is currently $3500 a year.

Edit: just to add - I don't know where people get the idea that we need to evict people from their homes over property taxes. Just put a lien on the property for the tax bill. This isn't rocket science.


That's a great idea, especially if they don't evict people, but just take a chunk of the house that is the state's now if they don't pay taxes.

If house prices go up, the state profits when the house changes hands, or the state owns all of the house and then needs to evict people.


Again, no need to evict people. The state will get its money someday. For shorter term expense needs, they can issue bonds referencing that lien as the collateral. Everyone dies eventually.

In non California states, this is pretty easy, your hypothetical retiree takes out a home equity loan or reverse mortgage.

In places like New York, you don’t see mass displacement of old people.


The issue is, someone who owns a house they bought for 260,000, 30 years ago, isn't paying tax on the current valuation of 1.4m, they're paying a much much lower rate because of Prop 13.

Whoa! Didn't even know about Prop 13 - that basically means no house can currently have a higher taxable value than basically double what it was worth in 1978. Insane!

It's worse than that. Those people with the very most equity gains, are paying the least taxes relative to their house value. Those with the least equity gain (like recent buyers), are paying the very highest taxes relative to their house. It's basically like saying the person who earned over 1 million dollars in equity gain pays far less taxes than the one who earned 10k in equity gain. It's extremely regressive.

And, since home owners are incentivized to stay in the houses that they bought a long time ago (whether or not it's convenient for them or not), it means there's far less housing turnover, less supply and less opportunities for everyone, and longer commutes which is terrible for the environment. It's a disaster.


[flagged]


Would you please stop posting flamebait here? We've asked you more than once already.

https://news.ycombinator.com/newsguidelines.html


One man’s “flame bait” is another man’s truth.

Huh? I think you're mis-reading something. Your assertion is true only for houses that haven't changed hands since 1978. In most cases, the buyer of a house is assessed taxes on the market value of the house at the time of sale, and further increases are limited from there.

This is true but it’s insane that California allows children to inherit the lower tax basis:

https://www.latimes.com/politics/la-pol-ca-california-proper...


Yes, "in most cases" was my hedge around the various ways in which property can be transferred while keeping its tax status. The majority of prop 13 is insane IMO. If I had to pick a single thing to change, I'd much rather stop applying it to commercial property than remove the inheritance provision.

Yeah, commercial property makes no sense either, especially if you consider the original intent of the law, but it bothers me less than residences as at least those properties, in theory, are doing something productive for society.

Long-term residents are also doing something productive for society -- they are providing stable communities around which longer-term plans can be made, in which cultural memory of e.g. local climatological risks can be preserved, etc. Housing is definitely way too expensive in the bay area, but calling existing residents "unproductive" is pretty astonishingly, callously, selfishly offensive.

Eh, I'd say I've met quite a lot of long-term residents of San Francisco. Pretty much no correlation between ownership and how worthless that person is to the community. I know renters with their 30-year lease that don't even live here anymore. I know homeowners with their 30-year old property tax assessment that also don't even live here anymore.

Both just pop in every now and then to enjoy the Bay Area for cheap and then let the home sit vacant the other 300+ days of the year.

I also know renters and owners that have been very active in their local communities.

If the metric you care about is "societal productivity" there are better ways to measure and reward that than based on "how long have you owned here."


Residences, not residents. Buildings, not people.

The property tax rate is capped at 1% (plus some small extra.) The property value is reassessed with change of ownership. Yearly increases in assessed value are limited to no more than 2%.

It gets even better. Because commercial property taxes are so low, the state is forced to rely more on income and sales taxes. Unfortunately these taxes source are affected much more by recessions. Things go to crap, and the state's coffers empty out.

Welcome to why California has budget problems in recessions!


No. Every time a house changes owners, it can be re-assessed at current rates.

So if we want to tax illiquid assets and wealth instead of income, why stop at houses? Why not tax equity held in companies? Why don’t we tax employees based on the amount and value of equity they have in a company? Every time there is a new round of funding that increases the value of equity, impose a higher tax.

It's not really houses that are important to tax, it's land, because there's a fixed amount of it, especially valuable land, so it's useful to encourage economically efficient use of that land. No property or land tax means people can just sit on land forever if they feel like it with no real downside, besides missing out on potential revenue.

This is bad for society, because people need land for things, and unlike cars or computers or gold we can't just ship it in from elsewhere if some provider is being obstinate.


The value of land, and the things that are on it, are tied together tightly. For much of California the price homes has much of the value in the home.

Even worse the assessed value of property, for tax reasons and insurance reasons can be abnormally low in CA (vs value). Many people in the fires have learned too late that they were underinsured and are no where close to being able to rebuild the same house on their property with their insurance payouts.


No you can’t just “ship land” elsewhere. But, there is nothing stopping people and companies from moving where land is cheaper. The land is only valuable because people want to live in California instead of places where it cheaper.

Its not just the supplier who is being “obstinate” the consumer is also refusing to look other places.


You have to remember that companies compete with others for human labor. If your company moves to a city nobody wants to move to, you'll lose labor resources to another company (in the case of SF companies, highly skilled labor that's not easily replaceable and has high training costs).

While I also think companies should spread out more, the very fact that so many companies are paying the significantly inflated property and labor prices in the SF area shows the tremendous economic value in having access to that labor market.


Do you really think that companies like Amazon, Google and Apple couldn’t move to any major metro area and convince enough people to move there if they paid them enough where they could offer potential employees enough to live well, pay then less and benefit from a much lower cost of living?

Anecdotally, I would never move from where I live - Atlanta - to the west coast. There is nothing appealing about the area or the cost of living vs salary. I’m not saying I wouldn’t move to another major metro area if the jobs somehow dried up here.

