Sounds like business will be booming for temp agencies as well as janitorial and facilities maintenance contractors.
Whatever the net positive here is wholly negated by the number of stable long term jobs that are going to go away and be replaced by whoever the body shop chooses to send that day. Working for these middle men really sucks compared to working for whoever the service is being provided for (and I say that from experience).
More likely, this will just result in businesses continuing to leave San Francisco.
The pandemic has given most companies a good reason to do so already and my bet is on most of them not returning to their overpriced San Francisco headquarters when this is eventually over.
Contra Costa is full of open space and I believe that many of the cities from Walnut Creek out would bend over backwards to pull in these types of jobs.
There's a mini-silicon valley shaping up in the East Bay along the 580/680 corridor - towns like Dublin, Pleasanton etc are growing rapidly with existing companies and new ones - Oracle, Workday, Snowflake etc are all there.
It helps that they are also much more new housing friendly than SF and SV.
Right! I wasn't thinking about stuff like Bishop Ranch being down there. Yeah, it really does seem like most of the freeway/transit-connected East Bay towns beyond the hills would be very amendable to this type of growth. It really seems like the only exception would be the arc from Orinda to Danville.
It’s hard to determine what’ll happen due to pandemic + remote work, but historically nearby counties with lower taxes have always been the biggest risk for high tax municipalities. Think less “I’m leaving NYC to go to Michigan” and more “I’ll move to New Jersey and commute into NYC”.
But again, the pandemic and rise of remote work makes this hard to predict.
A law firm I use has been in SF for over 20 years. They just moved to a rough part of Oakland. The move was challenging for them and I know they would not have done it if they didn't have to.
This was in the middle of Covid, around the time many businesses and renters were leaving SF. They would not give me specifics, but I assume it no longer made financial sense to be in that expensive high-rise, as all the parking was locked down, forcing all the customers to take BART. I am not sure what affect this new law will have for those that remain.
Another reason SF companies are leaving: restrictions mandating lower maximum elevator occupancy (e.g. 4 persons) is causing long lines at some high-rises, making it hard to get in and out of the building -- esp for quick breaks, food pickups, lunch, etc.
I noticed that as well. The building had really tiny elevators, but many of them. You could fit maybe 3 people in them. I had never seen anything like that in my life.
I doubt it. The purported reasons to leave were already on the table before the pandemic hit, but they were not enough to do so when compared to the reasons for staying. The pandemic is relatively temporary, and once it is over, those reasons for staying will still be on the table.
> Reminds me of the repeated hurricanes that drive people out of coastal areas.
People still live in coastal areas, and rich people continue to build lavish vacation homes on the coast despite the fact that they're washed away by storms every couple of decades. Part of being rich is not having to worry about money, which is why many rich people live in cities, states and countries that tax them more: the benefits of doing so outweigh the costs. I think you can draw parallels between that and companies choosing to remain in cities for similar reasons despite some drawbacks existing.
I have lived in San Francisco since 2005. Over the time I've lived here, we've had the opposite problem: lots of highly paid tech firms moving into SF. This has changed the nature of San Francisco in a way that many dislike, including me. I was initially attracted to San Francisco because, it was chill, it was beautiful, and it had a lot of eccentric, really interesting people. Many of our good friends had to leave over the years as SF has becoming more unlivable because rents have gone up so much, and also it's just not as fun, it's crowded and stressed.
I am aware that I am a part of the problem: my wife and I are white, yuppie, dink tech workers. :)
These issues are complex.
I voted yes on Proposition L: the tax is quite small and I think the tech firms are unlikely to leave, meanwhile SF can get more taxes from them (many of them were historically given tax breaks, like Twitter, to move into the mid-market area). If they do leave, I don't see that as a bad thing.
Meanwhile socioeconomic disparity is an oozing sore in San Francisco, we have billionaires rubbing elbows with homeless people every day. Nationally, we've had round after round of tax cuts for the wealthiest, if SF wants to tax excessive income disparity, I say, fair enough.
It’s not that simple. You can’t pass on taxes on profits. If hypothetically charging 57$ maximizes profits then raising prices just lowers profits.
Alternatively, if some aspect of your process like
sugar is taxed then companies seek alternatives like corn syrup. That extends to property taxes, executive pay, etc where companies seek alternatives to better utilize resources. Though in the case of salaries that my end up as various executive perks.
Likely true of most taxes, but not true of a tax on land value. Taxing land value heavily causes underused land to either be put to good use or sold, at a reasonable price, to someone who will build on it.
Taxing land value -- that is, collecting the lion's share of the annual rental value of the land for public purposes -- removes the speculative element, and makes it worth only what it is worth FOR USE.
That almost always creates jobs, first for construction, and then to utilize the space. It may create housing, and goodness knows, much of California is in desperate need of housing. And housing creates jobs -- houses and highrises don't maintain themselves.
Virtuous circle --- the opposite of the vicious one that Proposition has created (and which was easy to predict before it was enacted).
If you want jobs and housing, tax land value.
Otherwise, keep California doing what it does now.
I agree land value tax is a far more efficient tax than property or revenue taxes. The goal should be to raise revenue with minimal impact on commercial decisions. Punitive revenue/wealth taxes are essentially a form of sin taxes and distort the marketplace.
> if SF wants to tax excessive income disparity, I say, fair enough.
None of the billionaires here made that money from their salary. This will not touch them at all.
> If they do leave, I don't see that as a bad thing.
Chasing away jobs and the tax base will not end well. There is a decent chance SF enters a financial death spiral from its pension obligations. At the very least, massive cuts are in order. SF will not be transformed magically back to the year 2005, but it could very well wind up back in the 70s.
The text of the measure refers to "compensation", of which it gives a specific definition that includes commissions, bonuses, and equity (specifically mentioning stock options). The $1 salary CEO isn't excluded if they also have a huge equity package.
Although it doesn't mention capital gains, so if the CEO owns a significant part of their company already and doesn't have an additional vesting schedule, then they could make personal income from appreciation of the business that wouldn't be counted towards this bill.
Our billionaires are billionaires from their ownership stakes in the companies they founded. For instance, Jeff Besos only makes ~2 million per year in total compensation! He would pay no more in taxes if he were to move to SF (from this particular bill, anyway).
Same. I think it's fine if some businesses leave SF, and even more fine if their staff spread out. Given all our talk of internet-driven disruption and the world-changing nature of electronic communication, it's always been ridiculous that we had to cram everybody together in 0.01% of the US's land area.
I've seen people take that position and I see a fundamental mistake. Look at rust belt cities. Look at NYC in the 70s. When employers leave the people left behind are not better off. This doesn't mean we need to kiss big tech ass, but we have a city where getting a job is a solved problem. Very few places on earth have that.
Rent prices are the underlying problem pushing people out. Underlying _that_ problem is a lack of supply. SF zoned for and issued permits for a large number of offices, but not the corresponding residential structures to house those new workers. So they came here and were forced to compete with existing residents for a place to live.
The fix is to keep the economic prosperity and build more housing.
> Meanwhile socioeconomic disparity is an oozing sore in San Francisco
I'd argue that mixed income neighborhoods are the best kind. Many of the mechanisms for disadvantaging poor communities require geographic segregation. School quality, policing practices, etc
> The fix is to keep the economic prosperity and build more housing.
That makes sense to me. I don't keep up with exact SF policies but I'm guessing there are zoning and the NIMBY factor to deal with.
Underlying this problem is? Money, influence and power? I know a soon to be ex-POTUS that might be the perfect man for the job! He can come in and cut all deals needed. Then SF is saved and then he goes from city to city and country to country to redeem himself.
Yes, NIMBY zoning and a planning process that makes even zoning compliant projects difficult to impossible.
The Board of Supervisors are elected from districts instead of city wide. This means they're heavily influenced by neighborhood associations with a vested interest in maintaining the status quo. Throw in the normal, human fear of change and... the result isn't pretty.
And underlying that problem is Prop 13 - the insane multi billion dollar tax break that Californians bestowed on all land speculators. Until it's gone nothing will change.
Prop 13 is fucking horrible. We can't blame it for everything, though. It doesn't stop SF from zoning for more residential units or allowing the existing ones to be subdivided. All of those new units pay full freight.
Zoning laws aren't laws of physics. People make those up to align with what works best for them. Prop 13 strongly incentivizes less housing (because it boosts voters asset values with no downside to homeowners) and more commercial (because cities now rely on sales taxes to stay functional).
Until the landowners start to feel some downside from the housing disaster don't expect anything to change.
Proposition L is not enough tax to take away the economic prosperity.
I am all for building more and more dense housing. I'm not sure how to accomplish it. The way I see it, SF either becomes more dense, or it becomes even more of "a toy city for rich people" & loses all hope of economic diversity.
I grew up in Michigan. I am well aware of how cities can fall into decline. My wife on the other hand grew up in Minnesota. So in my mind, I often compare Detroit with Minneapolis. I think the problem with Detroit is that, it never diversified. It was all auto industry. Minneapolis's economy has several pillars: finance, insurance, healthcare, industry. You can ask yourself whether or not SF is either Detroit or Minneapolis in this example. I tend to think of SF as the New York of the West coast. It has very unique geographical advantages. It will have ups and downs, but will continue to be reborn.
>we've had the opposite problem: lots of highly paid tech firms moving into SF.
Quite the problem ... the kind of problem that multitudes of cities and regions in the world are desperately trying to recreate.
>This has changed the nature of San Francisco in a way that many dislike, including me.
This is where progressives don't live up to their name. The nature of cities is constant change. Meanwhile the activists are desperately trying to keep change to a minimum so that the character of neighborhoods never changes. It's an interesting dichotomy.
>because rents have gone up so much, and also it's just not as fun, it's crowded and stressed.
Rents will drop if you increase density ... but that would mean building higher density housing and thereby accepting that the character of cities and neighborhoods change.
