San Francisco's currently seeing a strange political alliance between homeowners - who want their valuable property in the Bay Area to appreciate - and well-meaning progressive activists earnestly trying to alleviate poverty.
Supervisor Peskin has built up a reputation for walking this line; for instance, he generally favors increasing affordable housing (BMR) requirements to very high levels. That appeals superficially to progressives, but also causes fewer units to be created overall, leading to ever-higher market rates and single-family-home values. It's really bad news for anyone who ever wants to rent in a market rate apartment.
This proposed policy follows a similar vein. It subsidizes everyone else - both asset-rich homeowners from earlier generations and those barely getting by - at the expense of San Francisco's newcomers, who have no reason to support him anyway. Coming from Peskin, this move doesn't surprise me at all.
Great to see renters (of all income levels) finally banding together in the most recent election: http://www.sfyimby.org/
Penalizing a single industry makes no sense. Either increase payroll taxes across the board for every industry, or you are literally saying that tech jobs are "worse" than other jobs and must be punished in order to make up for how they harm the city. Totally ridiculous, populist idiocy.
Come now. When your politics are fair it means the politician doesn't have any power - and if you don't have any power, how are you supposed to give favors to the people who paid for your campaign to get elected?
OK so what sort of ridiculous idiocy would you call it when tax breaks were doled out just to the tech industry? And how is this not some form of recapture of previous incentives?
I also disagree with targeted tax breaks to specific industries, but at least they entice rather than repel companies. Taxing a specific industry via referendum smacks of pandering for votes.
Yes, please tax these companies out of town so they can take their corp taxes and workforce with them so we can return to the grime of the 80s and 90s! Great idea only visionary supervisors could have!
Seriously, this is how they address issues of utmost importance? Never thought I'd say this, but I almost want technocratic politicians over these reactionaries st this point.
The larger issue, the elephant in the room is we need an integrated regional government with teeth and foresight. But all the pols in all these cities will not want to give up their power in exchange for a better planned and governed future.
> Yes, please tax these companies out of town so they can take their corp taxes
I'm confused. You think the companies are valuable because they pay taxes, but shouldn't be taxed?
Truthfully, this is only a return to the previous state of affairs, a 1.5% payroll tax isn't that painful - the impact on Twitter would be less than 5 headcount.
The reason companies like Twitter originally sought a tax break is because of how stock options are taxed. If you work for twitter for several years and never cash in your stock options, they have to bank the potential payroll tax they would pay on the purchase value of these options. So many employees never cash in on options that this creates a kind of snowball that freezes a ton of capital. In effect, this means that current investors in a company like Twitter are banking money to pay the taxes of future potential employee-investors.
I agree this doesn't make economic sense, I don't think wholly opposing payroll tax is a reasonable reaction to it. I don't know what the solution is, but it's amusing to see this come full circle.
NYC used to have one... Maybe it still does. I don't agree with it. Tax them on profits, whatever, but be fair. Don't go out of your way to tax a class of business in special ways, unless you're trying to disincentivize them.
So, of course all companies should pay taxes their fair share of taxes. Just don't construct special schemes to tax a class of businesses.
Imagine Detroit saying, we're broke, let's tax car companies by the amount of potential pollutants their end products could produce. Hey, they'd have a windfall till Tennessee says, hey, GM, wanna come over here? We'll tax you as a normal state would (as an exaggerated example).
Interesting how the interplay of payroll tax and stock options creates a capital issue like that! On a sidenote, do you know why payroll taxes are charged to the employer, rather than showing up on the employee's paycheque?
I find it interesting that you can argue that government is the solution & the problem at the same time. Wouldn't it be easier to remove the beaurocrats, regulations, and taxes?
The Democratic Party policies include support and protected class status for LGBT individuals, whose inclusion in the labor force expands the talent pool and are already account for a big chunk of the tech workforce.
But being free to fire someone because they prefer to date members of the same sex - or because they are black or a woman or not a Protestant Christian - does make things cheaper and simpler for business. Is that the world you would rather live in?
As an "at will" employee, I can be fired for not liking football, or eating tuna, or wearing sandals, or having teeth that are too yellow, or because it's Tuesday.
It's nice to think that there are specific reasons why people can't be fired, but as long as I can be fired at any time for no reason, then no list of specific reasons that cannot be used as cause for termination will ever have any relevance to me, no matter how long or thorough it may be.
