Voters can tax technology companies to fight homelessness

After years of economic prosperity driven by the rapid growth of technology, voters in the San Francisco Bay Area will decide in November to tax big business to help pay for problems that are only happening. aggravate with the development of business: housing and transport.

These campaigns reflect the pressure of rapid employment growth on public transit and the affordability of housing in many cities.

Business groups opposed to higher taxes argue that these measures would give companies a reason to expand elsewhere or, worse, to leave the region altogether.

Tax proposals passed in cities like Seattle have met with resistance from big business, but in the San Francisco Bay Area, some big tech companies have adopted tax hikes.

These supporters say that the company's philanthropy was not enough to tackle the problems of the San Francisco Bay Area such as homelessness and transportation. They argue that we need to create a steady stream of funding to pay for services.

"We certainly have a source of inspiration to take advantage of the enormous prosperity we have in the region," said Molly Turner, lecturer at UC Berkeley Haas School of Business.

The debate hit a climax in San Francisco, where the proposed tax hike sparked a clash between tech titans, divided political allies and led the city's new mayor to make the most controversial decision of his tenure.

Proposal C would double the city's homelessness budget by raising the Gross Revenue Tax on annual corporate income above $ 50 million.

The average increase of one-half percent of the tax would raise about $ 300 million a year to help San Franciscans homeless San Francisco to leave the street. Half of the money would be allocated to long-term solutions, such as supportive housing, while the other half would be allocated to more immediate assistance, such as shelters, mental health and housing assistance.

"We have just benefited from this considerable tax relief [President] Asset. The corporate tax rate has gone from 35% to 21%, "said Jennifer Friedenbach, executive director of the Coalition on Homelessness, which sponsored the measure. To deal with systemic crises, we need constant income. "

The homelessness crisis in San Francisco

With thousands of people sleeping on the street each night, most Franciscans in San could quickly claim that homelessness is one of the city's main problems. What voters are willing to do to solve the problem is less clear.

The last two polls, which proposed tax increases to raise funds for homeless services in part, all failed. One was a sales tax increase in 2016 and the other a property tax on the ballot last June. Proposal C differs because it would devote all the revenues it generates to homelessness programs.

"What we have seen in the past is DIY, and I do not think voters have much patience for that," Friedenbach said. "They want to see a big change."

It is estimated that 300 to 400 companies would pay the tax increase for proposal C. These companies are already paying 57% of taxes on businesses levied by San Francisco, according to a report from the Office of Economic Analysis.

Jim Lazarus, Senior Vice President of Public Policy at the San Francisco Chamber of Commerce, said a new tax hike would weigh heavily on the rising costs associated with recruiting and retaining workers in the region.

"At one point, the straw broke the back of the camel and a finance official said:" When the lease is concluded, we will leave the city, "he said.

Similar warnings from Amazon have prompted Seattle City Council to drop its new business tax earlier this year.

Tech titans not agree

But Salesforce, San Francisco's largest private employer, took a radically different stance on proposal C. The cloud computing giant donated $ 4.7 million to the Yes on C campaign, to which add $ 1 million from CEO Marc Benioff. This, despite Benioff's claim that the company should pay millions more under the tax proposal.

For Benioff, the debate on proposal C is black and white and the CEOs who are not in favor of the measure are not socially responsible.

"What I discovered is that there are two types of people in San Francisco," he said in an interview. "There are people who are willing to give and who always open their hearts and their wallets to support all that society needs, and there are those who will not give at all, whatever happens. "

Benioff may have referred to Twitter CEO Jack Dorsey, with whom Benioff exchanged blows against the C. Dorsey proposal. argued that his business, Square, will be more penalized by the tax increase than Salesforce.

Last week, Lyft and Macys joined Square to donate to the No on Prop campaign. C. That did not do much. Thanks to Benioff, the "yes" has garnered four times more contributions, according to data from the San Francisco Elections Department.