>I am aware that I am a part of the problem: my wife and I are white, yuppie, dink tech workers. :)
The fact that you're white and a tech worker isn't the problem. It's that you had the opportunity to move to San Fransciso for work due to the tech boom, and now you're trying to pull the ladder up so others cannot do the same.
>Rents will drop if you increase density ... but that would mean building higher density housing and thereby accepting that the character of cities and neighborhoods change.
I keep hearing proponents of strict exclusionary zoning laws arguing that they don't like the risk of having the value of their investment decrease because of this. SF will be a great example of how change happens weather you like it or not and allowing dense housing is what makes the change good or bad. You either sacrifice some of the view or sacrifice not having homeless camps.
I have never seen rents drop due to high density. If anything, rents are cheaper in sparsely populated areas. Examples abound. Rents won’t become cheaper if we build more. However, building more will certainly mean more property taxes for the government.
San Francisco gets several millions of dollars to spend from which they spend a measly amount on the homeless(and that’s over 350 million/annum)..where is the rest? Even the money spent on homeless solutions is mostly going to contracted non profits(look at their board..probably has ex-city employees as board members) or more public sector employees.
With 350 million, I would have created a new sustainable village to house 1000 people with jobs inside. Instead, SF still huffs and puffs and spends tax dollars on piffle and squat.
>I have never seen rents drop due to high density.
You think housing is somehow immune to supply and demand? If that's the case, you can't claim rents are rising due to increase demand from young professionals. Which then raises the question: "What does affect rental prices?"
Yes you did. You wrote: "Rents won’t become cheaper if we build more." ... If Rent rates are not a result of supply and demand, then where do they come from?
> The fact that you're white and a tech worker isn't the problem. It's that you had the opportunity to move to San Fransciso for work due to the tech boom, and now you're trying to pull the ladder up so others cannot do the same.
This is quite the ad hominem. I may have missed it, but I'm not sure where OP said anything about density or housing. Is there something wrong with not wanting the city that you love to be invaded by the human version of a swarm of locusts?
As it turns out, not everyone who works in tech in SF is an opportunist. There are plenty of kind folks who just want to make a life for their family, but like any boom, it also attracts a multitude of people who are just here for the money and don't give a damn about the city or region.
Ah yes, men and women who look at human needs and decide to serve them in exchange for compensation on the basis of voluntary exchange are just like insects that being multitudes into destitution and misery.
I see nothing in the OP's post that suggests that they're against re-zoning, building high density housing, or other measures to remove barriers against cheaper housing.
I didn't say he was but he used language that evoked San Francisco losing its character due to tech professionals moving it. It brought to my mind the language that anti-housing activists use to prevent new housing development in districts like 'The Mission'.
I have never seen a high density city have low rents. Mumbai, Hong Kong, London, NYC. Is there any factual and proven example of a city that has increased density and housing became affordable and cheaper as a result of more units?
I'm glad you pointed this out. I've had this thought floating around in my head for a long while. The only affordable high-density cities I can think of are in Thailand, Africa, and maybe Eastern Europe? I think NYC is our best comparison though... it's actually much more expensive per square foot to buy in Manhattan than it is in SF, and the rental prices are approximately the same.
Singapore has public housing. You don’t own the unit. You lease it from the govt. I think it’s 99 year lease transferable.
Most residential units are not used or traded as a speculative asset.
[..] The majority of the residential housing developments in Singapore are publicly governed and developed, and home to approximately 78.7% of the resident population.[..]
> the kind of problem that multitudes of cities and regions in the world are desperately trying to recreate
I always tell people that, "it is a nice problem to have." Totally agree with you.
But it is still a problem nonetheless. It's fair enough to raise taxes to try to solve some of the problems which hugely successful businesses have created by displacing people.
Building more housing: YES, more dense housing: YES, programs for homeless people: YES -- on the back of such success, we should have all the money we need to maintain San Francisco.
YES my presence is symptomatic of the problem but, being self-aware, I try to address that by genuinely loving San Francisco, paying more taxes myself when I am asked to do so, participating in local art and culture, and not treating it like a transient place but rather my home and a treasure.
Regarding your statement that I'm trying to block others' advancement: proposition L is about taxing companies whose CEOs make 100-600x more than the median at their company. I am not hurting other regular folks by supporting this, furthermore I'm not even hurting the CEOs (they make 100x more than normal folks). If you benefit from society to the point where you're the leader of such a company, for goodness sake, give a little back gracefully, that's progressive taxation and it has been one of the foundations of our society since 1862.
SF is a liberal, expensive place, because supporting such population density and giving everyone a high quality of life is hard and requires work and money. If we categorically define all taxation as bad, we lose all basis for collective action. America is getting lost in the labyrinth of its own arguments.
> If you benefit from society to the point where you're the leader of such a company, for goodness sake, give a little back gracefully, that's progressive taxation and it has been one of the foundations of our society since 1862.
100%. I think we agree on more that we disagree about, but we happen to be talking about Prop L.
The question on L is what's any of this have to do with the amount of money made by a CEO's employees? Should a CEO of a small number of highly paid employees be taxed less than the CEO of a large number of blue collar employees? That doesn't make any sense.
People talk about the ratio of employee to CEO pay because it's a quantifiable indicator of underlying causes. Trying to change the indicator directly misses the point. Why is the city so unaffordable to the working class? That's not being solved by this.
Your comment seems to lack understanding of both the tax and San Francisco's problems. The tax would not apply to Twitter, and the Mid-Market tax break was tiny at about ~$50m over its entire life. In addition, all the inequality issues in San Francisco are of its own making: the city began pricing out median income households 40 years ago while the Federal government was simultaneously subsidizing long commutes. Therefore, the only people left are those who benefit from proximity to high paying jobs or those who benefit from the city's social services more than they value moving to lower COL places like, e.g., Phoenix.
Around 2007, a gentleman named Steve Jobs invented the iPhone and unleashed another tech boom, driven primarily by the increased adoption and use of the smartphone and apps within them.
The spoils from this boom primarily benefited companies and people based in and around the Bay Area. People there didn't realize that the rest of the country (and much of the developed world) were still struggling and haven't fully recovered from the 2008-10 recession. The increased prosperity and resulting tax base growth papered over the fundamental mismanagement and poor governance in that area. Some of the highest incomes and highest taxes in the country and yet some of the most dilapidated infrastructure, highest poverty rates and poorest quality of life in the country. "European taxes and third world quality of life" is how I describe the area to people.
Yet, people moved here for the jobs and then new jobs followed the people.
14 years (i.e. half a generation) since then and at the beginning of what is another major recession and economic reset, it's perhaps difficult for most people to imaging that the appeal of the area has diminished and that things aren't magically going back to 2019. People have moved out, companies are hiring elsewhere, the tax base is down >50% and budgets are deep in the red. The local governments can try and raise taxes to squeeze a few million more here and there, but fundamentally, they will have to cut waste and cut spending in the next few years to survive.
I'm not saying SF is going to become the next Detroit, but I remember NYC in the 70s or Seattle post-Boeing (also, early 70s) as an example of what happens to cities when a major industry leaves town. It's a death spiral of lower tax collection -> poorer services -> more people leaving.
>The increased prosperity and resulting tax base growth papered over the fundamental mismanagement and poor governance in that area
This applies to sooooo many cities. I think money beyond the level required to provide basic services just gets wasted and the citizens see nearly nothing from it. It's so common it seems like some fundamental law of the universe.
Over the time I've lived here, we've had the opposite problem: lots of highly paid tech firms moving into SF. This has changed the nature of San Francisco in a way that many dislike,
Increase supply and prices will eventually fall. This is not a complicated problem and the relationship between supply, demand, and price has been known since the time of Adam Smith. https://news.ycombinator.com/item?id=16704501
> the tech firms are unlikely to leave, meanwhile SF can get more taxes from them (many of them were historically given tax breaks, like Twitter, to move into the mid-market area).
Twitter's highest paid executive looks like they make something in the $7M range (Dorsey's total comp is approximately zero for several years, as he is counting entirely on capital returns on his investment, not compensation from the firm); I'm doubting that their median SF pay is below ~$70K.
How many SF companies have FT in-house janitorial and facilities now?
I've worked for a lot of (admittedly, tech startup) companies, and none of them have.
For that matter, companies I've worked for who needed telephone-answerers or other low-compensation service workers have already spun that off into separate companies, for a similar reason - google '401K highly compensated employee' to see why.
CEO compensation historically wasn’t orders of magnitude greater than worker pay like it has ballooned to today and there were plenty of long term jobs. This just formalizes the idea that there shouldn’t be an egregious difference in compensation that was commonplace before the idea that a corporation’s sole purpose is to maximize shareholder value became the main driver of CEO compensation.
I'm completely at a loss as to why they wouldn't have already done as much of this as it was conceivably possible to do right now - or wouldn't get there eventually.
Companies don't pay you more money because they CEO looks at his salary and goes "yeah I think I have enough".
Because outsource vs in house is not a simple decision. there are many factors each with a set of pros and cons.
Sometimes outsourcing lets "them" focus on efficiency and getting the details right and so you are better off. Sometimes out sourcing cuts quality to get better costs.
There are many accountants, it is relatively standard across industries, and so you can outsource it all easily - but most big companies have it in house anyway. (though they will hire out some of the grunt work) This is one area where messing up will kill your company so you better keep a close eye on it. (An accountant can easily steel enough money that you can't maintain cash flow - you might get the accountant in prison but your great company is bankrupt anyway). This is but one example of many cases where out sourcing is bad.
On the other side power utilities outsource most tree trimming around power lines. The companies that do this work give the utility a great deal because the contract that keeps their crews busy 3/4ths of the year which is important because most of this type of work is right after a storm and employees are easier to keep when they aren't laid off 3/4ths of the year waiting on the next job.
When an out sourcing is borderline not worth it because of risks above it, it may become worth it after this change.
It would be good if they said something like "staff from other companies who spend more than 50% of their work week at your office will be included in your company average wages, even if hired through a subcontractor" — like residency requirements but for employees — to cover catering/security/reception jobs etc. that may get outsourced.