That limits my salary (not really the COL vs salary is very attractive to me here) except I’ve seen a few local jobs for MS pop up here and jobs at Amazon (AWS) for Solutions Architects, Professional Services, etc. that I may be interested in in a couple of years.

I could also argue that a lot of companies that think they need to hire “rockstar ninja developers” to write their yet another software as a service CRUD app are mistaken and if they had to actually worry about silly things like profits instead of being subsidized by venture capital they could find a way to either relocate to a cheaper area or allow more remote work.


No one else here is arguing about the merits of a property tax. The issue is that people are paying wildly different tax amounts for the same asset. This is exactly the same issue we see in industries where the entrenched companies put up huge barriers for newcomers.

It is because of the unintended consequences if companies decide to relocate. You start with wanting to tax wealth and then suddenly you find your area in an unemployment crisis because the employers packed up and left.

Property taxes are taxing wealth - just a type of wealth that doesn’t affect the people who want more affordable housing.

If (metaphorical) you want to raise property taxes to force people to move to make housing more affordable, why go through the circuitous route? Why not just use imminent domain, take the land, bulldoze the house and put up apartments?


Aren’t taxes highly regressive in Texas with sky high property taxes which exempt rich people ?

The property taxes are sky high, yes, but they most definitely do not exempt the rich. There is no state income tax. I wouldn’t call the state’s general tax structure progressive or regressive.

Property taxes are inherently more regressive than income taxes, since since property (either directly or through rents) nearly always consumes a larger portion of the income/wealth of lower-means individuals.

It's not obvious to me that you can't also have a progressive / marginal tax system for property taxes based on home valuations (e.g. home values >$1MM taxed higher than those worth $200K). So, I don't think property taxes are inherently regressive.

That said, I don't think it's enough to just look at one tax. We have to consider taxes and regulations as a whole to understand whether a place is overall regressive or not. This leaves room for different implementations of tax policy which if done correctly will benefit the people.


I would say overall California’s high income and sales taxes and low property taxes are far, far more regressive, see this at the extreme:

https://www.latimes.com/politics/la-pol-ca-california-proper...


Huh?

California’s income taxes are super progressive. They’re only high for high earners.


Here is a recent comparison:

https://www.motherjones.com/kevin-drum/2019/11/taxes-are-sur...

Short answer: yes, Texas is regressive, with tax rates being lower in California for the bottom 60%.


The problem is that the cost of housing (to purchase and rent) is so out of line. I would guess that the "bottom 60%" pay more for housing in ca than they would in taxes in Texas. That payment is wealth transfer to people and not taxes for services.

I was responding to someone asking narrowly about taxes, not chasing moving goalposts.

> I would guess that

That's why I posted data; it works better than guessing.


The commenter guessed at something your article did not address yet is not unrelated. Saying it's moving goalposts to discuss housing costs in relation to property tax percentage and then quoting the first part of the sentence pretending your link addresses the unquoted part is disingenuous at best.

I pretend nothing; the first part of my response made it obvious I'm not responding to housing-related issues.

I'm guilty of being a little snippy, which I'll own. I just get sick of these unmoored "housing sucks in California well no, it is taxes well really is is about..." conversations. The issues are complex, there's real lives and lots of money on the line, and yes, fully two thirds of these conversations involve moving goalposts, whether or not people realize that's what they're doing.


Giant companies get to personally negotiate their own favorable property tax rates. If people goose-step to the polls in 2020 to confiscate additional property from commercial property owners in the form of increased property taxes [1], the mega-corporations won't pay a cent of it. The mom an pop business that give SF its character, however, will be driven out of business.

[1] https://www.sfchronicle.com/politics/article/Change-in-Calif...


While California taxes are high, this doesn't seem to be the main reason that building more housing is difficult? For that you can blame zoning restrictions and political opposition.

That is a piece of it. But the housing market lacks liquidity due to prop 13. When your tax basis doesn't reflect the value of your property and doesn't keep up with inflation it makes NO sense for you to move in response to market conditions.

Not building housing increases the value of what I already own, and the tax policy means I don't face the economic pressure to change any of it. The two are deeply linked and going to be nearly impossible to change.


Sure there is another way for it to change. Companies start moving out of California, the employees follow and the demand lessens.

Property taxes in fort worth are ~2.85%. What is bay area?

The Bay Area's problem isn't absolute tax rates. It's that taxes aren't calculated on current property value, but on original sale price. This keeps effective tax rates low if you bought earlier. It also discourages redevelopment, rezoning, or anything else that would bring more supply into the market.

Closer to 1%.

Asterisk: Texas has no state income tax, but has a higher property tax rate.

Zero until the house is sold.

The attitude here is we are fully developed and thus done developing. I don't imagine a bright future for California with these housing policies.

I don't see a bright present:

"The poverty rate, when adjusted for the cost of living, is the worst in the nation"

https://www.bloomberg.com/graphics/2019-california-housing-c...



I'd say that if you're not a tech company there is no reason to pay the premium cost of being in SF.

I agree. With the way thins are here, I'm often surprised we don't see more companies leaving SF.

For anyone interested here is the build out of their HQ on the Circle T Ranch (Hunt Brothers owned it once) then Perot Jr bought it about 25 years ago and is turning into a financial hub. Fidelity is there along with Deloitte and TD Ameritrade just built a brand new complex about 1 mile away.

https://goo.gl/maps/whA2nM9YYGka55P5A

Schwab owns the whole corner there with plenty of room to expand, the Circle T Ranch is around 2500 acres.