The Dems are not a Labor party. Most unions cozy up to them just because it's better to woo Belphegor than Beelzebub.
As a previous small business owner...being able to fire somebody for whatever reason I please is absolutely and 100% necessary. It is expensive for an employer to hire somebody. Realistically, the examples you provided do not happen often. The majority of the time an employee is fired is usually because of performance, team incompatibility/culture fit, or what I've seen is the employee simply stopped caring/lost interest/passion. Regardless of what the reason is, most employers know it is expensive to have employee churn and firing is the last resort option.
When you own a business, and have two employees, and have to get rid of one, it should be easy as sitting down and saying you are no longer a good fit for the company...The employee takes the two weeks pay and that is the end of it. That is all it should ever be. No matter the reason. Non "at-will" employment states are ridiculous.
Oh I wish. The more realistic scenario is the employee gets fired and loses all benefits and pay right then and there. If they're minimum wage and/or have a family, they then get evicted, their car is repossessed, and their life is ruined.
I understand the issue from the side of the business. I also understand it from the side of the employee. If at-will employment strives to be at all fair, either severance needs to be mandatory or our welfare safety net needs to be increased. Years back I got fired "at-will", and the state just laughed when I asked about money to pay my rent. Luckily my car was paid off, because they weren't going to help with that, either.
I have been fired "at will" 5 times. Four times after a corporate buyout/merger, and twice due to the company losing a major customer's contract (two were due to both). I can speculate over the last one, but "at will" doesn't have to give a real reason, and they didn't, so who knows?
The first time, I got a decent severance, probably because the company didn't want me to sue over unvested options. The second time, I got no severance at all, but six months of warning before the ax fell. The third time, 1.5 weeks notice and no severance. The fourth time, 3 days of notice and no severance. (That was right after getting a manager-requested performance bonus, too.) The fifth time, completely unnecessary security escort to the parking lot, and two weeks pay in lieu of notice. Each time, it was a scramble to find anything at anywhere near my old salary before the savings ran out. Twice, I had to take a crap job that I ended up hating because I'm afraid of being broke and homeless. Twice, I had to move to another city.
So when a business owner says "at will" is necessary... well screw you, buddy. Having the rug unexpectedly pulled out from under your whole life makes it really hard to not fall down. Your employees are not machines. They need to eat, and sleep, and some of them need food and beds for their spouses and kids, too.
I constantly hear that "at will" theoretically makes it easier to hire people, but in actual practice, the ease of hiring is probably constrained by benefits enrollment and mandatory paperwork rather than the fear of not being able to easily fire a bad employee. No one will hire you unless they can expect to keep you for at least a year, because of the up-front HR expenses for a new hire. Firing may be zero cost, but hiring isn't exactly gratis.
I understand the reasons why employers like it. But they aren't the only participants in the economy, and labor gets absolutely zero benefit from it. Eventually, laborers will realize that the only way to make "at will" work for them at all is to secretly shop for new jobs on a continuous basis, and then jump ship with no notice the instant a better offer comes in. Businesses are still eating up the last remnants of the "company loyalty" and "professional conduct" ethics, and when it is finally gone, everyone will be "F U, pay me" mercenaries, or Uber drivers. Businesses will find it just as difficult to plan major projects as their "at will" employees find it to plan major expenses, like weddings, houses, and kids. If a temporary contractor can't pick it up with no lead time and be immediately productive, it just won't get done. Good luck running an entire economy that way.
That's why I always dread the "where do you see yourself in five years?" question in interviews. My honest answer is that as an "at will" employee I will be blown hither and yon like a leaf in the wind, and I will probably have two or three more employers appended to my resume by then, but I instead glibly lie and say that it would be an achievement just to still be working for the same company under the same ownership.
I really, really want to hitch my horse up to the same wagon for the next 25 years, and maybe grow some roots that I won't have to cut off next time the job market goes sour. Both of my parents had just two different employers over their 40 years of working, and we lived in the same city, in the same school system, all the way until I graduated high school. But I'm not entirely certain that my own kids will be able to graduate with some of the same friends they made in elementary school--not just because I'm afraid we may have to move, but because their friends' parents are already being shuffled to different cities.
"At will" is most definitely not fair in the current environment.