So how does one "speak up" as a janitor then? I think as long as maximizing shareholder value is the dominant incentive of corporations, your job will always be at risk of being outsourced unless you have either a clear competitive advantage or a strong collective bargaining ability.
One would have been voting down on this stupid measure. SF has a child's notion of how to fix problems. Rich CEO bad? Tax companies for rich CEOs. Tenderloin full of shit? Create a whole new division of people with more taxes to clean up shit. It never addresses the root cause.
There won't be a Bay Area exodus anytime soon but you bet a startup is going to move out of SF when it starts to get big. The additional taxes will only hurt the companies that have a firm root here and will discourage future companies from forming in SF.
Sf wants everything to remain exactly the same in a world that's changing faster than ever. It's time to encourage new residential units, properly tax land/property, and start actually proactively fixing its problematic neighborhoods.
Sounds like you don’t live in the Bay Area. Almost every tech job that isn’t salary, and plenty of salary jobs, already are.
It is standard practice in the Bay Area to use staffing agencies for everything but executives and core talent with all signs pointing to the practice becoming even more common well before this.
Wait until a commercial robot-vacuum/robot cook provider comes along and underbids the temp agency.
You can rent a robotic fry cook for 1'500$ a month from Miso Robotics [0]. I know somewhere someone is looking at a commercial-grade surface cleaner and trash-picking robot.
Does anyone have the text of the law, or a detailed description of it?
> Under a newly approved law, any company whose top executive earns 100 times more than its average worker will pay an extra 0.1% surcharge on its annual business-tax payment. If a CEO makes 200 times more than the average employee, the surcharge increases to 0.2%, and so on per multiple of 100.
What do they mean by "earns," are bonuses included? Nonmonetary compensation like having your car or mortgage paid for directly? Increase in stock value that's part of your comp package?
I'm sure folks will try to game this to get around it, I'm just curious how.
Also it sounds like this is a surcharge on taxes paid, not actually a new tax on revenue. So if you pay $1 million to the city of San Francisco in taxes, and your CEO earns exactly 100x more than the average worker, you now have to pay... $1,001,000?
Ensure your outsourcing is not in SF. The outsourcing firm CEO pays themself whatever damn multiple they like. Voila, SF keeps all the cushy jobs they like, makes the working poor someone else's problem.
That doesn't seem all that relevant to the topic of taxes, and even if it did, I don't believe there's a very good correlation between increases in CA taxes and improvements in the housing situation.
The amount of money that this is expected to bring is ≈ to the size of SF's homelessness budget so it's not the biggest stretch to link them (although you could bring up lots of other issues to)
Err, plumbers exist, and showers and bathrooms are added to commercial buildings all the time. Nobody is suggesting simply telling people to live in existing office space as-is - converting them would include accounting for these things.
It is not easy to do this in most buildings. There are some examples (eg. 100 Van Ness) but it takes years and really was not as simple as people make it out to be.
Why not loosen building restrictions and allow to build new and high outside of a narrow downtown area? Why not loosen restrictions to build smaller, tenement-style units of there is demand?
> The tax will levy an extra 0.1% to 0.6% on gross receipts made in San Francisco for companies whose highest paid executive makes 100 times or more its median worker’s salary. The amount levied will increase in 0.1% brackets proportionally to the pay ratio. A company whose highest paid employee earns 200 times more than its median San Francisco worker will get a extra 0.2% charge on its gross receipts. For companies whose CEO makes 300 more, the charge jumps to 0.3% and son on. The tax caps at 0.6%, and only companies with gross receipts over $1.17 million will be targeted.
> Under the measure, gross receipts and CEO compensation will include money made from stock options, bonuses, tax refunds, and property, a caveat seen by many as a way to target the tech sector where CEOs are often compensated in non-salaried bonuses. Tech is expected to account for 17% of the tax revenues, according to an estimate by the city’s chief economist, while retail and financial firms are expected to account for 23% of the revenues each.
> The CEO tax is expected to generate between $60 million to $140 million per year.
Doesn't seem that big in comparison to what SF annual budget is.
> Proposed legislation would raise the Transfer Tax rate on properties in
the city that sell for more than $10 million. For properties selling for
between $10 million and $25 million, the rate would rise from 2.75% to
5.5%. For properties selling for over $25 million, the rate would rise
from 3% to 6%.
>Doesn't seem that big in comparison to what SF annual budget is.
There are no singled-out pockets that you can tap into and make up SF annual budget. It's all about cumulating a lot fo long-tail small pockets + 1-2 large pockets.
I'd also be surprised if it brings in anywhere near the quoted amount since the SF supervisors have proven themselves incapable of considering second order effects such as companies contracting out their low-pay roles or simply leaving SF.
Pretty hard to claim this when Visa decided to massively expand their Global HQ in San Francisco after Prop C passed.
The pandemic has thrown things in a wrench, but prior to the pandemic, San Francisco businesses were constrained only by commercial real estate. There was literally no space left to put any new businesses.
We've been collecting Prop C revenues since March 2019, and they are exactly as forecast.
Two economists walk down a road and they see a twenty dollar bill lying on the side-walk. One of them asks “is that a twenty dollar bill?” Then the other one answers “It can’t be, because someone would have picked it up already,” and they keep walking.
this is a tax on high pay roles, so I don't understand your concern. Also I hope and pray that it would cause companies to move, that is essentially working towards the same goal.
Do you have a link of what you're referring to? I know some of the supervisors personally and that strikes me as an extremely distant view of them. I think it's a lot more likely that you're projecting strawmen intentions onto policies.
I tried to look up the actual bill, but it doesn't provide any information on how stock options are valued [0]
I am curious how you would determine what the fair value of a stock option is when it is granted. Assume the option's strike price is for the current stock price. Theoretically, that stock option has a current value of "0" (assuming that it is non-transferrable so we don't have to worry about market price)
That stock option is expected to increase in value if the stock price increases (which then aligns the CEO's salary with shareholder value). So in five years, those stock options might be worth millions of dollars. But would you then say the CEO got paid millions of dollars five years ago? But the stock options when they were granted were 0 - they increased in value when they were the property of the CEO. If the CEO bought artwork 5 years ago and the value increased 10x in 5 years, would you also add that to his taxable income?
I am sure there are ways to value these options. But I can't find the details in this bill. Do you know how it might work?
I have no idea how far fetched this is, but there are clearly ways to price options given current share price, the stock price, expiry, etc. Black-Scholes comes to mind, but I am not an expert at this and don't know how reasonable of a valuation you could get this way. Just pointing out that there exists a mathematical framework for option valuation, which is presumably what Wall Street uses as the basis for pricing call/puts on the open market.
Seems like the solution is directly compensate your CEOs very little and outsource executive services to a third party company that aggregates CEO compensation as a "contracted entity". This company will mostly be paying CEOs, so its median employee salary will be relatively high.
Also depending on how this is structured, disregarded entities still consolidate to the individual so the measure could be flipped to be measured at the (trust ignored) individual level and it would still work.
> hopes the tax will drive companies to reexamine their compensation structures
Outsource the lowest paid workers to a subcontractor to raise your average employee wage. I’m not sure that has a desirable effect, but it seems this law certainly financially encourages that.
Bechtel, McKesson, Petrovich, Jamba Juice, Core-Mark, Houzz, Lyft, Xero, Pandora, Robin Hood, and hundreds others have moved their HQ to somewhere other than California.
You can pay lower paid workers a higher effective wage in pretty much anywhere but California.
> Outsource the lowest paid workers to a subcontractor
So, then the sub contractor pays the taxes and invoice you with mark-up?
Because those companies have ceos too?
I think this is rather fascinating. Assume a de-facto minimum wage of 10 dollars an hour, 2000 hours/year for 20k/year lower bound. 200 times that is 4M usd/year in compensation for a single individual. Does seem wierd to see such a big difference in campensation. If nothing else, seems to illustrate a broken labour market with horribly skewed bargaining power.
I don't see the reason that the contracting firm CEO would likely clear $2M/yr as a low-risk, mostly undifferentiated supplier of office services. (That’s where the markup to the clients comes from, not the tax.)
But if the tax does become a problem, split into OfficeServicesA and OfficeServicesB corps and let your clients pick which one they'd like to hire. Or have your spouse or family member do some of the administrative work (for business continuity reasons) and split the comp.
I'm sure companies will find a way to avoid the tax. Splitting the company (low income workers are already rarely employed directly), finding compensation forms that don't count,...
The real estate transfer tax sounds rather misguided as well. I expect it to distort the already unhealthy real estate market in harmful ways.
I'd rather go for higher ground value taxes with reductions for high density occupancy or people who live in that building themselves.
The worst case scenario is a democratic super majority where CA and it's insanely mis-managed cities are bailed out by the federal government. Think GM Auto Bailout, but this time for an entire state...
This is coming from someone who's never voted for a single republican. Let's remember that [0] SF also just elected a DA who's parents were literally complicit in the Weather Underground bombings...
As a California outsider, I had a very difficult time making it to the end of the article you linked. Maybe Chesa Boudin is a terrible person, but that article alone just reads like someone's angry rant and told me very little about Boudin himself.
I doubt it has the intended effect as SF tech companies are already moving to distributed locations. Workers have had the past 8 months to enjoy avoiding long commutes and stepping over needles and feces.
This design seems really odd. Why target business and CEOs in particular? Why not just have a straightforward high progressive tax? It also seems like it will reward the practice of outsourcing lower-paid job functions, or discourage employers from hiring lower-paid workers generally. The whole thing seems designed as a punitive measure, without really thinking about what incentives it creates.
State law prohibits local governments from using progressive income taxes <https://leginfo.legislature.ca.gov/faces/codes_displaySectio....>. San Francisco therefore uses a combination of gross receipts taxes (whose rates vary depending on business NAICS industry code and are graduated), payroll taxes (now repealed), real estate transfer taxes, sales taxes, and parcel taxes.
