Thousands of small businesses would see a payroll tax break under a measure submitted Tuesday for the November ballot by Mayor Gavin Newsom.
The business community often complains that City Hall keeps increasing the costs of doing business, from laws requiring paid sick leave to San Francisco’s relatively higher minimum wage.
Currently, 17,000 businesses do not pay San Francisco’s 1.5 percent payroll tax under The City’s existing exemption for businesses that have a payroll less than $167,000. Newsom’s measure would increase the payroll exemption to those businesses with a payroll of $250,000 or less.
Additionally, the measure would decrease the 1.5 percent payroll tax to 1 percent for those businesses with a payroll of more than $250,000 and as much as $400,000.
“We recognize that there’s been a lot of hardships placed on businesses in terms of the mandates that we’ve set coming out of City Hall,” Newsom told The Examiner. “I think this is absolutely appropriate relief for those same small businesses.”
The total cost to The City would be about $10 million in lost payroll taxes. Newsom said the shortfall would be filled by taxes raised through the passage of a charter amendment by Board of Supervisors President Aaron Peskin.
The charter amendment would close a payroll tax loophole that doesn’t tax all the income of partners in such businesses as law firms and architectural firms. Peskin’s measure is expected to raise at least $20 million annually.