The controversial "tech tax" is dead for the time being, with a 2-to-1 vote yesterday by the Board of Supervisors’ budget committee meaning the measure will not be sent to the full board for vote. The Chronicle reports that had it been placed on November's ballot by the full board and approved by two-thirds of SF voters, the “Homelessness and Housing Impact Technology Tax” would have imposed a 1.5 percent payroll tax on San Francisco technology companies and used the proceeds to fund affordable housing and homeless services. Not everyone was a fan.
“As a city, I don’t think we should subscribe to the politics of Donald Trump and the Republicans that they are saying certain people are not welcome here in San Francisco,” Supervisor Mark Farrell said yesterday, kind of bizarrely invoking the Republican candidate after voting to kill the measure in committee. "Members of our technology community are San Franciscans. And I, for one, believe we should embrace them. And for those that are new to our city ... seek to engage them rather than demonize them."
The measure was supported by Supervisors Eric Mar, David Campos, and Aaron Peskin, and back in June Mar told the Examiner why he thought it was the right move. "After five years of a rapid tech boom in The City that we are all aware of, it is time San Francisco’s big tech companies are paying their fair share to address the impacts of housing and homelessness in our city."
Ted Egan, San Francisco's chief economist, didn't agree — something he made clear in a report released yesterday which attempted to project the potential impacts of the measure should it pass. While noting that the tax would generate anywhere from $70 million to $140 million per year, Egan argued the overall impact would in fact be negative. "Because the decline in earnings will more than offset the decline in housing prices,
housing will be less affordable, on average," the report claims. "This is possibly the case because some of the tax would fall on technology company employees, many of whom do not live in the city. Technology workers who live, but do not work, in the city would be unaffected." Given how many major tech companies are located south of the city, this is a fair point.
For the purposes of the tax, the report notes that a tech company was to be defined as one "doing business in San Francisco that receives any gross receipts from any of five technology business activities, defined in the North American Industrial Classification System (NAICS)." Those included: "Computer & Peripheral Equipment Manufacturing," "Software Publishing," "Data Processing, Hosting, and Related Services," "Internet Publishing & Broadcasting and Web Search Portals," and "Computer Systems Design and Related Services."
It should be noted that there is a separate effort underway by new Department of Homelessness and Supportive Housing head Jeff Kositsky to solicit voluntary charitable donations from large tech companies, in and outside the city, to support transitional housing and homeless services.
While the proposal was quick to generate a backlash — mayoral spokesperson Deirdre Hussey told the Chron it was a “job-killing measure” — there is now a backlash to the backlash.
In a press release sent out this morning, progressive supporters announced their intention to raise enough signatures to put the tech tax on the ballot — but that's not all. "Supervisor Mark Farrell spearheaded the effort to kill the legislation at a special Budget Committee hearing on Monday," reads the release. "Community members are calling for an investigation of Supervisor Mark Farrell by the City Attorney and Ethics Commission in light of a clear conflict of interest and his extensive ties to the tech industry."
It remains to be seen if the group will gather the necessary signatures to keep this thing afloat.