In my opinion, the state legislature should amend RTC 17041.5 to allow local income taxes, but only on rent, imputed rent, and capital gains within the city. Rents are the thing that local governments can tax without distorting the market.
As for this performative CEO tax, I think that the only positive effect that it will have, if any, would be to raise awareness of an issue whose solution has to come at the national and state level.
that was my reaction too. I don't live in the US, so this is an honest question. Most of the comments here are disparaging about the policy. Is that because:
1. you agree with the principle of addressing wealth polarisation, but don't agree with tax as the mechanism? (in general or the proposed model specifically)
2. you don't agree that increasing wealth polarisation needs to be stopped/reversed?
3. something else?
Thanks.
--
Edit: fixed the numbering, forgot I wasn't writing markdown!
Most motivated people with the means to scrape enough cash together to even try to start something dislike legislation and the idea of "redistribution" because usually these plans raise far less money than politicians think, but moreover the politicians coming up with these plans have already proven they have no clue how to spend taxpayer dollars.
To be frank, as a supporter of capitalism - I generally support the notion of high taxes in europe because the populations who pay these taxes clearly see HUGE societal benefits as a result of half their income evaporating. There also seems to be more respect of the people's money from these gov'ts regarding how they spend taxpayer money is spent and with a clear aim to help the people NOT partisan goals, wars etc. I may be incorrect here (open to correction) but it seems like US politicians (federally at least) seem entitled to taxpayer dollars. Most forget that until WW2 the idea of federal witholding simply wasn't a thing and many middle class families were flushed with savings.
Unfortunately, both sides are at fault in the US. The only way this is going to change for the better is to cease the cycle of one political party only pandering to it's base instead of motivated and able americans.
I don't really agree with you characterization of where our taxes go -- federally, 64% of the government budget is related to mandatory spending, almost all of which is social security, medicare, and medicaid.
15% of the budget goes to the military. That makes the U.S. the largest military spender in the world.
15% of the budget may seem expensive, but it's not fair to compare it to Western Europe. NATO is a big reason why western europe does not need to spend more on their own defense.
I believe that's a good thing - it's in the United States' best interest to avoid rearmament in Europe, and Europe has never been at (relative) peace for so long as it has been since the emergence of the post-WWII consensus -- but they do in fact have more money for more non-defense discretionary spending than we do as a result. The Euro area spends 1.4% of GDP on military spending while being protected by an umbrella of security provided by the U.S., which spends 3.7% of GDP on the military.
Again, I think this is good for the U.S., we benefit from the liberal world order that we enforce, but I think it has to be taken into context when the EU is described as a great example of how to spend tax money on wise social programs.
I take a bigger issue with programs like student loan debt forgiveness which would be a slap in the face to poor people like myself who worked their way through college in order to no longer be burdened by loans. Not to mention the fact that without a refresh of regulation on universities (specifically graduate degrees) loan forgiveness would just further embolden universities to increase tuition.
The issue with taxes in this country is that the budget is expected to always be met WITH excess. That's the disgusting part, the assumption that "well we can go over and shell out benefits to our beneficiaries (people who voted for us) and the american tax payer will foot the bill" is atrocious.
Both parties are guilty of this, however I also find it ironic that Americans (specifically privileged americans) seem to think that "taxing the rich" is a solution, when a) rich people already pay an overwhelming majority of taxes, b) the rich will always find ways to out-smart the government and avoid taxes they deem as unfit and c) even if you taxed earners above $400k 95% of their income it would only amount to maybe a trillion dollars - so not even close to bringing the national deficit down.
> I take a bigger issue with programs like student loan debt forgiveness which would be a slap in the face to poor people like myself who worked their way through college in order to no longer be burdened by loans
This is like saying that a cheap cure for cancer would be a slap in the face to people who drained their life savings battling cancer, and to the families of those who lost.
To be frank, conflating healthcare and higher education is quite a mental leap. Yes, they both have problems and are "free" in other countries - in either case, nothing is really "free".
In a basic way, all taxes are "wealth redistribution". If you tax every taxpayer $0.02 for public roads and non-tax payers get to use them, well, that's redistribution - and nobody (seriously) has problems with this.
The problem comes with policies of the form "We're going to tax [some wealthy group] and redistribute the money to [some other group]". There's a few sets of issues:
1. The money never gets to the downstream group. It gets eaten up by fees and processing, etc. Great for the middleman but not anyone else. If it does get to the downstream group, the total amount is gravely reduced.
2. You have to make a very strong case for taxing [some wealthy group]. Simply having wealth doesn't seem a good basis for taxation - "You're successful so we're going to charge you more taxes, maybe next time you won't be so successful" Obviously there are other arguments that can be made - the wealthy stole their money, or gained it illictly, etc - but those arguments tend to be individual cases and don't allow acting against an entire class of people unless you go into weird theoretical territory.
3. Solving "wealth disparity" isn't a meaningful goal. A thousand homeless folks all in the same campground have no wealth disparity - that doesn't mean you've improved their life. Simply funneling money doesn't solve problems, and making the end goal to shift around bits of paper is mistaking a process for a goal. If your goal is "We should provide a base level of healthcare to those who can't afford it" and can name an actual price for that, then that's a meaningful goal and you can tax appropriately if voters approve it.
I think there are essentially three schools of thought.
1.) wealth/income inequality is inherently wrong, so redistribution is automatically good. private property is theft!
2.) whatever people get paid is theirs, fair and square. therefore redistribution is automatically bad. taxation is theft!
3.) some people are genuinely much more productive than others, and their pay may reflect that. at the same time, people can acquire more than their "fair share" by exploiting vulnerabilities in the system.
from the perspective of 3.), redistribution via tax looks like a dirty hack to mitigate the consequences of a deeper problem. it makes things a little better in the short term, but it doesn't address the root question: why are some people able to capture outsized compensation for their work? but hey, sometimes you have an urgent issue and the quick fix is all you have time to implement.
> from the perspective of 3.), redistribution via tax looks like a dirty hack to mitigate the consequences of a deeper problem.
Scenarios 1 and 2 don't exist in the real world. They are just theoretical models.
Every law is a "dirty" hack, because the deeper problem is the nature of humans - which is to hoard privilege, wealth, power, and security - and the way that influences their societies.
Almost every non natural constraint civilization has imposed on humans has been to either support one group's hold on power and security (i.e primogeniture in feudal societies, taxes imposed on non-believers in the state religion) or the opposite: to redistribute power and security across the broader population (Magna Carta, The New Deal, Social Security / Medicare in the US).
I think #3 is close, but it's not just that some users concentrate a disproportionate amount of wealth. It's also the quirk of human society that great hoarding of wealth winds up distorting it such that economic worth becomes directly tied to human worth. This is undesirable generally, and taxes are the main mechanism for the government to regulate this tendency.
> 1.) wealth/income inequality is inherently wrong, so redistribution is automatically good. private property is theft!
There is a version of this that doesn't care about "right and wrong": Wealth inequality may happen for good and natural reasons, but too large quantities lead to a worse society for wveyone, and so redistribution is one way to reduce it.
You can see how Islam addresses this issue in a very pragmatic and moderate manner. People are heavily encouraged to work and generate wealth, at the same time, it acknowledges that there will be a poorer segment of the population due to different factors (opportunity, luck, hard work, inheritance, etc.).
Islam requires a form of "charity tax" called Zakat. Its proceedings goes to the poor and needy, among others (e.g. freeing slaves, wayfarers, etc.). The percentage is different based on the commodity (e.g. livestock is taxed differently from cash), but the percentage is fixed (only 2.5% in the case of cash money annually).
However, and extremely importantly, it also prohibits exploitative and parasitic practices that cause very unfair advantages to some at the expense of others. Obvious things like lying and cheating (e.g. false advertising), but also very important issues of lending money with interest, selling what you don't own, selling debt for debt, etc. Most of which you'll find on Wall St. as normal behavior. Everything inside these boundaries is up for grabs. Remove these horrible practices, and things will get better almost by definition without having to start taxing people even more.
I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort?
My personal theory of "inequality" is that it isn't necessarily a bad thing. A distribution of income levels will always have a long right tail as you cannot make negative income but there is no theoretical limit to the maximum income. If all wages grow by the same relative amount, you would see increased inequality.
I think it is a problem if wages aren't growing for all portions of the distribution, but that is precisely because of the lack of growth for some and not because of the existence of growth for others. So, yes, I do think that growing income inequality may be a societal issue, but only if it is an effect of wage stagnation for middle and lower classes (which it is).
I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels. Automation and globalization may also be the cause of the continued growth in the very high wages. Even if they share the same underlying cause, one didn't cause the other.
I understand, but don't agree with, the argument that increased inequality causes social problems on its own. According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within. I don't agree, I think social problems come from the difference in reality compared to expectations of how one thought their future would go -- in other words, it is much worse for someone to see low wage growth in a stagnant economy where their standard of living is declining relative to their parents than it is to see moderate wage growth in a growing economy but there are some other people getting super, super rich. I don't think one's life relative to rich people is that important compared to one's life relative to personal expectations.
So, in that sense, I don't agree with redistribution schemes that intend on fixing a symptom of a problem (that rich people exist) rather than fixing a cause (wages are stagnant).
If the idea isn't to just reduce the inequality, but rather to supplement lower incomes -- there is absolutely no version of "taxing the mega rich" that we could do which would raise enough money to redistribute to the rest of workers such that it compensates them for the lack of wage growth at the lower end. It can't be done, there's not enough money. Eventually you have to tax the (productive) middle class.
From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve.
> I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels.
Who disproportionately benefitted financially from automation and globalization?
> From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve.
You need to do both. No one was talking about this 20 years ago because most people were participating in the "good economy", even if some benefitted far more than others. Now people are being told the economy is good (by both major polities), but it doesn't match reality, which you noted is a major cause of angst.
