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.