Am I the only one who thinks nobody is talking about the elephant in the room ? i.e. the cause and effect. Fintech companies like Robinhood have popularized the concept of (a) zero fee trading and (b) better UI/UX and just better service/offering on highly scalable platforms that allow them to introduce new products/services, which are virtually impossible for legacy providers like Schwab. Seems like that is the single most important cause of Schwab and TDAmeritrade merger. Much like ~15 years ago when "Internet" based trading companies forced the traditional "phone calling" brokers to either merge with Internet upstarts or go out of business. Schwab survived the first wave of disruption as it aggressively embraced into Internet based trading. There was a wave of consolidation with other purely online trading companies e.g. Datek, Scottrade etc. merged into what is now TDAmeritrade.

Seems like the traditionals haven't been able to survive the second wave of disruption. This is what is prompting the merger i.e. if you can't grow like the fintechs then cut costs using merger cost synergies. A side effect of this is move from extremely high cost locales to lower cost ones. It's PR couched in terms like "Any additional real estate decisions will be made as part of the integration process, over time."

Good for San Fran and the bay area, it seems. Some prime corporate space being vacated should take a little pressure off real-estate prices (I hope).


https://www.schwab.com/public/schwab/active_trader

I don't think Robinhood can even compare to the tools offered by Schwab's brokerage accounts. It's like r/wallstreetbets vs r/investing

I do agree that Robinhood was the first to make trading accessible to the masses and pushed for zero-fee trading.


What percentage of the users at Schwab use the premium tools, my guess is somewhere between 1-10% ? Does Schwab earn disproportionate revenue from them ? If yes, then I can see your point but as someone below points out most brokerages make money off balances carried in the brokerage accounts. That makes Robinhood (and the likes of it ) valuable since it's more about monthly active users. My point is user base growth has been stagnant with traditional brokerages, whereas fintech upstarts are on a tear. That combined with other revenue vectors e.g. crypto trading, SIPC insured bank accounts etc. make it difficult for traditional brokerages to compete

Will be interested to see robinhoods "financials" when they finally release them. It's likely their business model is of the "give free stuff away and raise more funding" variety.

Financials are not public but they make money like other brokerages i.e. on the float. They also seem to have a fremium model. Add to that other products they are offering and I won't be surprised if they growing in revenue per user terms. Yes, they are likely using VC money for growth but also have long term potential for a viable model

Schwab has a great website, and has for a lot longer than Robinhood has been a thing. Also, they stopped charging commissions on trades as well.

Schwab is pretty great. If your only frame of reference is Robinhood, you should really look into it.


> the traditionals haven't been able to survive the second wave of disruption

Pretty much all major American brokerages now offer zero-commission equities trading. It’s been a long time since retail equities traders depended on commissions to butter its bread.

This merger was driven, in part, by the greater fraction of revenues commissions represented ex ante for Ameritrade versus Schwab.


This ^^

Most brokerages make the lion's share of their profits on carried interest in cash accounts, not trading. Robinhood isn't forcing this merger at all. TDA was ripe for the taking considering its nice overlap with Schwab demos (tons of small retail and some active traders with ThinkOrSwim). TDA fits better with Schwab than Fidelity, Vanguard, etc.

I'm honestly surprised that MS or BofA didn't make a play here. The influx just might save those two dying market players.


Keep in mind it's not a technological wave of disruption this time, but a round of venture backed growth companies that compete for users, but do not need to make a profit.

Sooner or later they will need to make profit. I posit they are on a good trajectory to do so:

Square and Stripe will make profit in payments (they almost are) Coinbase will make a profit in crypto (it's already break even) Affirm, Lendup, Sofi etc. will make a profit in lending Robinhood and the likes of it will make a profit in trading

The reason is simple: The traditional companies that they are displacing had an order of magnitude higher cost structure and weren't able to transform their backend legacy systems quickly enough (yes, they did transform their front-end UI/UX somewhat to match the newer ones, but the core is not scalable to be able to offer newer products). If the older companies were able to make a profit the newer ones will make greater profit. Again, to take Robinhood as an example: Free trading a great lure for users, however most of the money is made on other services e.g. float. Thus giving away a small part of revenue i.e. trading cost and recoup more from other services is huge.


I just moved to the Bay Area and I have no good opinions about living here. It’s a 3 trillion dollar neighborhood that has broken infrastructure, an abysmal housing situation, crime through the roof, homeless people everywhere, traffic, outrageous costs and just generally an awful place to live. I don’t know about the business side, but from an employee standpoint, fuck the Bay Area. Oh, and my car got broken into twice, and someone asshat stole my license plates.

I mean the peninsula is mostly a dump but even historically “bad” neighborhoods like Richmond and Oakland are miles away from where they were 10-20 years ago. The East Bay and Silicon Valley proper are downright decent places to live.

It's not a dump... it's more like one giant suburb with the component cities redeveloping their cores.

Sounds like you live in SF rather than other areas of the bay. The bay has micro markets like its micro climates.

Also, the bay has good jobs, so there's that. I mean that's probably why you moved here?


If the exodus goes from a trickle to a torrent, the city budget propped up by property taxes is going to crater. Whatever problems there are now with homelessness, imagine what it will be like when social services can no longer be provided for them. San Francisco is a ship that lost power to its engines while coasting towards an iceberg.

It would need to be a real big exodus for property tax revenues to go down. Prop 13 limits and associated low turn property turnover means a large amount of the tax roll is assessed under current value. During the 2008 real estate crash, few of the California counties saw a decrease in property tax revenues.

Wouldn't property turnover be high if there is an exodus?

Probably yes, however, because so many properties are assessed so far under their current market value, due to historic low turnover, the high turnover of an exodus would tend to raise the overall assessed value, unless the price drop was very extreme

You must not live in the Bay Area and are merely reaching for talking points.