Additionally, if your goal is to create more jobs and wage growth for low and middle income people, the best way to do that is to reduce economic concentration and create more opportunity for competition and small business. It will be less cost efficient, but the economy will be more resilient and the wealth would be more broadly distributed, even though some people could still achieve obscene wealth.
Thanks for the comment. One point to clarify on my post:
> I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort?
I wasn't intending to equate distribution and polarisation. By the latter, I meant the steady shift of wealth to a smaller population who have become progressively wealthier. While, at the other end, the majority have beome comparatively less wealthy compared to equivalent social cohorts over time.
Perhaps more succinctly, it's the _change_ in distribution, not the _presence_ of a distribution.
I'm no economist and I know there are a variety of opinions on distribution, but I understand there's reasonable agreement that globalisation has increased polarisation [0].
> According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within.
You shouldn't think of the destruction of the system from within as the problem. Some might fear that, but afterall, its unlikely that the people without power would beat those that have it.
The problem is the power zero sum game in itself. Wealth and power are both ways to gather even more wealth and power. In a simple society without a government you could simply use the power to buy weapons and soldiers to coerce the wealth of others. In our society you can use power to shape the rules more favorably for your own group.
As the wealth ratio of one group converges to 100%, the other groups have gradually less influence, unless allowed by those in power because of ideology or their good hearts.
Either you see this as fine and natural, or your ideology prefers everyone to have some amount of freedom over their own lives.
In the later case you may look at ways to reduce the wealth and power inequality, by weeding out rules particularly favorable to the powerful, or by trying to spread wealth more evenly.
It's funny/sad that people act like "redistribution of wealth" is a scary concept. Wealth is constantly being redistributed by commerce, and mostly it is being redistributed to the people with the biggest piles already. Overpricing products, underpaying workers, lotteries, taxes, rents, and investor/borrower arrangements are all mechanisms to shift wealth around.
A trade between two parties is not a redistribution of wealth .
If I buy a car for $10,000, then I now have a car worth $10,000, and the seller has $10,000. Wealth was not redistributed, we’re both where we started.
When the price isn't optimal, which it never really is, it's not an equal exchange of value.
The typical tautology toted that if you spend X then it's worth X is just willfully missing the point that there's such thing as a bad deal. When you build bad deals into a system such that some group of people only has bad deals as options, you are able to extract wealth from them. That's what life is for many people -- a series of bad deals with no other options.
What a massive incentive for companies to not classify people who do their work as employees. You don't have to pay extra CEO taxes, and you don't have to provide benefits!
Pros: lots of funding, lots of experienced employees who have taken companies from seed to IPO, probably a higher chance than some other areas to go from well off to ridiculously rich
Cons: I get taxed more if I start making 200x what the average employee in my company makes.
Can you see how no one would care unless they're 100% sure they're gonna be making 200x what their average employee makes regardless of where they put their business?
This reminds me of that episode of South Park where they form a band but refuse to play until internet music piracy stops. I doubt that someone talented enough to build that kind of company is going to factor this into their decision to run it from SF.
Even if you don't account for anything else, the high cost of living here translates to expensive city employees and expensive services. If you account for the "exchange rate" between San Francisco dollars and other city dollars, I wonder how the per capita spending stacks up. I expect it still doesn't look good, but I bet it looks a lot less ridiculous.
Maybe if San Francisco did things differently, costs might look like other cities and counties in the Bay Area. Either way, it's going to be much more expensive than your typical city.
> costs might look like other cities and counties in the Bay Area
True, but most likely in a way that also reduced the cost in other cities and counties, because the high cost of SF has pushed people out to lower cost areas in the outskirts. If SF wasn't so expensive, more people from the surrounding area would live there, having the desire if price wasn't the issue, therefore reducing demand and thus costs for the outer areas.
I agree they shouldn't be seeking to grow their budget endlessly. Why do we accept that behavior from businesses? IME, they often effectively ruin their own products and do harm to society by attempting to extract the maximum benefit from market position. It seems that in many people's opinions they're just behaving as they should.
The business is making money by a voluntary exchange: the tax is not a voluntary contribution. Maximizing lack of consent is not the same as maximizing voluntary exchanges.
To everyone saying, "this will kill low wage jobs", most companies already outsource their low wage jobs. Their janitors and cooks and maintenance people are already via contractors. Their lowest paid employees are most likely their admin assistants at $50K a year.
So basically this is targeting companies whose CEOs make over $50M a year, which is basically Twitter, Pinterest, Google, Facebook, Uber and a few others that actually have an office in San Francisco.
And I'm sure Google and Facebook et. al will fight them over how much money they "make" in San Francisco.
Google and Facebook are in the SF Bay Area and not in SF City. Also, Zuckerberg gets a $1 salary. Unless this law targets full compensation (stocks included), it's not going to touch him. FB is too big to accept a 0.1% or 0.6% gross tax. This law is targeting smaller companies (think Stripe and similar).
San Jose is an alternative for the CEO/Headquarters. There could be a minor office in the city where tech workers prefer to live, or they could commute down instead of up. Imo, SF City is overplaying their hand here and might be in a bit of a shock for the reality of how business works. The last bubble and good times might have distorted their understanding.
Thanks for the clarification. But any company operating in SF is a bit crazy. So if a bank has a branch/office in SF, then it's liable for this tax? For all their gross income or just for the income generated within city boundaries?
The law says just money they make in the city. But it's kind of vague and I'm sure there will be a lot of debate between the companies and the city about how much they are making in the city.
The medium size businesses that only operate in SF will be screwed the worst.
The law says any company operating in SF, which would include FB and Google, who have offices there.
Very interesting, but, does that mean that execs who don't personally work in SF are subject to the tax? Ie, will Citibank's Michael Corbat, working out of Citigroup's New York offices, need to pay the tax because Citibank has bank branches in SF?
I'm not a lawyer or accountant, but my layman's reading of the law says it is a tax on gross receipts for the company in San Francisco, not the CEO directly. But applies if anyone who works for the company makes more than 100x the median.
I'm really not sure how they plan to enforce this at all.
That was fast. Unless this tax targets all of the bay area, the moving cost is not really much and your workers could still commute with a WFH option. Imo, San Jose is in prime position to build a real city with the possible exodus from SF.
Population essentially doesn't matter - people are talking about density here. For example, Phoenix is essentially an enormous suburb with giant malls, and you never hear of despite its population numbers. Boston is a small city with rich urban life that occupies an outsize role in the American psyche.
SJ is big by population but it's essentially a tiny downtown and a huge spread of suburban single-family homes and strip malls. And (before the covid mess) the traffic was already not great. So if we ever get back to in-person office working, and after Google sets up their new office in SJ and others will consider doing the same it probably is going to suck big time. But if it will be "mostly remote" setup then SJ has plenty of space and opportunity to accommodate more business.
Is Facebook still giving Zuck bonuses or new stock issues? Isn't Zuckerberg's wealth composed entirely of stock that he already owns? So how is this going to affect Facebook?
His income in 2020 was listed at $23M, all under "other income", mostly for the costs Facebook paid for his personal security and personal air travel on the corporate jet.
But he wasn't the highest paid exec. Sheryl Sandberg was, at $30M. Probably still not high enough to trigger the tax.
With policies like this, why would anyone in their right mind (I say this as a staunch progressive) start a business in SF or even consider traveling to the Bay Area for the benefits of huge equity packages? Even if you choose to willingly ignore that CA state taxes are also increasing substantially.
I hate to say it, but when you do things like this to Big Business TM it DOES have trickle down effects that negatively affect small business owners and business services alike.
San Francisco is a combined city and county (the only one in California), so its budget includes things that would be in county budgets for places like Los Angeles and San Jose.
For example, SF MTA is part of the SF budget, but LA MTA is a county agency, and isn't part of the LA city budget.
Seems like a fair comparison to make would be with NYC, whose city government similarly subsumes the counties/boroughs. NYC's per capita budget is about 2/3 of SF's; there may be economies of scale and other non-linear contributors at play with NYC's 10x larger population, or maybe SF is just less efficient.
edit: NYC's MTA is funded separately, including huge state contributions, so this is a terrible comparison. Let this comment be a reminder of the difficulty in comparing municipal budgets.
I wonder how many low margin businesses will leave SF because of this. If I understand it right, this is up to a 0.6% tax on gross receipts. What if a business runs on very thin margins? I can imagine someone like Waste Management ($50b company, $11m in CEO comp, median employee probably makes waaaay less than that) deciding that operating in SF is no longer worth it.
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[ 1.6 ms ] story [ 341 ms ] threadWhatever the net positive here is wholly negated by the number of stable long term jobs that are going to go away and be replaced by whoever the body shop chooses to send that day. Working for these middle men really sucks compared to working for whoever the service is being provided for (and I say that from experience).
The pandemic has given most companies a good reason to do so already and my bet is on most of them not returning to their overpriced San Francisco headquarters when this is eventually over.
It helps that they are also much more new housing friendly than SF and SV.
But again, the pandemic and rise of remote work makes this hard to predict.
Until the next ones comes. That could be in 1 year or 100 years. No one knows.
Reminds me of the repeated hurricanes that drive people out of coastal areas.
People still live in coastal areas, and rich people continue to build lavish vacation homes on the coast despite the fact that they're washed away by storms every couple of decades. Part of being rich is not having to worry about money, which is why many rich people live in cities, states and countries that tax them more: the benefits of doing so outweigh the costs. I think you can draw parallels between that and companies choosing to remain in cities for similar reasons despite some drawbacks existing.
Think about hedge funds, bond traders, etc. For example, they will be all firing desk support people and replacing them with RobertHalf.
I am aware that I am a part of the problem: my wife and I are white, yuppie, dink tech workers. :)
These issues are complex.
I voted yes on Proposition L: the tax is quite small and I think the tech firms are unlikely to leave, meanwhile SF can get more taxes from them (many of them were historically given tax breaks, like Twitter, to move into the mid-market area). If they do leave, I don't see that as a bad thing.