I'm just an armchair economist but it seems obvious that this payroll tax (especially when combined with minimum wage hikes) will further incentivize companies to relocate entry level workers to lower cost of living areas, e.g. Yelp customer service moving to Phoenix. Companies will keep their most skilled (and highest paid) workers in San Francisco because access to those workers is why they HQ there in the first place. As a result, the middle class continues to hollow out and inequality is actually worsened, which likely puts additional pressure on homelessness and the other problems they were trying to solve in the first place. I wonder if these politicians think about the unintended consequences of their proposals - whether they don't know, don't believe it to be so, or simply don't care.
If you only tax for workers above a certain wage and use that money to support rentals for lower income folks you might make it work. Maybe such a thing would incentivize tech companies to move elsewhere which of course has other side effects. There is no free lunch when using taxation to enact public policy.
> If you only tax for workers above a certain wage [...] you might make it work.
Actually, payroll taxes usually do the opposite: "It only applies to the first $110K in earnings. That way, it makes sure to capture a significant portion of the earnings of all poor-to-middle-class people, and then cut off before capturing a significant portion of the earnings of any rich people."
You run into the same problem as means-testing social security and similar ideas -- turns out that income is a very pyramid-like distribution and there's just not a ton of it at the top, relative to the base and the middle. It wouldn't surprise me if 75% of this proposed tax would be collected from the component of salaries below the FICA limit ($118,500 for 2016). Another question is do you consider RSUs to be part of payroll on which tax is due? What about options? These can be 50% or more of compensation in many of these large firms.
Hope this doesn't sound nitpicky, but I'm curious about the implication that 'Yelp customer service' would be considered 'middle class'. Were you specifically meaning that, or was it just co-incidence? I'm curious because I find that the issue of 'the hollowing out of the middle class' hinges on the definition of 'middle class', so I'd like to know how this might help inform the definition. thanks.
Discussions of class can be semantic minefields, but broadly I'd consider that entry level customer service job ($20/hr as another poster mentioned) as lower middle class. Importantly though, entry level lower middle class jobs can serve as a path upwards for skilled individuals who would become more solidly middle class after a few years. It's not just the loss of the entry level jobs I'd look for but the few rungs in the ladder above them as well.
> To put this into perspective our city has a larger budget than 12 individual US States
It also has a larger GDP than something like 36 individual US states (don't have same year numbers, but only 14 states -- and, obviously, one of those is California -- have 2015 GDP [0] higher than SF's 2014 GDP [1]) -- and that's not just because its bigger in population than some states, since only four states (Wyoming, Vermont, Alaska, and North Dakota) have smaller population than SF.
> Is it possible to utilize our current resources more effectively?
SF could do much better with the amount of taxes we pay. I have no idea where the taxes go, but the state of some roads (let alone public transportation) is pretty bad. San Francisco is only doing so well because it's the only "lively" city around Silicon Valley.
I'd wager a good chunk of it goes to ensuring the money is being spent correctly.
When I was an undergrad my boss was the grant writer. Half the money (and a lot of time) went into compliance and accounting.
Another example is the joke about construction projects; 1 guy digs the hole, another guy supervises the guy digging the hole, a union rep watches over the guy digging the whole, government rep makes sure the guy digging the whole is to spec, environmental guy makes sure the guy digging the whole isn't causing environmental damage. Individually, all these people are necessary, but as you add more requirements and more compliance it takes up a lot of money.
And that's what happens when people say I don't know where the tax money goes. Another committee gets formed, more forms to fill in are created.
> Yeah, but this ignores the fact that the CA budget, and CA taxes, alone are enormous.
Not as a share of GDP, compared to other states. Its roughly comparable to other big states (though higher than Texas), and lower than lots of states run by what purport to be small-government conservatives.
California's budget is big in absolute terms, sure, but so is its nearly $2.5 trillion GDP.
SF's budget share of SF's GDP + California's budget share of California's GDP is less than many states budget share of GDP alone (without considering local budget shares.)
Wow, that's nuts. I've been putting together a paper on the budgetary effects of driverless cars, but I haven't looked at LA yet - if that's their overall budget and they match a range of numbers with cities like Boston, DC and NY for traffic and parking violations, they're going to get hit HARD.
[edit] just with a quick overview of parking alone, they're looking at a 3-5% drop in revenue with total adoption - I'll look into it more but if traffic/vehicle violations make up the normal percentage of 'licenses, permits, fines and fees' it'll be up to 10%.
Aaron Peskin is doing everything to fuel hatred against tech workers in the city; he reminds me of populist Latin American leaders who antagonize the population against a certain group to grab media attention and get votes..
How do you decide if a company is a tech company? They use computers, they must be a tech company..
