Imagine if rather than threatening to slow down operations in Seattle when faced with a tax on big business, Amazon CEO Jeff Bezos championed the legislation.
Would the controversial “head tax” on Seattle’s top-grossing companies have faced the same fervent opposition that eventually led the City Council to repeal the measure less than a month after unanimously passing it?
It’s impossible to say for sure, but a similar scenario is playing out right now in another West Coast tech hub. Salesforce CEO Marc Benioff is zealously backing a tax on San Francisco’s top-grossing businesses which, like Seattle’s short-lived head tax, would raise funds for homeless services and affordable housing.
Benioff has pledged to donate up to $2 million to the campaign for Proposition C, a ballot measure that would levy a tax on San Francisco businesses with revenues over $50 million. He’s also called out his fellow tech CEOs who oppose the measure on Twitter and in interviews.
Benioff got into a dispute with Twitter and Square CEO Jack Dorsey over the measure, asking, “which homeless programs in our city are you supporting?” He escalated the issue in an interview with The Guardian. “He just doesn’t want to give, that’s all,” Benioff said. “And he hasn’t given anything of consequence in the city.” Dorsey could not be reached to comment.
Several San Francisco tech leaders opposed to the measure are echoing sentiments their Seattle counterparts expressed during the head tax fight. Dorsey said the proposition is the wrong approach, instead endorsing San Francisco Mayor London Breed’s plan to tackle the city’s homelessness crisis. Breed does not support Proposition C.
Stripe general counsel Jon Zieger criticized the proposition because it would “double spending for homeless services without a comprehensive plan,” in an op-ed run by the San Francisco Chronicle. He called for regional solutions that don’t leave the City of San Francisco footing the bill alone. That’s the same position that the Seattle Metropolitan Chamber of Commerce and other business leaders took when Seattle’s head tax debate was raging.
It’s easy to draw parallels between the two tax battles.
Seattle and San Francisco are both major tech hubs where booming job growth is widening income inequality, driving up housing costs, and squeezing out vulnerable residents. They’ve both been mired in homelessness crises for years and activists in both cities are calling on the tech industry to mitigate the impacts of hyper-growth. But the tax plans differ in important ways.
Proposition C is a ballot measure, ultimately leaving the final decision in the hands of San Francisco voters rather than the City Council. It’s a tax of 0.16 to 0.65 percent on gross receipts rather than employees. An unpopular component of the Seattle legislation was that the plan taxed businesses per-employee, per-hour worked. The tax was designed that way because Washington state’s constitution prohibits taxing income.
The only way to significantly reduce the immediate crisis of 7,500 individuals & 1,200 families languishing in the streets is to scale up now. Prop. C doubles what San Francisco already spends to assist homeless people & keep them housed. https://t.co/StqRUrkLaX
— Marc Benioff (@Benioff) October 12, 2018
The revenue threshold for companies to be subject to the tax is also higher in San Francisco at $50 million.
In Seattle, businesses with revenue of $20 million or more would have been taxed. Proposition C includes a provision for the most lucrative businesses in San Francisco too. Companies with more than $1 billion in revenue and 1,000 employees would be subject to a payroll tax of 1.5 percent instead of the gross receipts tax.
The San Francisco Controller estimates the tax would raise $250-$300 million per year for housing and homeless services. Benioff, whose company would be on the hook for about $10 million a year, says the funds are urgently needed to address the crisis. A September poll of 800 likely voters indicates he’s not the only one. Polling showed the measure winning by 56 percent.
“The only way to significantly reduce the immediate crisis of 7,500 individuals & 1,200 families languishing in the streets is to scale up now,” Benioff said on Twitter. “Prop. C doubles what San Francisco already spends to assist homeless people & keep them housed.”