Meanwhile socioeconomic disparity is an oozing sore in San Francisco, we have billionaires rubbing elbows with homeless people every day. Nationally, we've had round after round of tax cuts for the wealthiest, if SF wants to tax excessive income disparity, I say, fair enough.
a personal wealth tax is not felt or distributed down lane. As long as it is not a company tax, it will not be directly pointed to the buyer.
Yes it would be. A tax on salaries, would force companies to have to pay more to attract talent.
And these are additional costs that the company would have to pay.
Alternatively, if some aspect of your process like sugar is taxed then companies seek alternatives like corn syrup. That extends to property taxes, executive pay, etc where companies seek alternatives to better utilize resources. Though in the case of salaries that my end up as various executive perks.
Taxing land value -- that is, collecting the lion's share of the annual rental value of the land for public purposes -- removes the speculative element, and makes it worth only what it is worth FOR USE.
That almost always creates jobs, first for construction, and then to utilize the space. It may create housing, and goodness knows, much of California is in desperate need of housing. And housing creates jobs -- houses and highrises don't maintain themselves.
Virtuous circle --- the opposite of the vicious one that Proposition has created (and which was easy to predict before it was enacted).
If you want jobs and housing, tax land value.
Otherwise, keep California doing what it does now.
None of the billionaires here made that money from their salary. This will not touch them at all.
> If they do leave, I don't see that as a bad thing.
Chasing away jobs and the tax base will not end well. There is a decent chance SF enters a financial death spiral from its pension obligations. At the very least, massive cuts are in order. SF will not be transformed magically back to the year 2005, but it could very well wind up back in the 70s.
Although it doesn't mention capital gains, so if the CEO owns a significant part of their company already and doesn't have an additional vesting schedule, then they could make personal income from appreciation of the business that wouldn't be counted towards this bill.
Rent prices are the underlying problem pushing people out. Underlying _that_ problem is a lack of supply. SF zoned for and issued permits for a large number of offices, but not the corresponding residential structures to house those new workers. So they came here and were forced to compete with existing residents for a place to live.
The fix is to keep the economic prosperity and build more housing.
> Meanwhile socioeconomic disparity is an oozing sore in San Francisco
I'd argue that mixed income neighborhoods are the best kind. Many of the mechanisms for disadvantaging poor communities require geographic segregation. School quality, policing practices, etc
That makes sense to me. I don't keep up with exact SF policies but I'm guessing there are zoning and the NIMBY factor to deal with.
Underlying this problem is? Money, influence and power? I know a soon to be ex-POTUS that might be the perfect man for the job! He can come in and cut all deals needed. Then SF is saved and then he goes from city to city and country to country to redeem himself.
The Board of Supervisors are elected from districts instead of city wide. This means they're heavily influenced by neighborhood associations with a vested interest in maintaining the status quo. Throw in the normal, human fear of change and... the result isn't pretty.
And underlying that problem is Prop 13 - the insane multi billion dollar tax break that Californians bestowed on all land speculators. Until it's gone nothing will change.
Until the landowners start to feel some downside from the housing disaster don't expect anything to change.
This is the case for the tech industry, not categorically. Important distinction there.
https://fred.stlouisfed.org/series/CASANF0URN
I am all for building more and more dense housing. I'm not sure how to accomplish it. The way I see it, SF either becomes more dense, or it becomes even more of "a toy city for rich people" & loses all hope of economic diversity.
I grew up in Michigan. I am well aware of how cities can fall into decline. My wife on the other hand grew up in Minnesota. So in my mind, I often compare Detroit with Minneapolis. I think the problem with Detroit is that, it never diversified. It was all auto industry. Minneapolis's economy has several pillars: finance, insurance, healthcare, industry. You can ask yourself whether or not SF is either Detroit or Minneapolis in this example. I tend to think of SF as the New York of the West coast. It has very unique geographical advantages. It will have ups and downs, but will continue to be reborn.
Quite the problem ... the kind of problem that multitudes of cities and regions in the world are desperately trying to recreate.
>This has changed the nature of San Francisco in a way that many dislike, including me.
This is where progressives don't live up to their name. The nature of cities is constant change. Meanwhile the activists are desperately trying to keep change to a minimum so that the character of neighborhoods never changes. It's an interesting dichotomy.
>because rents have gone up so much, and also it's just not as fun, it's crowded and stressed.
Rents will drop if you increase density ... but that would mean building higher density housing and thereby accepting that the character of cities and neighborhoods change.
>I am aware that I am a part of the problem: my wife and I are white, yuppie, dink tech workers. :)
The fact that you're white and a tech worker isn't the problem. It's that you had the opportunity to move to San Fransciso for work due to the tech boom, and now you're trying to pull the ladder up so others cannot do the same.
I keep hearing proponents of strict exclusionary zoning laws arguing that they don't like the risk of having the value of their investment decrease because of this. SF will be a great example of how change happens weather you like it or not and allowing dense housing is what makes the change good or bad. You either sacrifice some of the view or sacrifice not having homeless camps.
San Francisco gets several millions of dollars to spend from which they spend a measly amount on the homeless(and that’s over 350 million/annum)..where is the rest? Even the money spent on homeless solutions is mostly going to contracted non profits(look at their board..probably has ex-city employees as board members) or more public sector employees.
With 350 million, I would have created a new sustainable village to house 1000 people with jobs inside. Instead, SF still huffs and puffs and spends tax dollars on piffle and squat.
You think housing is somehow immune to supply and demand? If that's the case, you can't claim rents are rising due to increase demand from young professionals. Which then raises the question: "What does affect rental prices?"
This is quite the ad hominem. I may have missed it, but I'm not sure where OP said anything about density or housing. Is there something wrong with not wanting the city that you love to be invaded by the human version of a swarm of locusts?
He is, by his own admission, one of those locusts.
https://m.youtube.com/watch?v=3dBaEo4QplQ
Most residential units are not used or traded as a speculative asset.
[..] The majority of the residential housing developments in Singapore are publicly governed and developed, and home to approximately 78.7% of the resident population.[..]
https://en.m.wikipedia.org/wiki/Public_housing_in_Singapore
I always tell people that, "it is a nice problem to have." Totally agree with you.
But it is still a problem nonetheless. It's fair enough to raise taxes to try to solve some of the problems which hugely successful businesses have created by displacing people.
Building more housing: YES, more dense housing: YES, programs for homeless people: YES -- on the back of such success, we should have all the money we need to maintain San Francisco.
YES my presence is symptomatic of the problem but, being self-aware, I try to address that by genuinely loving San Francisco, paying more taxes myself when I am asked to do so, participating in local art and culture, and not treating it like a transient place but rather my home and a treasure.
Regarding your statement that I'm trying to block others' advancement: proposition L is about taxing companies whose CEOs make 100-600x more than the median at their company. I am not hurting other regular folks by supporting this, furthermore I'm not even hurting the CEOs (they make 100x more than normal folks). If you benefit from society to the point where you're the leader of such a company, for goodness sake, give a little back gracefully, that's progressive taxation and it has been one of the foundations of our society since 1862.
SF is a liberal, expensive place, because supporting such population density and giving everyone a high quality of life is hard and requires work and money. If we categorically define all taxation as bad, we lose all basis for collective action. America is getting lost in the labyrinth of its own arguments.
100%. I think we agree on more that we disagree about, but we happen to be talking about Prop L.
The question on L is what's any of this have to do with the amount of money made by a CEO's employees? Should a CEO of a small number of highly paid employees be taxed less than the CEO of a large number of blue collar employees? That doesn't make any sense.
People talk about the ratio of employee to CEO pay because it's a quantifiable indicator of underlying causes. Trying to change the indicator directly misses the point. Why is the city so unaffordable to the working class? That's not being solved by this.
The spoils from this boom primarily benefited companies and people based in and around the Bay Area. People there didn't realize that the rest of the country (and much of the developed world) were still struggling and haven't fully recovered from the 2008-10 recession. The increased prosperity and resulting tax base growth papered over the fundamental mismanagement and poor governance in that area. Some of the highest incomes and highest taxes in the country and yet some of the most dilapidated infrastructure, highest poverty rates and poorest quality of life in the country. "European taxes and third world quality of life" is how I describe the area to people.
Yet, people moved here for the jobs and then new jobs followed the people.
14 years (i.e. half a generation) since then and at the beginning of what is another major recession and economic reset, it's perhaps difficult for most people to imaging that the appeal of the area has diminished and that things aren't magically going back to 2019. People have moved out, companies are hiring elsewhere, the tax base is down >50% and budgets are deep in the red. The local governments can try and raise taxes to squeeze a few million more here and there, but fundamentally, they will have to cut waste and cut spending in the next few years to survive.
I'm not saying SF is going to become the next Detroit, but I remember NYC in the 70s or Seattle post-Boeing (also, early 70s) as an example of what happens to cities when a major industry leaves town. It's a death spiral of lower tax collection -> poorer services -> more people leaving.
This applies to sooooo many cities. I think money beyond the level required to provide basic services just gets wasted and the citizens see nearly nothing from it. It's so common it seems like some fundamental law of the universe.
San Francisco's huge, number one problem has been and still is that it makes building new housing illegal: https://techcrunch.com/2014/04/14/sf-housing/.
Increase supply and prices will eventually fall. This is not a complicated problem and the relationship between supply, demand, and price has been known since the time of Adam Smith. https://news.ycombinator.com/item?id=16704501
Twitter's highest paid executive looks like they make something in the $7M range (Dorsey's total comp is approximately zero for several years, as he is counting entirely on capital returns on his investment, not compensation from the firm); I'm doubting that their median SF pay is below ~$70K.
Tech needs to expand to other parts of the country. If SF wants high taxes, so be it, let all participate in the competition of where to be located.
I've worked for a lot of (admittedly, tech startup) companies, and none of them have.