Everyone in CA knows that property tax money goes straight to the state and is divvied up there. It's collected locally, then sent straight to the state. CA gets first crack at spending it, then it goes down to the local level. The social services are paid for mostly by bond measures, which are immune to real estate prices. Other things are paid for with consumption based taxes (mostly sales).


Didn't know property taxes go to the state first but the overall point remains that if there is an exodus of wealth from the Bay Area, that will affect the resources available for social programs. Also stories about companies and workers leaving the state beyond the Bay Area are hardly in short supply though some might be overdone for clickbait or political purposes.

Social programs are almost entirely funded through voter approved bond sales. Their funding won't take a hit if there's an exodus of wealth. The bonds are already sold.

Completely agree with you on the overdone clickbait!


If housing costs are a problem. They have too many people moving there and not leaving. All major cities in California has the same issue that people keep moving here and driving up housing cost and causing more traffic.

Sometimes I wonder if there’s a funded campaign against the Bay Area online. Where do you live, and where did you come from? I just moved to SF and yes it has homeless people, traffic and is extremely expensive, but these are things that every other big city I’ve lived in has. The costs and homelessness are worse than Seattle or NYC but not to the point that it’s a reduction in my quality of life. To say you have “no good opinions” is so extreme. The area is beautiful, has a rich history, amazing culture, food and art, and if you work in technology has the best availability of jobs in the world.

I had a company fly me out to interview at a startup in SF a few weeks ago. My hotel was a 20 minute walk from my interview. I almost walked. I'm glad I did not. Just about every block between my hotel and my destination was densely packed with homeless and tents. I watched a drug deal in broad daylight at a red light while just spacing out staring out the uber window, and found I accidentally made eye contact, and prayed the light would change over faster, as meanwhile a mentally ill man is literally roaming the streets screaming about the end of the world (not exaggerating).

The start up had about 20 people (maybe 2 of whom were over 30) in what was clearly an apartment at some point in the past, except the "bathroom" was what looked like a makeshift closet to me: a sliding glass shower door with a room divider behind it. For ~20 people. As the interview wraps up, one of the leads decides we should go for a walk so he can break the bad news about the job. We walked around the block about 5 or 6 times, every time passing the homeless man asleep on the sidewalk about 15 feet from their office door. No one there seemed to understand my astonishment/shock/horror about the state of that city.

The uber driver on my ride back to the airport who was native to the area sure understood though. That dude just drives around all day feeling out whether or not someone's going to report him if he speaks honestly about it. That conversation was by far the best part of the trip.

Flew back to ny and interviewed in nyc a few days later, and all I can really say is at no point in NYC did I feel physically unsafe like I did in SF. They're not even comparable in my book. I'm still unsettled by just how bad SF was, and I'm absolutely astonished that I don't hear people talk about this more.


Few agree with you, San Francisco is in a dire state. I work here and I walk past passed out people with needles in their arms, human feces littering the sidewalk, women with their toddlers on the street asking for money. BART stations smell like garbage. There is a homeless, mental health and drug crisis happening all at once condensed into a small geographical region. San Francisco still has some charm, but it's hard to appreciate these days.

> Sometimes I wonder if there’s a funded campaign against the Bay Area online.

By whom and to what end? Has it occurred to you that some people just don't like living there? Not everyone you disagree with is a paid shill.


It’s not just a matter of disagreement— take a look on here, Reddit and Twitter and you’ll find a swarm of people making it seem like the Bay Area is a dystopian hellhole. I was legitimately concerned about my move before I got here.

I agree that there's lots of people online who make exaggerated negative claims about San Francisco, and my best guess as to why is that it's part of the coastal/inland, liberal/conservative cultural divide/war. It's easier to put others down than to fix your own mess, and frankly, California's economy and social services are the envy of almost every other state.

San Francisco is a very liberal city and conservative publications like the WSJ love to vocally shit all over the city because of its many problems, but that doesn't mean it doesn't actually have those problems. It does. San Francisco is a shitty place to live for anyone but the wealthy. I've worked in the city for 9 years now (I live in the East Bay) and if you stay here long enough like I have you'll discover that the young single people that come to work here don't stay long, they do tours for about 3 to 5 years and then cycle out to someplace they can actually raise a family.

I believe you will find the same no matter which city on reddit. /r/vancouver paints it much like the parent post and scares people coming.

Obviously it's a conspiracy by Californians to keep others from considering to move there!

You simply haven’t lived here long enough. It’s crazy that you would dismiss a crisis that has been documented and growing for years as an online misinformation campaign because your few months here don’t align with what you’ve read.

I'm not dismissing the crisis- it's a separate conversation that can be had for SF, LA and Seattle. My call out is for this confusing picture painted online that the Bay Area is a crime ridden wasteland that should be avoided at all costs, which simply isn't the case.

Maybe the Bay Area the new Chicago? I see lots of misinformation on Chicago posted for seemingly political reasons.

Some of these complaints didn’t really pick up in earnest until after 2015, even though the underlying issues have not meaningfully changed in severity since then. In fact, rents in SF are lower today than at their peak in 2015. Homelessness is up, though the city has gotten slightly better at provisioning shelter and is slowly writing conservatorship legislation.

Of course someone will bring up the infamous up-and-to-the-right poop maps, but that seems primarily to be a case of response bias as 311 rolled out an app with increasing adoption.


It's not a funded campaign against California or anything (although I suppose our current president's campaign rhetoric comes close to meeting that definition), but I agree that the constant California bashing is annoying. My guess is that it's simply a result of the fact that more people here have experiences with California than anywhere else, and people like to complain about where they live. So you see a lot of negative California rhetoric, because lots of people here can relate to it. Whereas if I complain about the intolerance, ugliness, weather, etc. of College Station, Texas (all reasons why I moved away and have no interest in moving back to that state) few know what I'm talking about.

