San Francisco has beena case study in how not to run a city, but a new report is amplifying the alarm as voters consider a CEO tax that some are calling a poison pill for the epicenter of tech.
The Bay Area Council Economic Institute releaseda studyon Wednesday that found eye-watering business taxes are driving away San Francisco businesses and making it nearly impossible to fully recover from the pandemic. Payroll employment in the city is still 8.6% below pre-pandemic levels, while office vacancy has climbed to about 33% — the highest among major U.S. cities.
Downtown business formation also has essentially collapsed — falling from 711 new firms in 2017 to just 25 last year — as more companies seek out financially greener pastures, according to the report.
The report comes as San Francisco voters are set to weigh in on Measures C and D, two competing proposals on the June 2 ballot that would radically reshape the city’s business tax system.
The think tank’s report found that a hypothetical payment processing firm would owe about $60.5 million a year in San Francisco business taxes — compared to roughly $5.1 million in Seattle.
Meanwhile, a mock cloud storage company would pay about $24.2 million, more than three times what it would face in competing cities.
“San Francisco continues to offer extraordinary advantages in talent, innovation, and global connectivity, but this report makes clear that the city’s tax structure has become a growing competitive disadvantage,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute.
“Other knowledge-economy cities facing many of the same post-pandemic challenges have recovered more successfully than San Francisco. This report shows that tax competitiveness matters, particularly in industries where companies can increasingly deploy talent and investment across multiple regions.”
Measure C, which is backed by business interests, would expand exemptions for smaller businesses in San Francisco — raising the cutoff from $5 million to $7.5 million in revenue — while accelerating scheduled tax increases on larger companies, particularly through higher executive pay tax rates starting in 2027.
Measure D, which is supported by labor unions and opposed by Mayor Daniel Lurie and the city’s Chamber of Commerce, would broaden the CEO tax by basing the figure on a company’s entire workforce — not just San Francisco employees.
Source: California Post – Breaking California News, Photos & Videos