For that matter, companies I've worked for who needed telephone-answerers or other low-compensation service workers have already spun that off into separate companies, for a similar reason - google '401K highly compensated employee' to see why.
First they came for the janitors, but I did not speak up, for I was not a janitor...
Companies don't pay you more money because they CEO looks at his salary and goes "yeah I think I have enough".
Sometimes outsourcing lets "them" focus on efficiency and getting the details right and so you are better off. Sometimes out sourcing cuts quality to get better costs.
There are many accountants, it is relatively standard across industries, and so you can outsource it all easily - but most big companies have it in house anyway. (though they will hire out some of the grunt work) This is one area where messing up will kill your company so you better keep a close eye on it. (An accountant can easily steel enough money that you can't maintain cash flow - you might get the accountant in prison but your great company is bankrupt anyway). This is but one example of many cases where out sourcing is bad.
On the other side power utilities outsource most tree trimming around power lines. The companies that do this work give the utility a great deal because the contract that keeps their crews busy 3/4ths of the year which is important because most of this type of work is right after a storm and employees are easier to keep when they aren't laid off 3/4ths of the year waiting on the next job.
When an out sourcing is borderline not worth it because of risks above it, it may become worth it after this change.
There won't be a Bay Area exodus anytime soon but you bet a startup is going to move out of SF when it starts to get big. The additional taxes will only hurt the companies that have a firm root here and will discourage future companies from forming in SF.
Sf wants everything to remain exactly the same in a world that's changing faster than ever. It's time to encourage new residential units, properly tax land/property, and start actually proactively fixing its problematic neighborhoods.
It is standard practice in the Bay Area to use staffing agencies for everything but executives and core talent with all signs pointing to the practice becoming even more common well before this.
You can rent a robotic fry cook for 1'500$ a month from Miso Robotics [0]. I know somewhere someone is looking at a commercial-grade surface cleaner and trash-picking robot.
[0] https://www.theverge.com/2020/10/6/21503892/miso-robotics-fl...
> Under a newly approved law, any company whose top executive earns 100 times more than its average worker will pay an extra 0.1% surcharge on its annual business-tax payment. If a CEO makes 200 times more than the average employee, the surcharge increases to 0.2%, and so on per multiple of 100.
What do they mean by "earns," are bonuses included? Nonmonetary compensation like having your car or mortgage paid for directly? Increase in stock value that's part of your comp package?
I'm sure folks will try to game this to get around it, I'm just curious how.
Also it sounds like this is a surcharge on taxes paid, not actually a new tax on revenue. So if you pay $1 million to the city of San Francisco in taxes, and your CEO earns exactly 100x more than the average worker, you now have to pay... $1,001,000?
Lay off everyone making less than 200x the top earner. Move to remote workers where possible, outside contractors where not.
Why not convert vacant offices to apartments?
fire codes?
not enough bathrooms?
lack of showers?
Err, plumbers exist, and showers and bathrooms are added to commercial buildings all the time. Nobody is suggesting simply telling people to live in existing office space as-is - converting them would include accounting for these things.
> The tax will levy an extra 0.1% to 0.6% on gross receipts made in San Francisco for companies whose highest paid executive makes 100 times or more its median worker’s salary. The amount levied will increase in 0.1% brackets proportionally to the pay ratio. A company whose highest paid employee earns 200 times more than its median San Francisco worker will get a extra 0.2% charge on its gross receipts. For companies whose CEO makes 300 more, the charge jumps to 0.3% and son on. The tax caps at 0.6%, and only companies with gross receipts over $1.17 million will be targeted.
> Under the measure, gross receipts and CEO compensation will include money made from stock options, bonuses, tax refunds, and property, a caveat seen by many as a way to target the tech sector where CEOs are often compensated in non-salaried bonuses. Tech is expected to account for 17% of the tax revenues, according to an estimate by the city’s chief economist, while retail and financial firms are expected to account for 23% of the revenues each.
> The CEO tax is expected to generate between $60 million to $140 million per year.
Doesn't seem that big in comparison to what SF annual budget is.
From (because the article doesn't give exact figures on transfer taxes): https://sfcontroller.org/sites/default/files/Documents/Econo... ?
> Proposed legislation would raise the Transfer Tax rate on properties in the city that sell for more than $10 million. For properties selling for between $10 million and $25 million, the rate would rise from 2.75% to 5.5%. For properties selling for over $25 million, the rate would rise from 3% to 6%.
There are no singled-out pockets that you can tap into and make up SF annual budget. It's all about cumulating a lot fo long-tail small pockets + 1-2 large pockets.
The pandemic has thrown things in a wrench, but prior to the pandemic, San Francisco businesses were constrained only by commercial real estate. There was literally no space left to put any new businesses.
We've been collecting Prop C revenues since March 2019, and they are exactly as forecast.
Correct. SF and its politics cannot be saved, just let them slowly eat themselves.
Keep in mind they also have to calculate this for certain employees.
I am curious how you would determine what the fair value of a stock option is when it is granted. Assume the option's strike price is for the current stock price. Theoretically, that stock option has a current value of "0" (assuming that it is non-transferrable so we don't have to worry about market price)
That stock option is expected to increase in value if the stock price increases (which then aligns the CEO's salary with shareholder value). So in five years, those stock options might be worth millions of dollars. But would you then say the CEO got paid millions of dollars five years ago? But the stock options when they were granted were 0 - they increased in value when they were the property of the CEO. If the CEO bought artwork 5 years ago and the value increased 10x in 5 years, would you also add that to his taxable income?
I am sure there are ways to value these options. But I can't find the details in this bill. Do you know how it might work?
0: https://sfelections.sfgov.org/sites/default/files/Documents/...
Outsource the lowest paid workers to a subcontractor to raise your average employee wage. I’m not sure that has a desirable effect, but it seems this law certainly financially encourages that.
Bechtel, McKesson, Petrovich, Jamba Juice, Core-Mark, Houzz, Lyft, Xero, Pandora, Robin Hood, and hundreds others have moved their HQ to somewhere other than California.
You can pay lower paid workers a higher effective wage in pretty much anywhere but California.
So, then the sub contractor pays the taxes and invoice you with mark-up?
Because those companies have ceos too?
I think this is rather fascinating. Assume a de-facto minimum wage of 10 dollars an hour, 2000 hours/year for 20k/year lower bound. 200 times that is 4M usd/year in compensation for a single individual. Does seem wierd to see such a big difference in campensation. If nothing else, seems to illustrate a broken labour market with horribly skewed bargaining power.
But if the tax does become a problem, split into OfficeServicesA and OfficeServicesB corps and let your clients pick which one they'd like to hire. Or have your spouse or family member do some of the administrative work (for business continuity reasons) and split the comp.
The real estate transfer tax sounds rather misguided as well. I expect it to distort the already unhealthy real estate market in harmful ways.
I'd rather go for higher ground value taxes with reductions for high density occupancy or people who live in that building themselves.
This is coming from someone who's never voted for a single republican. Let's remember that [0] SF also just elected a DA who's parents were literally complicit in the Weather Underground bombings...
[0] - https://californiaglobe.com/section-2/san-francisco-voters-e...
In my opinion, the state legislature should amend RTC 17041.5 to allow local income taxes, but only on rent, imputed rent, and capital gains within the city. Rents are the thing that local governments can tax without distorting the market.
As for this performative CEO tax, I think that the only positive effect that it will have, if any, would be to raise awareness of an issue whose solution has to come at the national and state level.
Um, yes? "Critics call John Travolta 'blatantly an actor, playing parts in movies.'"
1. you agree with the principle of addressing wealth polarisation, but don't agree with tax as the mechanism? (in general or the proposed model specifically)
2. you don't agree that increasing wealth polarisation needs to be stopped/reversed?
3. something else?
Thanks.
--
Edit: fixed the numbering, forgot I wasn't writing markdown!
To be frank, as a supporter of capitalism - I generally support the notion of high taxes in europe because the populations who pay these taxes clearly see HUGE societal benefits as a result of half their income evaporating. There also seems to be more respect of the people's money from these gov'ts regarding how they spend taxpayer money is spent and with a clear aim to help the people NOT partisan goals, wars etc. I may be incorrect here (open to correction) but it seems like US politicians (federally at least) seem entitled to taxpayer dollars. Most forget that until WW2 the idea of federal witholding simply wasn't a thing and many middle class families were flushed with savings.
Unfortunately, both sides are at fault in the US. The only way this is going to change for the better is to cease the cycle of one political party only pandering to it's base instead of motivated and able americans.
sooo ranked choice voting? :D
15% of the budget goes to the military. That makes the U.S. the largest military spender in the world.
15% of the budget may seem expensive, but it's not fair to compare it to Western Europe. NATO is a big reason why western europe does not need to spend more on their own defense.
I believe that's a good thing - it's in the United States' best interest to avoid rearmament in Europe, and Europe has never been at (relative) peace for so long as it has been since the emergence of the post-WWII consensus -- but they do in fact have more money for more non-defense discretionary spending than we do as a result. The Euro area spends 1.4% of GDP on military spending while being protected by an umbrella of security provided by the U.S., which spends 3.7% of GDP on the military.
Again, I think this is good for the U.S., we benefit from the liberal world order that we enforce, but I think it has to be taken into context when the EU is described as a great example of how to spend tax money on wise social programs.
I take a bigger issue with programs like student loan debt forgiveness which would be a slap in the face to poor people like myself who worked their way through college in order to no longer be burdened by loans. Not to mention the fact that without a refresh of regulation on universities (specifically graduate degrees) loan forgiveness would just further embolden universities to increase tuition.
The issue with taxes in this country is that the budget is expected to always be met WITH excess. That's the disgusting part, the assumption that "well we can go over and shell out benefits to our beneficiaries (people who voted for us) and the american tax payer will foot the bill" is atrocious.