I'm no California booster or anything, mind you. Some people like it here (I'm one of them), and some don't. That's fine. We certainly have our problems that we need to work on, and we have also done a lot of things right. (For example, SF tore down the Embarcadero Freeway permanently when it was damaged in the earthquake. Brilliant move. Wouldn't fly politically for a second in Dallas.)


How much you pay for something can affect your opinion. SF does have a pretty high "where is the mobey going?!" factor.

I left the Bay Area a few months ago. We didn’t even last 2 years. Structure your rent accordingly. :)

Then why are you here? For your own sake, please leave if you are so unhappy.

This response is the most callous and gutting. People are genuinely raising concerns about things that are objectively broken here like housing, transit, income disparity and drug use, and right on cue someone comes along and says "then leave". Isn't this allegedly most inclusive and welcoming region in the country?

I would love to leave if I could take my job with me.

I know I'm trying.

Why did you move there? Tech exists outside the bay.

Crime through the roof? People who live in actual high crime areas would like a word with you.

It sounds like you've experienced more than your fair share of crime since moving to the BA, but calling it high crime is beyond a stretch.


Even though there is not much organized crime and no longer the same level of gang activity as 10 years ago, as a matter of policy, SF tends to either not convict or give lighter sentences to your everyday crime like shoplifting and breaking car windows though. The consequence is that there is a lot of broken glass on the street.

I'm originally from a much rougher part of the US than SF. Walking on the street here at night is still a relative dream (but not at all like in Asia).

(Also, another uniquely SF policy: blatant abuse of opioids, etc. here are not considered to be criminal.)


I'm from New Orleans and will take all of the broken glass and addicts over NOLA's violent crime. It's not even a close comparison.

You live in the Bay Area now? I've never had any problems in NOLA short of a close call to a home invasion at a acquaintance's five years ago (who was involved in things he shouldn't have been)

Been in the Bay since 2000. I grew up in NOLA through the worst years. Can't unsee what I've seen there.

NOLA is bad because crime is everywhere. There are no good areas and bad areas -- it's everywhere. Even people in old Metairie need to deal with home invasions.

Uptown? Oooooo-lawd! Who was the rich uptown couple that had a home invasion where they tied up the husband and repeatedly raped the wife over several days as they went to the ATM over a long weekend? I honestly can't remember their names because that stuff happens so often (and said family was even friends with my dad).


Yes, it was Uptown. (I don’t live Uptown) I don’t recall the details of the incident you state. Things have certainly changed since 2000.

Yeah, the murder rate has gone down only because first responders are getting better at treating gunshot wounds. The actual violence rate is up.

And now, 11 people shot on Canal Street. This seems to happen every few years in NOLA. It almost never happens in the Bay Area at normal locations.

https://www.nola.com/news/crime_police/article_883833a4-142b...


Property crime is high in the bay.

Yes, SF does rank #1 nationally for property crimes. It stinks, but most people value life more than property. Violent crime in the Bay Area is still much lower than national averages, and that's what most people concentrate on.

Also, San Francisco isn't the entire Bay Area.


You go from saying "people who live in actual high crime areas would like a word with you" to acknowledging that SF has the highest property crime rates in the country.

And then wave it all away as, I guess, it's only really non-violent crime.

Odd logic.


I also said, that SF isn't the entire Bay Area.

If you gave weightings to crime categories (we all do this internally), property crime would probably be the lowest weighted next to white collar crime. Violent crime would get exponentially higher weightings.

It's one thing to have $200 worth of stuff stolen in a car break-in. It's another to be violently mugged for $200 in cash on your person. I've lived in bad areas and the Bay isn't one of them. I'll trade property crime for knowing my family isn't likely to end up the victim of a horrendous violent crime.

Manhattan also has high property crime rates but low violent crime. Even has high real estate costs, but you don't see anyone knocking it as a hell hole.

There are people with some weird agenda/vendetta against the Bay Area, and they're obviously pouncing here.


It is not a zero sum situation - you don't get high violent crime due to low property crime and vice versa. It's entirely possible to live in an area with low property and low violent crime. Besides, doing a quick search shows [e.g. 1] that the NYC has both violent and property crimes rates much lower than SF, this could explain why people are not saying it's a hell hole.

1. https://en.wikipedia.org/wiki/List_of_United_States_cities_b...


Those stats are based on city and not MSA. If it were MSA, the Bay Area would be equivalent to New York. The city of New York includes all boroughs, not just Manhattan. If you compared Manhattan to SF, I bet they would be similar.

Also, I'm talking about the entire Bay Area and you keep zeroing in on SF.


I would love to compare just Manhattan but I cannot find the statistics. Seeing that you assert that - care to show the numbers to support your assertion?

Also, seeing that the Bay Area includes Oakland and Palo Alto, I don't think comparing the entire Bay Area to NYC will give you results you have imagined.


SF Bay Area gets so expensive that even financial giants gets gentrified.

I would be curious to see the ROI for someone like Schwab for staying in the Bay Area.

Does the reduce capital costs of people, taxes, and buildings outweigh the talent pool in the area? Makes me wonder what the numbers look like.


Yes. I'm building a distributed engineering team now (hiring people both inside and outside the bay area). Everyone underestimates how much talent there is outside the core hubs (Bay Area, Seattle, NY, etc). Yes, talent does cluster in those cities, but they don't have a monopoly.

There are lots of smart, driven people outside the talent hubs. Also as a sweeping broad generalization that I frankly can't back up with data, they are a lot less entitled and don't job hop as frequently.


Why do I have the feeling that “entitled” is being defined as “they ask for lower salaries that allow the company to keep more of the money they make.”

