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Voters may be asked to tax SF tech companies

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A tax on technology companies that could go before San Francisco voters in November is expected to generate $120 million annually. (S.F. Examiner file photo)

San Francisco five years ago lured technology companies like Twitter to the mid-Market area with tax breaks worth millions of dollars.

Now, voters may be asked in November whether tech companies should pay more than $100 million annually in a surtax on payroll.

Supervisor Eric Mar confirmed via text message Monday night that he will introduce Tuesday for the November ballot the “Fair Share – Homeless and Housing Impact Tech Tax,” which would generate revenue toward housing and homeless needs. Supervisor Aaron Peskin is a co-sponsor.

The measure would impose a 1.5 percent surtax on tech companies’ payroll within San Francisco, according to those involved in the discussions.

The tax is expected to generate $120 million annually.

The proposal comes after San Francisco changed its tax structure in 2012 from a payroll tax, which was maligned as a job killer, to a gross receipts tax benefiting the labor-intensive technology industry. The City adopted a mid-Market Street tax break for Twitter a year prior.

The tax policy changes set the stage for a tech sector boom, leading to a strong local economy that’s also widely blamed for contributing to The City’s housing crisis.

The proposal is backed by Jobs With Justice San Francisco, a coalition of groups like SEIU 1021, Unite Here Local 2, Causa Justa:Justice Cause, and Alliance of Californians for Community Empowerment, which has been in discussions with board members over the proposal in recent weeks.

“We see that the boom in technology has brought a housing crunch where everyday people can’t afford to stay in their homes,” said Kung Feng, lead organizer with Jobs With Justice San Francisco. “We need to have technology companies step up and pay their fair share and address the housing crisis.”

Feng defended the proposed payroll tech tax.

“Jobs are great,” he said. “But we need to have a local economy that works for everybody.”

The proposed tech tax would decrease by 50 percent the annual business registration fees for some 75,000 small businesses, those with less than $1 million in gross receipts.

Revenue would go toward housing and homeless needs, and therefore require a two-thirds majority vote. To end up on the November ballot, six members of the 11-member Board of Supervisors must vote to support it by Aug. 5.

Notably, Mayor Ed Lee’s 2015 affordable housing bond, which was approved by voters, totaled $310 million. The mid-Market tax break saved six companies, including Twitter, a combined $34 million in payroll tax in 2014 alone.

While the tech sector has risen along with its political allies since 2011, only recently has tech apparently started to lose some political rounds. This past November, Peskin defeated Mayor Ed Lee’s tech-backed appointee to reclaim the District 3 supervisorial seat.

Meanwhile, Supervisor Jane Kim claimed the lead in votes over the more tech-friendly Supervisor Scott Wiener in the June primary for the state Senate.

And earlier this month, the board unanimously approved tougher regulations of short-term rentals websites like Airbnb, requiring them to only list verified city-registered housing rentals. Illegal short term rentals are blamed for exacerbating the housing crisis. On Monday, Airbnb filed a lawsuit against San Francisco to block the law.

The rising rents have also forced the closure of many long-time small businesses. While there is rent control for apartments built before 1979, no rent control exists for commercial spaces. To try and help these businesses weather the economic boom, Supervisor David Campos created a legacy business program with the support of voters to provide financial assistance.

The proposal comes amid highly charged political year that intensified last week when Supervisor Mark Farrell placed on the ballot a measure that would ban encampments and authorize The City to remove them within 24 hours notice after offering shelter. Critics of that measure say The City should instead invest in more services.

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  • josephine

    yippie :)

  • sfjohn


  • Ragazzu

    Bring it on. Uber off-shores its profits big time–money that used to circulate in the local economy. See “How Uber plays the tax shell game” at the Fortune magazine website.

  • jgkiefer

    Hopefully they will leave and the city housing rates will do down. They can take their buses with them.

  • 101

    And your taxes will go up dummy because these companies support the general fund. Not to mention their employees use local services and go into those local restaurants and stores to support the workers. People like you are a dinosaur living in the past . But then again , you are probably a welfare leach.