A new mayor with his own projects

Benioff's position on proposal C also provoked a break with a political ally: the mayor of London, San Francisco.

Benioff said the need for sustainable funding for homeless people is best illustrated by a call that he just received from the mayor. Breed was looking for a $ 8 million donation to acquire a site that could be used as affordable housing.

"She has more money, her budget was up," said Benioff. "The city is ready to start its ready-to-go projects and we can go directly to these homeless people if we have more targeted funding."

Breed does not agree with the nature of this appeal. She said that she had asked Benioff for the immediate donation because an extra budget would have taken too long to secure the units. Nor does she agree with the idea that San Francisco could raise taxes on homelessness services without consequences for the global economy of the homeless. city.

"Can big companies pay more to support that? Yes, they can," Breed said.

"But measures such as a measure of voting need to be handled in a more responsible manner," she added. "Ensuring that, when we try to tax and tax our actions, the unexpected losses of a job loss for middle-income residents are not unintentional." I'm talking about the manufacturing, the retail, of those things that are important to San Francisco. "

"I want to make sure that I am held accountable for the decisions I make," she said. "Not the decisions that other people take."

It is possible that the heated debate on Proposal C could extend beyond November. Supporters hope that a recent decision of the Supreme Court will allow the citizens' initiative to be passed by the majority. Historically, local measures that affected funding to a specific source, such as homelessness services, required a two-thirds majority vote. The application of the Supreme Court decision raises difficulties and a majority vote in favor of Proposal C could be one of these difficulties.

Mountain View and East Palo Alto measurements

Tax measures in Mountain View and East Palo Alto have been accompanied by far fewer political fireworks, but also reflect a trend towards increasing corporate responsibility for tackling the thorny housing and housing problems. of the Bay Area.

Measuring HH in East Palo Alto would impose a fee of $ 2.50 per square foot on large commercial office space to pay for affordable housing.

Supporters hope to capitalize on Amazon's recent growth in the city and on Facebook's expansion in the nearby neighborhood of Menlo Park.

"We are simply trying to protect our community and have a fair share that will improve the lives of more people," said Mayor Ruben Abrica. "We are also trying to be proactive because we know that other developments are going to take place."

The Mountain View tax is more strongly directed to a single company: Google.

The "entry tax" proposed in measure P would tax companies for each employee, with larger companies paying higher rates. The proceeds of the tax will go to the general fund, with the promise that they will be used for transportation.

The tax is expected to generate $ 6 million a year, more than half of which comes from Google.

Mountain View Mayor Lenny Siegel said the research giant was quick to help solve problems like homelessness in the past.

"He is a good citizen, but we can not guarantee their donations," he said. "Thus, the tax will allow us to create links to build the infrastructure for Google employees to switch from Caltrain to Googleplex."

In the past, tax breaks were used to attract business

The demand for additional investment from large corporations, and particularly the region's burgeoning technology companies, is a reversal from the policy discussions that have taken place in the cities of the region. the Bay Area at the beginning of the decade.

Then, San Francisco changed its tax code to attract and retain businesses, with special incentives for growing technology companies.

Many corporate tax supporters in the San Francisco Bay Area claim that these successful businesses have not made reciprocal friendly politics.

"I do not see the technology involved in a very civic way, and I think it has to be," said Senator Dianne Feinstein, who said she supported Proposal C.

"Like when I was mayor, the CEOs of the big banks – I could come in and ask them to contribute to all civic causes." Cross my heart. "I've never had a" no. "Bank of America , Wells [Fargo], all said "yes". "

So, instead of asking for philanthropy, the tax measures are intended to force companies in the San Francisco Bay Area to put more skin in the game to tackle local problems.

It remains to be seen whether a proposal similar to Proposition C has arrived too late and is only setting the stage for an ephemeral victory.

"There is certainly a risk if we rely on this tax to fund much of our homelessness," said Molly Turner of UC Berkeley Haas School of Business. "If we have a correction or a recession in the near future, it will significantly reduce our ability to fund these programs."