Well they do ask for lower salary (their cost of living is lower), and in my case it's less about "keeping more of the money" and more about having a bigger chance at building a successful product with the runway we have (being an early-stage startup and all).

But that's not what I mean by entitled. Entitled is an attitude of thinking one is special and thus deserving of special treatment.


Schwab isn’t exactly competing for the “tech” talent pool so there isn’t anything particularly special about staying in SF vs elsewhere for them.

Why not? Billions in assets. Automated investment and market prediction projects. Extremely well built Web UI- you can tell they're hiring industry UI/UX people by the interface they are beta-ing- upgrade in functionality but major downgrade in usability.

A middle of the road developer can make all of those things. You don’t need a 10x ninja in SF who demands 500k/year to do that. Highly doubt Schwab has really been competing on salary in SF for tech roles as is.

Does anyone?

They don't pay very well. They can't compete for top talent like other companies can.

What beta products are you referring to?

They're working on a new research UI. So you plugin a symbol like SPY and you get a bunch of information on the stock. There is a banner for a beta redesign

Oh, that. I've used it, and didn't find it very impressive, certainly not what I'd expect from top UI/UX talent. Schwab's site isn't terrible, just very old-fashioned (and a little buggy).

Rational economic actors going to act. Why be in SF just for the novelty if you can go somewhere cheaper.

Disclaimer: Schwab customer


Novelty? Quite a lot of that has been driven out already.

If you are a broker you go to NYC, banking is London, commodities is Chicago, electronics is Shenzhen.... You come to the bay FOR tech, and for A-team tech at that. There simply isn't any other place on the planet for you to go if you want to be with, and work with the best.

Turns out a lot of businesses don't need A-team tech though.

Welcome to the Lone Star State! Cheap real estate and friendly folks. And BBQ, metric tons of BBQ...

And traffic out the wazoo, and few good alternatives to driving.

The traffic in Texas is significantly better than SF and LA. My parents live in a suburb that is 25 miles from the Houston and it takes 45 minutes to get to downtown during commute hours. My girlfriend has an equivalent commute in the Bay which takes around 75-90 minutes during commute hours.

The public transit is terrible in Texas so I expect it will be worse than the Bay in a decade or two if they refuse to build up transit, but for now it's a lot better. Texas has a lot more space so they've addressed traffic issues by building much wider highways and also multiple rings of highways. Obviously that's an unsustainable solution in the long term but for the time being, my Texas friends have way better commutes than what I see my co-workers deal with in the bay.

We shouldn't really be criticizing other states when California is definitely not the model for transit and traffic either. LA is a nightmare and SF is getting close to one as more and more tech companies move away from transit centers and force employees to drive.


Texas is significantly worse than SF for anyone who doesn't have a car. There aren't good alternatives to driving to get around there.

The traffic principally affects you if you drive, hence why Texas is often worse even now than SF.


In Texas, you are forced to drive because there isn't public transit. In California, you are forced to drive because you have to live far away from transit centers in order to find affordable housing.

Regardless if you look at commuter data, it's pretty obvious that the Bay Area & LA commuters are significantly higher than Texas metros. We have higher median, average, and extremes in commute times: https://www.mercurynews.com/2019/08/22/bay-area-traffic-dela... https://www.apartmentlist.com/rentonomics/traffic-trains-or-...


Dallas is terribad. At least it was in 1999 when I lived there. I can't believe that there are fewer people on the road and less traffic now than then.

Fun trivia tip: the opening scene of "Office Space" with the old person and walker going faster than traffic was filmed in Las Colinas (where I worked at the time).


It has gotten better in 20 years (that's way too long to retain judgement on transportation). Not a ton better, but since most of these companies aren't moving to Dallas proper, it's moot anyways.

How did they remove the cars from the road?

I'd imagine traffic at the mixmaster and various loops are still terrible.

I had a reverse commute (Lower McKinney to Las Colinas), and I'd see gridlock the entire way there (other direction).


It's going to be funny in 5-10 years when the major Texas cities become the next SF because none of them are planning for any sort of large population growth.

Austin already suffers from horrific traffic and poor infrastructure. City planning here is a joke.


>City planning here is a joke.

Virtually all city planning is a joke, and even if one can conjure up an example of a currently "well planned" city it may well be a short lived title based on a number of economic and industrial changes in the coming years and decades.

SF is unique in that it is an industrial incubator for the modern tech industry, much as Detroit once was for the auto industry. There's nothing to say that SF couldn't become the next Detroit, save for its significant tourist appeal. In which case it would become more like Venice.

It's not entirely surprising though, and I can say that on intuition alone I've been guilty of just laying the blame at the politicians doorsteps and shaking my fist at the sky while proclaiming "such incompetence!".

The fact is that it's an incredibly difficult thing to get right, is extremely expensive and carries huge risk if one is hoping to get such planning done right in a pro-active manner, than in the reactive manner which we're accustomed to. The potential downsides to getting such an effort wrong are catastrophic.


Even that seems better than dealing with SF's bullshit for the next 5-10 years.

Austin has been attempting to create a plan for an extensive zoning rewrite for the last several years. It recently restarted after the previous attempt was abandoned in August 2018 (after spending $8.5 million on consultants) because "it became a political lightning rod for preservationists and neighborhood groups who warned the effort would upend longtime neighborhoods."

https://www.bizjournals.com/austin/news/2019/10/04/the-next-...


Correct, but this time we brought in a new City Manager to handle the code. He just came from Minneapolis, see what they've done: https://slate.com/business/2018/12/minneapolis-single-family...

We also voted in a city council that is majority pro-density/urbanist, and the new code timeline claims it should be voted in early next year: https://www.austintexas.gov/department/land-development-code...