  • 101

    The haves and haves not. You fall into the latter.

  • 101


  • Ragazzu

    You’re absolutely right. I have no offshore tax scams going. I pay my taxes in full.

  • RealFakeSanFranciscan

    Sounds like a great time to be a hedge fund manager in SF – making many times the salary of a bunch of software engineers, yet paying less tax for it than they will due to not being in “tech”.

  • Cynthia

    Except that it will need to get coordinated with Oakland; otherwise, the companies will just move to Oakland and speed up the gentrification wave over there.

  • sfmission

    101 I agree–Tech companies have big money and will fight back before they pull out and take half the city with them. More likely their tax lawyers will easily find a way to avoid the tax increase. Ask.Com moved to Oakland. Others hide their tax legally. Still others make the all too historical back room deals with city politicians. If Yahoo, Twitter and Modzilla alone moved out of the city the general fund would decrease considerably. The city would have to cancel or decrease funding for certain programs. I would wager liberal SF dug itself into a hole enabling homeless, mentally ill, addicts and drug dealers so programs for those folks would be wiped out. There are many jobs open as well as quality educational institutions right in San Francisco. There is no reason to be on welfare.

  • Scott

    If only we had the technology to build housing taller than three stories.

  • njudah

    you can’t get 2/3rds of people in SF to agree if the sun is shining. what makes eric mar think this thing, which will have no money and no organization like most of these ballot measures, would even pass?

    it’s a distraction people. designed to get you all upset, over something that will probably never go past the “dude what if “stage anyways. But by all means, Get Upset.

  • De Blo

    Excess business taxes, anti-business policies, over-regulation, and excess property taxes are already the main problem in San Francisco. We need to be lowering taxes, not increasing them.

  • Fubar

    In unrelated news, Facebook, Apple, AT&T, Google, Twitter and other Tech companies changed their policy to now require any of the Supervisors using social media, cell phones, the world-wide-web, or any “technology” to now pay an annual surcharge of $120M for use of that technology.

  • De Blo

    Every technology job creates 5 other jobs.

  • eggsf

    Eric Mar and Aaron Peskin…Supervisors in the school of “Tax first or Ban first and ask questions later”…making decisions on corporate finances….not unlike unmarried marriage counselors. Enough said.

  • whateversville

    Seriously. Or they’ll just move to Brisbane, like Twitter was planning on doing, which was the whole reason for the mid-Market tax break in the first place.

  • whateversville

    The companies located in San Francisco don’t usually have buses, so, that might not work out the way you’re hoping it will.

  • JustJake

    Such incredible BS, and another shining example of why SF, inspite of its international reputation, is also ridiculed and laughed at so frequently. Dysfunction Junction.

  • JustJake

    Jeez. Out of control mindset is taking over. Let’s turn SF into a semi-desolate urban streetscape… with roving bands of bicyclists armed with u-locks, who attack those who mistakenly arrive, thinking it resembles America.
    SF no longer deserves Hetch-Hechy water supply, lets divert it for real Californians and let those trying to take over SF drink recycled piss. Wake me up when sanity returns to City Hall.

  • YackingYak

    so you lure them and now you trap them… theyll just move.

  • eggsf

    I was “Collateral Damage” in the progressive fight against “Downtown Interests”…lost 4 good jobs when the companies moved out of San Francisco.
    Let’s say payback at the ballot box against progressive policy is sweet.

  • sffoghorn

    If only high rise housing was affordable to people earning wages in the local economy and there was infrastructure capacity available or in the pipeline to serve these newcomers.

  • sffoghorn

    The scams and scams not.

  • sffoghorn

    Perhaps you were just poor at your job and the magic of the market was worked against you?

  • eggsf

    Frigging did my job well enough to stay on my first two jobs for 12 years and 7 years. I didn’t leave the companies…they left the city instead.

    Finding work as a temp often for short-term jobs. Trying to save face and staying off the dole…which is more than I can say for others loitering in the street these days.

  • lunartree

    It’s called supply and demand. Every economist on earth could tell you that. We’ve restricted the housing supply for so long that the market rate is unreasonably high, and some people believe the fix for this is doubling down on the same mistakes we’ve been making for decades?