This measure seems strangely punitive. I think the better option would be a progressive payroll across-the-board tax above a certain level, say $100,000.
The proposal as it stands seems to imply that tech alone is responsible for widening income inequality, particularly in San Francisco. The more accurate perspective is that tech these days has allowed small numbers of extremely skilled people to perform work that half a dozen moderately skilled workers could not accomplish as well on their own. As a result, it makes a lot more sense to pay one person $200,000+ a year than six people at $100,000. The biggest income gains are near or at the top, and the taxes should follow.
Taxing an engineer making $85k just because they work in tech only makes an already very expensive city less worth living in.
The employer is actually taxed, not the employee, and it's a 1.5% tax, which is the same amount of the original payroll tax which was rolled into gross receipts a few years ago.
When the employer is the one actually transferring the money to the government, market economics make it sure that they pass the cost on to the employee.
If this passes, I can only see it as a net loss to the city.
Higher payroll taxes, less disposable income from tech employees, less money put into the market by the private sector in favor of taxes put in by the government. It is highly understood about the effect of economic multipliers between private industry spending and government. When will progressives ever learn?
On that note, businesses: There are many states who would give many tax incentives for moving your company to the city/state. Texas, Washington...even NY...
SF and it's voters apparently do not want you...time to go somewhere that does.
Idk. It seems like the mistake was enacting these tax breaks in the first place, without putting the necessary effort into building enough housing to support the new jobs (or improving transit and building out more densely populated suburbs).
The ideal solution was probably to invest heavily in housing 5 years ago. But since it's too late for that, at this point it's just damage control. Even if SF does finally get moving on building more housing, it's so far past having enough of it in the reasonably near future that a small incentive for jobs to go elsewhere probably would help things in the next ~5 years. As far as progressive redistribution schemes go, this one actually makes more sense to me than most (as much as I hate to agree with Peskin et al).
Come on, nobody is going anywhere there's no tech investors.
There are many states, that pay a lot less taxes (some only Sales and Property tax) and the SF Tech community always ignores because SF is so cool (there's no tech investors).
You guys are staying, tax or no tax, stop whining.
Worth mentioning that this requires a 2/3 vote to pass which means it has pretty slim chances. The proposal has yet to pass through Board of Supervisors which always introduces its own amendments as well.
Right it will be up for voters to decide. But a 2/3 majority victory is almost impossible in SF. . The ultra-progressive ballots have been relatively unsuccessful in SF lately even with 1/2 vote required to win (anti-Airbnb measure lost, Mission moratorium lost).
Probably isn't "tech company" at all. Twitter's payroll tax break which this would resend is actually for companies in Mid-Market, which are the big tech companies. It's not really different than NYC giving a tax break to investment banks by defining the tax break as being "a Lower Manhattan Wall Street address."
"The measure identifies tech companies by the type of tax code they use under the Internal Revenue Service’s North American Industry Classification System. Companies classify themselves. They may face penalties if a government audit finds they are misidentifying themselves."
San Francisco should not do this. Instead, they should enact a city tax, much like New York City. Anyone that lives within the city should pay an extra tax. Now, this assumes they have to do this in the first place. The easiser / cheaper thing to do would be to elimiate the social safety net that lets the problem fester.
A city tax makes far more sense than saying, "Anyone who works for a company in industry XYZ pays more taxes because we hate your entire business category". I have no comment or opinion about your "social safety net" idea. What kind of signal does this send to tech companies? Also, see the failed Massachusetts tech tax that caused lots of controversy before being repealed [0]
>A city tax makes far more sense than saying, "Anyone who works for a company in industry XYZ pays more taxes because we hate your entire business category"
Not if you're trying to take advantage of resentment by a certain portion of the population towards industry XYZ.
Supervisor Peskin has built up a reputation for walking this line; for instance, he generally favors increasing affordable housing (BMR) requirements to very high levels. That appeals superficially to progressives, but also causes fewer units to be created overall, leading to ever-higher market rates and single-family-home values. It's really bad news for anyone who ever wants to rent in a market rate apartment.
This proposed policy follows a similar vein. It subsidizes everyone else - both asset-rich homeowners from earlier generations and those barely getting by - at the expense of San Francisco's newcomers, who have no reason to support him anyway. Coming from Peskin, this move doesn't surprise me at all.
Great to see renters (of all income levels) finally banding together in the most recent election: http://www.sfyimby.org/