We still have very loud neighborhood NIMBY groups. But the votes are what matters. I'm hopeful.

As for the grandparent, this doesn't mean suburban traffic will improve. I doubt it ever will, see: https://en.wikipedia.org/wiki/Induced_demand -- I recommend relocating to walkable/bikeable/busable parts of town, which are expanding (albeit slowly, because of pushback from drivers).


Austin really is a small town, tho. You can see all of downtown from your hotel room, and the rest is just suburbs.

Austin is significantly larger than SF lol

DFW Traffic isn't that bad - noticeably better than Seattle - where I last lived before moving here.

Seattle has become an extreme. DC at its worst i only slightly worse than the constant hell that is Seattle. And friday night near pikes? Yikes.

And no state income tax.

Westlake does not have cheap real estate.

Relative to Dallas, yes - relative to SF it's quite a bit cheaper. Westlake's median price per square foot is $392, SF is $1068. The surroundings of SF don't get much cheaper. Dallas is $204/sf. https://www.zillow.com/westlake-tx/home-values/ https://www.zillow.com/san-francisco-ca/home-values/

https://www.zillow.com/dallas-tx/home-values/


I think the appropriate measure is median sales price, not price per square foot. Cities show that most people can consume much smaller homes than the median new construction in America, but small homes isn’t as much of an option in this part of Texas.

Austin is the least affordable of the Texas metros. The affordable ones are Houston, San Antonio, and Dallas/Fort Worth (basically any major metro outside of Austin).

And no Prop 13. Takes 1 or 2 reassessments before the screeching begins.

Unless you're a retiree, the lack of a state income tax makes up for it. Texas' policies are pro-worker and anti-landowner.

>"Cheap real estate"

And the highest property tax rate in the nation.


Because of the highest property tax in the nation.

This is a feature, not a bug. It’s very difficult for the wealthy to hide their property. There are also a number of ways to reduce the tax rate on one’s primary residence. Combined effect of this is surprisingly progressive, closer to a wealth tax.

Another effect high property taxes, is that most existing homeowners feel some pain when real estate prices soar and therefore there is a large contingent of voters who want to make sure that supply keeps up with demand so that their taxes don’t go up.

By contrast, where I live (in San Francisco), the existing homeowners make out like bandits when the government policies are punitively exclusionary towards outsiders. Soaring home prices mean nothing but good for homeowners when their taxes are both very low and virtually frozen at the original purchase price by prop 13.


Don't forget the joy of parcel taxes, city and county sale taxes, and other ways of bleeding you out to make up for the people who aren't paying their fair share because of Prop 13; which you still have to pay even if prop 13 doesn't help you because you were born in the wrong decade.

Pricing people out of their own homes they used to be able to afford is "fair"?

I'm struggling to see how someone who got $1MM+ in free equity would be priced out of a home they could previously afford; or how the current system that prices people who grew up here out of the entire area is somehow more fair.

Work your whole life and live in a moderately priced home. Housing prices around you drastically shoot up for reasons outside of your control while you're in your 60s. Not fair to be forced to move at that point I think.

It's a good thing you're not forced to move at that point, then. If your home value goes up, you've got a lot more equity you can borrow against. There are many investment vehicles at that point that are very low risk and will cover the meager 1% property tax (less in CA) you'll be paying.

Higher tax rates, but fairer than California. Your neighbor isn't paying lower taxes than you just because they bought 10 years ago when the property was cheaper.

High property taxes are one of the most liberal policies of Texas. It's a progressive tax that is largely shouldered by rich landowners and the revenue form a large part of budget for public school systems.

I'm not sure why people in California love our regressive Prop 13 tax rebates that largely benefit the wealthy and are a cause of huge budget deficits. Prop 13 is the most Republican policy we have in our state.


Except property taxes for landlords are lower. Multi-family residences have a much lower property tax rate. A neighbor left the extra front door on his home as he remodeled just to keep that massiv discount.

Edit: This is just another example of supposedly progressive rules that create a nice safe wall between upper middles and don't have to works.


If high property taxes are liberal - why wouldn’t high taxes on other forms of wealth be beneficial?

When did I say high taxes on on other forms of wealth wouldn't be beneficial? I totally support taxes on wealth to build social programs.

Does that include taxing employee equity based on how it is valued based on each round of funding?

Would you also be okay with taxing someone based on how much they had in savings and mutual funds?


> Does that include taxing employee equity based on how it is valued based on each round of funding?

This already happens, except as a tax on income rather than wealth. Exercising options in a private company that has increased in value will result in a tax bill. And you can't sell shares to pay that bill (usually) because the company is private.


That’s exactly my point. Property tax is a tax on wealth. You are not taxed on options until you exercise them. You also can’t sell part of your house to pay taxes on it. You also aren’t taxed on the increase in your stock portfolio until you sell it.

I think equity, even relatively illiquid equity, should be wealth taxed (at least on amount >$50m). I am sure there will be novel financial tools to provide liquidity to pay this tax if this was the case. At the same time it might discourage bubbles in valuations (eg weworks).

Why carve out equity that should have a wealth tax associated with it differently based on the type? I would think that intellectually consistency would demand that either we tax all equity based on unrealized gains the same whether it is stock, equity in a business or real estate property.

I am not carving out equity. I think everything should be wealth taxed. I also think there should be a large deductible.

That's all relative because there is no state income tax so if you are a high-income person then Texas is paradise, even with high property taxes. Also guess who makes all the executive decisions in terms of where to put the jobs? Executives aka rich people.

Fair point, but my wife and I bough at $1600 sqft home on a nice large lot in a decent neighb when we were in grad school (College Station, TX). We paid $120K and had P+I of $400. Sure, taxes added a couple hundred bucks, but it was still a fraction of California. We interviewed at Livermore labs during that time and the same home was about $1M.