    Also, before you say “supply and demand” magically doesn’t count in SF, the high end of the housing market (condos) is currently dropping because, surprise, the new condos opening up this year are affecting supply and demand.

  • Doug

    This presents a real opportunity to Oakland and we’ll see if they are smart enough to take advantage of it. If not Oakland then San Jose where the 49’rs play………..

  • whateversville

    And if only such technology wasn’t forbidden in more than half of the city.

  • Cynthia

    An opportunity for what? To thoroughly push all low- and middle-income residents out of the city, as has happened with SF?

  • Cynthia


  • Cynthia

    You do realize that at last budget, SF was $100 million in the hole? Seems like having all those companies avoiding paying taxes didn’t work out too well for SF.

  • sfsoma

    It’s not hard for a tech company to move. There is no production/manufacturing/warehouse facilities that they have built or need, just office space. Surrounding communities governments would be glad to have them and will build to accommodate them. Now the people living in those communities may not be so thrilled with the traffic and increased people it brings.

  • sffoghorn

    Capital did not anticipate this economic bubble and hence did not purchase government to upzone and marshal resources to construct to the new greater envelopes.

    The market for luxury condos is always minescule when compared to the market for what is euphemistically called workforce housing, i.e. housing for everyone else. A few units added to a small market will effect price.

    That does not apply to the general case in San Francisco where demand fantastically outstrips supply AND ALWAYS WILL so long as the bubbles of tech and international capital remain inflated.

  • Doug

    To bring large Tech Companies to Oakland or San Jose. The tax base will help either of those cities.

  • Cynthia

    Yeah, it’ll just … trickle down, right?

  • Pilgrim Jane

    Oh, supply and demand?
    That’s it everyone! Some free market cheerleader just said the magic words and the debate is thus ended. Good thing we don’t need to discuss elasticity of demand or any other complex concepts, or this could get messy for our free market worshipping friend.
    Trust him, folks, there’s nothing more satisfying than a good long drink from the stream of trickle down housing. Just wait right here for about 20 years, and you’ll get an affordable home. In the meantime, Mr. Supply and Demand and his pals will be working to throw you out of your rent controlled apartment because, Hey! It distorts the market when the rich can’t displace the poor whenever and wherever they feel like it
    Just think: if we keep building and building a never ending supply of multi million dollar luxury condos, one day we’ll have prices as low as London and Tokyo!

  • lunartree

    > Capital did not anticipate this economic bubble and hence did not purchase government to upzone and marshal resources to construct to the new greater envelopes.

    Come on man, I don’t mean to be pedantic, but you’re not even speaking coherently…

    Also, this idea that bubble was unpredictable is complete nonsense. I’ve been hearing about how expensive SF is since I was a little kid, and historical data backs this up. The Bay Area economy has been through multiple booms and busts, and every time voters double down on their choices. We’ve been restricting housing construction because it makes our land values go up, and now instead of admitting we created this problem we jump through all sorts of hoops to maintain the cognitive dissonance that its those new invading techies causing these problems. This needs to end.

  • lunartree

    Found the anti-intellectual! I’m sorry I’m using words that offend you, but this is called economics.

    I believe housing is a right, and that we need subsidized housing, but if the market rate for housing isn’t affordable for the middle class then it’s pretty clear we haven’t been planning ahead. If we are to create functional programs for this we have to understand the market we’re dealing with. We need new market rate construction to push down the high end of the housing prices. We can leverage this construction to create affordable housing through mandates without having to spend additional taxpayer money. That money should then go to improving our infrastructure and other programs. The goal is a market rate that will eventually be affordable by the middle class, and a massive stock of affordable housing to fix the issues now.

    People with your sentiment really shut down educated debate by calling anyone who talks about economic a libertarian. How about your listen to what people are saying and debate that like an adult rather than just keep arguing against the nonsense in your head.

  • Pilgrim Jane

    Yes, so many great part time jobs you’ll want to take 3 or 4!
    Just imagine all the fun you’ll have doing rewarding temporary work like at jobs like these:
    Driving strangers around in your car!
    Letting them live in your home!
    Making or delivering their salads and fresh juices!
    Walking their dogs!
    Doing their laundry!
    Waxing their lips and butts!
    And good old fashioned getting down on your knees and licking their shoes clean!
    It’s a servant’s world out there, waiting for you to join the fun!

  • Pilgrim Jane

    It’s cute that you’ve confused your lack of empathy with intellectualism.

  • sffoghorn

    There was not sufficient capital available over the decades prior to this tech bubble to have financed the construction of sufficient housing that would have any measurable impact on housing price now.

  • Aton47

    Die techie scum

  • lunartree

    You clearly didn’t bother reading what I said. I’m arguing from the position of empathy and housing as a right for everyone. Your views on housing will not result in enough housing to actually meet people’s needs.

    This issue is so emotionally charged you refuse to even read past the words “market rate”. You say you have empathy, but if you can’t get past your emotion to form an educated opinion to act on your empathy what are you accomplishing aside from hindering attempts to help the people you claim to care about.

  • lunartree

    And there still is. At the current rate of $500k per unit it’s impossible for the city of San Francisco to make any dent in the housing crisis though constructing affordable housing though direct subsidy. Not too mention, this idea of 100% affordable housing has been done before. It’s called project housing and it’s a disaster and has been discredited by most city planners.

    The way San Francisco can get out of this housing crisis is buy up zoning and mandating affordable housing in new construction. This is part of our existing policy and was around before the boom. However, NIMBYs have repeatedly fought the construction of any housing. If the idea of building housing remains controversial we will remain in a housing crisis with brief breaks while in recession.

  • sffoghorn

    However, NIMBYs have repeatedly fought the construction of any housing.

    There are 1299 projects in the pipeline in San Francisco.

    You are not credible.

  • newsbeagle

    The companies with the buses that draw the ire of the city activists will not be affected by this law. Its all the micro sized startups in SOMA who are not public and have very little money.

  • lunartree

    Are you having trouble understanding my words or are you intentionally misunderstanding? I said the NIMBYs *fought* construction. I didn’t say there was no construction. Also, there’s more housing than that in the SF pipeline.

    1000 units of housing isn’t very much. San Francisco has been growing by nearly 10k people per year since the recession. We would need to sustain at least 3000-4000 units per year to prevent rent increases during these growing years. And the population is likely to grow by 100k more over the next two decades. We need to get serious about fixing this issue.

  • sffoghorn

    There has been plenty of upzoning and plenty of construction.

    You are obviously not familiar with the lead times required to turn capital into housing in greenfields not to mention longer lead times required to do upzoned infill.

    It is clear due to the overloading of the transit system that the absorption rate is being exceeded with the current rate of construction.

  • pickles94114

    Dumb idea. What exactly will define a “tech company”? And why give them good reason to relocate to an adjacent neighboring city, only to see the same housing effects happen there? I’m sure there are better/smarter solutions than just pushing well-paying employers out of the city.

  • Derek DeHaan

    Actually that isn’t true at all. It’s been well covered that a majority of tech workers spend most of their time outside of the city using services provided by their employer. Support the workers? Hell, go buy one to the lines of kids waiting for a Google bus they don’t even talk to each other but they’ll go galavanting through North Beach hamming it up with the waiters at the Rose? People like you are idiots living in the here and now, maybe you should consider ending your suffering, not to mention ours…

  • magaman2016

    Equality under the law means nothing to these hateful thieves in political office. Aaron Peskin & company deserve to be violently drowned in the Pacific Ocean.

  • magaman2016

    Die, peasant wastrel.

  • Jon Krop

    We were fine and doing great before they came in and over inflated the cost of everything; I’m not a welfare leach – I was born here, and even started delving in computers back with an Atari 400 and BASIC and Assembly.

    Many of those restaurant workers are getting pushed out of SF due to the crap this latest techie and BnB and Uber wave is causing; and also why a freakin’ burger or pizza costs twice as much here as it does anywhere else.