We stayed here (she still at university as a professor), and I left to co-found a startup. Still pretty cheap real estate, affluent & educated population (of all political leanings), and endless supply of smart folks to hire. And BBQ. I'll take it.

Though I love California too, just returned from a week in Big Sur and then the wine country. It's just must cheaper to visit :)


Isn’t Prop 13 an enormous issue (with real estate owners not paying taxes on the true value of their property) in California?

Prop 13 basically just limits increases in taxes from purchase time. So it benefits existing land owners at the expense of future land owners.

And it also benefits speculators - makes it cheaper to hold onto property for longer.


It's in the top 5 but not the highest.

Friendly if you're the right political party and orientation, I hear.

Seriously, Texans in the cities may be redneck compared to the rest of the country, but holy fucking shit are they friendly as hell. If you suck in social situations, you will find plenty of extroverts that will gladly make you feel included in a group of strangers.

It really is best to come experience it in person. Yes, there's always stupid people doing stupid things anywhere and it's certainly a conservative state, but people are generally much more tolerant and intelligent than the stereotypes.

The stereotypes are hilarious. I'm a computer scientist and spent 9 months at IBM's TJ Watson facility up in New York outside the city. Every person I contacted to rent a room from made a point to tell me that I'd have to leave my horse at home because they didn't have a stable. They uniformly were shocked in disbelief when I explained I owned no horses, no cowboy hat, no boots. The horror...


But boots are great! ;-)

As someone who lives in Fort Worth, I feel your pain, some folks do honestly seem to think that Texas is basically one big western still.


People here trend conservative. This cuts both ways, it means that they don't want to make a scene when they see something that offends their norms, but it also means that you have to try a little harder to open minds.

The other ruling ethos here seems to be 'good fences, make good neighbors'.


Might be the types of people I met in Texas, but I generally feel people are receptive to counter view points if you dont look down on them. I never had issues with debating people in Texas.

I'd agree, people do have reasonably open minds here, so long as you discuss with them, not dictate to them. Texans do not take kindly to dictating.

Have you ever visited? Talked to locals? You might be surprised how friendly people are IRL.

I lived in Dallas and it is the only place I've lived where people would scream homophobic slurs at me in the street. I wouldn't say I'd never move back, but the situation would have to be dire for me to consider it. Definitely cut your hair if you visit.

That's not unique to Texas, just assholes. I've seen it here in San Diego while walking through Hillcrest.

I dunno, 40 years of living in other places, stuff like this only happens in Texas and the South. There are definitely assholes in NY and Boston but they won't get up in my grill for "looking gay" on the street so that's pretty neat.

I concede and won't argue with personal experience. It sucks that it is still a thing anywhere, hopefully we'll get there some day.

It happened to me in Chicago, twice in one weekend. All I did was wear a pink shirt and walk down the street. That was enough to garner homophobic slurs.

I'm not gay and when I mentioned it to one of my Chicago friends, and he just shrugged his shoulders and said, "Yeah."

tl;dr jerks are everywhere


When did you move away? I've been visiting here on and off for a decade before I decided to move here, and I've never experienced this.

2000 or so.

The world has changed in the last almost 20 years, the Dallas you left in 2000, is not the Dallas of today.

Dallas is actually very liberal, it's a blue city, totally blue,

People can be friendly to your face and still vote for and support laws and political leaders who want you out of their area or worse.

Look at how they fought gay marriage or how they treat Mexican-American's. There are pockets of safety in that state (Houston/Austin) but as a whole it's not that great.

I lived a number of years in Idaho which has the same problem. I'm "OK" in Boise (even there things can happen) but I'm genuinely concerned for my safety when I have to drive anywhere else in that state.


You don't know anything at all about Texas if you think that. All of Texas' large cities lean liberal.

Spoken like some who has never visited!

based off the experience of soem of the LGBT people from there who've talked about it on Discord servers I'm in. Some areas are better than others but even someone from Dallas in this thread experienced issues.

Funny to hear that when we are comparing it to San Francisco. (Not trying to start a flame, I found this to be legitimately funny.)

>Friendly if you're the right political party and orientation, I hear.

Yes, it's conservatives who have done and continue to do the following:

- Attacked people in the streets over a hat they've chosen to wear. A hat merely supporting the nation's elected President.

- Deplatformed, or had banned from even attending non-political events, for wearing the same hat at an entirely irrelevant place and time.

- Cornered or essentially kidnapped college professors, and then continuing on to destroy their careers, for expressing views not even contrary to their own but merely in light conflict with it.

- Started trending topics on social media lamenting a desire to kill an entire demographic of people based on their race and gender, or denouncing a race or gender as "trash".

- Held marches in prominent cities calling for cops to be shot.

- Attacked journalists from the "opposite" side for merely being at events to report on them.

etc. etc.

Long story short, I would wager that your typical radfem socialist type, adhering to the stereotypical dress attire and appearance choices, would be a magnitude of order more safe and welcomed walking down a street, or attending a university, in a major Texan city than a conservative with a MAGA hat, or similar stereotypical signal, in a liberal city.


Please don't take HN threads further into ideological flamewar. The GP comment was flamebait, but this comment is the bursting into flames that we're trying to avoid here.

https://news.ycombinator.com/newsguidelines.html


Fair enough. You can delete my original post if you so wish.


Never been an industrial accident in California, eh?

Because that's the purpose of zoning laws, to prevent accidents from occurring at all, right? :rolleyes:

Just remembered this illuminating USCSB coverage of the West Fertilizer explosion:

https://www.youtube.com/watch?v=pdDuHxwD5R4


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