    These companies are hiring and creating a culture of elitism and self entitlement that is totally anti-San Francisco’s history in the 50 years I’ve lived here.

    It’s not all about making as much money as possible – or thinking that since you make more money you are better and entitled to more things. San Francisco was built by misfits, nerds, and outcasts; we collectively created a great culture and city – and now it’s being decimated by assholes and techies.

  • Jon Krop

    HAHAHAHAHA … hardly.

    More like the inverse – Back in the late 90’s I had tons of work because so few knew how to build a site.

    In the 2000’s I had tons of work because still few people could build/design good sites.

    Halfway thru this decade, I get less work due to crappy platforms like wix; until people start to realize those things are crappy and then eventually come back to me.

    Not to mention all of those cheap ass logo and design companies and outlets.

    But maybe you meant that every tech job creates around 5 or so hand or blow jobs?

  • jgkiefer

    I hope they all leave and go back to where they came from and take their buses with them.

  • jgkiefer

    Good. Bye!

  • jgkiefer

    The workers at the 5 other jobs can’t afford to rent or live in San Francisco.

  • jgkiefer

    They have to have lots of money to be in San Francisco to begin with.

  • jgkiefer


  • Ryan K

    Then there would be more places for Chinese investors to place all cash offers, with no increase in city services to compensate for the added density. Sounds like a GREAT plan!

  • lurker

    Seems that it would be preferable to simply have a direct transfer of funds from these tech companies that the supes want to punish (which seems a bit like biting the hand that feeds you) to the homeless or whoever the supes in their magnanimity deem worth of a wealth transfer. At least that way, there wouldn’t be any need to fund any additional bureaucratic agencies. And if we’re willing to do this, then why not just pick specific neighborhoods – say, for instance, Presidio Heights – and require them to pay an extra surtax to the homeless, since their wealth alone is evidence of ill-gotten gains through the oppression of the masses.

  • Moishe Pipik

    According to the 2015 “Homeless Count” there are 6,686 homeless in SF. This tax would pay each homeless person $23930/year! And if it comes to pass, there will be nobody left _except_ homeless people in San Francisco.

  • eggsf

    I like a McDonalds for decent priced lunches but certain non-techie San Franciscans hate chain stores and chain eateries. $4 toast and $6 coffee…really?

  • grannygood

    You have a business, you pay taxes. You make money, you pay taxes. I paid my taxes for the last 50 years, these folks can pay theirs too!

  • grannygood

    Looking out my window I can see dozens of new buildings over 6 stories. Maybe you could invest in common sense and reality instead of relying on technology for your snide comments.

  • grannygood

    Hardly, these companies do not pay taxes so they don’t pay into any funds. Their employees are the ones evicting people from their homes and creating a cost of living that they can’t even afford and then they are investing their money out of state and out of country. Also there is no bigger leaches than company making billions and paying 0 in taxes.

  • DC

    Politicians, doctors, lawyers, bankers, real estate agents, etc., all make more money than average locals, and are also to blame for inflated housing prices. Lets tax those sectors too!

  • De Blo

    They can live in Antioch or Stockton. Remember that no one, unless he owns property here, has a right to live in San Francisco.

  • Scott

    Why wouldn’t we increase city services with the increased tax revenue from the additional residents? Greater population density yields *more* capacity for city services for an urban area, not less.

    The xenophobia re: Chinese buyers is another fear I hear a lot in these debates and is frankly ridiculous on two counts: 1) It assumes that there is an effectively infinite supply of Chinese capital to consume any additional housing, which is clearly not the case because if that were true we would see these purchases in much greater numbers than we do. 2) People of many nationalities buy property in SF as an investment vehicle. This is not a contributing factor to the crisis, but rather a symptom of it. If we didn’t vote to make housing as scarce as we do, we wouldn’t have to worry about speculators (of any nationality) buying homes as investment vehicles.

  • EyemNotFree

    Exterminate social media CEOs for acts of war against peaceful Americans like me

  • sugarntasty

    Tax payers burden we, need Prop SF: affordable fixing facilities San Francisco.
    Adamant is going to pass those saying,discourage development unlikely!