Both parties are guilty of this, however I also find it ironic that Americans (specifically privileged americans) seem to think that "taxing the rich" is a solution, when a) rich people already pay an overwhelming majority of taxes, b) the rich will always find ways to out-smart the government and avoid taxes they deem as unfit and c) even if you taxed earners above $400k 95% of their income it would only amount to maybe a trillion dollars - so not even close to bringing the national deficit down.
This is like saying that a cheap cure for cancer would be a slap in the face to people who drained their life savings battling cancer, and to the families of those who lost.
The problem comes with policies of the form "We're going to tax [some wealthy group] and redistribute the money to [some other group]". There's a few sets of issues:
1. The money never gets to the downstream group. It gets eaten up by fees and processing, etc. Great for the middleman but not anyone else. If it does get to the downstream group, the total amount is gravely reduced.
2. You have to make a very strong case for taxing [some wealthy group]. Simply having wealth doesn't seem a good basis for taxation - "You're successful so we're going to charge you more taxes, maybe next time you won't be so successful" Obviously there are other arguments that can be made - the wealthy stole their money, or gained it illictly, etc - but those arguments tend to be individual cases and don't allow acting against an entire class of people unless you go into weird theoretical territory.
3. Solving "wealth disparity" isn't a meaningful goal. A thousand homeless folks all in the same campground have no wealth disparity - that doesn't mean you've improved their life. Simply funneling money doesn't solve problems, and making the end goal to shift around bits of paper is mistaking a process for a goal. If your goal is "We should provide a base level of healthcare to those who can't afford it" and can name an actual price for that, then that's a meaningful goal and you can tax appropriately if voters approve it.
1.) wealth/income inequality is inherently wrong, so redistribution is automatically good. private property is theft!
2.) whatever people get paid is theirs, fair and square. therefore redistribution is automatically bad. taxation is theft!
3.) some people are genuinely much more productive than others, and their pay may reflect that. at the same time, people can acquire more than their "fair share" by exploiting vulnerabilities in the system.
from the perspective of 3.), redistribution via tax looks like a dirty hack to mitigate the consequences of a deeper problem. it makes things a little better in the short term, but it doesn't address the root question: why are some people able to capture outsized compensation for their work? but hey, sometimes you have an urgent issue and the quick fix is all you have time to implement.
Scenarios 1 and 2 don't exist in the real world. They are just theoretical models.
Every law is a "dirty" hack, because the deeper problem is the nature of humans - which is to hoard privilege, wealth, power, and security - and the way that influences their societies.
Almost every non natural constraint civilization has imposed on humans has been to either support one group's hold on power and security (i.e primogeniture in feudal societies, taxes imposed on non-believers in the state religion) or the opposite: to redistribute power and security across the broader population (Magna Carta, The New Deal, Social Security / Medicare in the US).
There is a version of this that doesn't care about "right and wrong": Wealth inequality may happen for good and natural reasons, but too large quantities lead to a worse society for wveyone, and so redistribution is one way to reduce it.
Islam requires a form of "charity tax" called Zakat. Its proceedings goes to the poor and needy, among others (e.g. freeing slaves, wayfarers, etc.). The percentage is different based on the commodity (e.g. livestock is taxed differently from cash), but the percentage is fixed (only 2.5% in the case of cash money annually).
However, and extremely importantly, it also prohibits exploitative and parasitic practices that cause very unfair advantages to some at the expense of others. Obvious things like lying and cheating (e.g. false advertising), but also very important issues of lending money with interest, selling what you don't own, selling debt for debt, etc. Most of which you'll find on Wall St. as normal behavior. Everything inside these boundaries is up for grabs. Remove these horrible practices, and things will get better almost by definition without having to start taxing people even more.
My personal theory of "inequality" is that it isn't necessarily a bad thing. A distribution of income levels will always have a long right tail as you cannot make negative income but there is no theoretical limit to the maximum income. If all wages grow by the same relative amount, you would see increased inequality.
I think it is a problem if wages aren't growing for all portions of the distribution, but that is precisely because of the lack of growth for some and not because of the existence of growth for others. So, yes, I do think that growing income inequality may be a societal issue, but only if it is an effect of wage stagnation for middle and lower classes (which it is).
I do not believe that the rich getting richer is the cause of the stagnation, though. If anything, automation and globalization have been the main reasons for stagnation among middle and lower income levels. Automation and globalization may also be the cause of the continued growth in the very high wages. Even if they share the same underlying cause, one didn't cause the other.
I understand, but don't agree with, the argument that increased inequality causes social problems on its own. According to this theory, as I understand it, you can't have the differences among people be too great because it will cause too much power imbalance and resentment and eventually the masses will rise up and destroy the system from within. I don't agree, I think social problems come from the difference in reality compared to expectations of how one thought their future would go -- in other words, it is much worse for someone to see low wage growth in a stagnant economy where their standard of living is declining relative to their parents than it is to see moderate wage growth in a growing economy but there are some other people getting super, super rich. I don't think one's life relative to rich people is that important compared to one's life relative to personal expectations.
So, in that sense, I don't agree with redistribution schemes that intend on fixing a symptom of a problem (that rich people exist) rather than fixing a cause (wages are stagnant).
If the idea isn't to just reduce the inequality, but rather to supplement lower incomes -- there is absolutely no version of "taxing the mega rich" that we could do which would raise enough money to redistribute to the rest of workers such that it compensates them for the lack of wage growth at the lower end. It can't be done, there's not enough money. Eventually you have to tax the (productive) middle class.
From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve.
Who disproportionately benefitted financially from automation and globalization?
> From that perspective, I prefer policies that focus on wage growth for the lower and middle classes, even if that's a harder problem to solve.
You need to do both. No one was talking about this 20 years ago because most people were participating in the "good economy", even if some benefitted far more than others. Now people are being told the economy is good (by both major polities), but it doesn't match reality, which you noted is a major cause of angst.
Additionally, if your goal is to create more jobs and wage growth for low and middle income people, the best way to do that is to reduce economic concentration and create more opportunity for competition and small business. It will be less cost efficient, but the economy will be more resilient and the wealth would be more broadly distributed, even though some people could still achieve obscene wealth.
> I find it interesting that you frame income inequality as "wealth polarisation." Are you implying a bimodal distribution of some sort?
I wasn't intending to equate distribution and polarisation. By the latter, I meant the steady shift of wealth to a smaller population who have become progressively wealthier. While, at the other end, the majority have beome comparatively less wealthy compared to equivalent social cohorts over time.
Perhaps more succinctly, it's the _change_ in distribution, not the _presence_ of a distribution.
I'm no economist and I know there are a variety of opinions on distribution, but I understand there's reasonable agreement that globalisation has increased polarisation [0].
[0]: https://en.wikipedia.org/wiki/Economic_inequality
You shouldn't think of the destruction of the system from within as the problem. Some might fear that, but afterall, its unlikely that the people without power would beat those that have it.
The problem is the power zero sum game in itself. Wealth and power are both ways to gather even more wealth and power. In a simple society without a government you could simply use the power to buy weapons and soldiers to coerce the wealth of others. In our society you can use power to shape the rules more favorably for your own group.
As the wealth ratio of one group converges to 100%, the other groups have gradually less influence, unless allowed by those in power because of ideology or their good hearts.
Either you see this as fine and natural, or your ideology prefers everyone to have some amount of freedom over their own lives.
In the later case you may look at ways to reduce the wealth and power inequality, by weeding out rules particularly favorable to the powerful, or by trying to spread wealth more evenly.
If I buy a car for $10,000, then I now have a car worth $10,000, and the seller has $10,000. Wealth was not redistributed, we’re both where we started.
Perhaps - but it will discourage new businesses from locating there, and new businesses are the future.
Pros: lots of funding, lots of experienced employees who have taken companies from seed to IPO, probably a higher chance than some other areas to go from well off to ridiculously rich
Cons: I get taxed more if I start making 200x what the average employee in my company makes.
Can you see how no one would care unless they're 100% sure they're gonna be making 200x what their average employee makes regardless of where they put their business?
Trains, streets, cops, hospitals, public works, 31k employees, and so on.
True, but most likely in a way that also reduced the cost in other cities and counties, because the high cost of SF has pushed people out to lower cost areas in the outskirts. If SF wasn't so expensive, more people from the surrounding area would live there, having the desire if price wasn't the issue, therefore reducing demand and thus costs for the outer areas.
Basically admitting that the thought process is charging as much taxes as you can possible get away with.
What if the CEO has 'an office' in South Bay but spends their time in the city?
This seems like the wrong tranche of government to be flirting with such a law.
So basically this is targeting companies whose CEOs make over $50M a year, which is basically Twitter, Pinterest, Google, Facebook, Uber and a few others that actually have an office in San Francisco.
And I'm sure Google and Facebook et. al will fight them over how much money they "make" in San Francisco.
San Jose is an alternative for the CEO/Headquarters. There could be a minor office in the city where tech workers prefer to live, or they could commute down instead of up. Imo, SF City is overplaying their hand here and might be in a bit of a shock for the reality of how business works. The last bubble and good times might have distorted their understanding.
Also the law says all compensation, including stocks and bonuses. So Zuck would definitely qualify.
The medium size businesses that only operate in SF will be screwed the worst.
Very interesting, but, does that mean that execs who don't personally work in SF are subject to the tax? Ie, will Citibank's Michael Corbat, working out of Citigroup's New York offices, need to pay the tax because Citibank has bank branches in SF?
I'm really not sure how they plan to enforce this at all.
San Jose is already 25% bigger than SF. It's the third largest city in California after Los Angeles and San Diego.
Source: https://calmatters.org/california-divide/2020/11/san-francis...
But he wasn't the highest paid exec. Sheryl Sandberg was, at $30M. Probably still not high enough to trigger the tax.
I hate to say it, but when you do things like this to Big Business TM it DOES have trickle down effects that negatively affect small business owners and business services alike.
It doesn't seem like they're too worried about new businesses, they're just trying to hold the current ones hostage.
For example, SF MTA is part of the SF budget, but LA MTA is a county agency, and isn't part of the LA city budget.
edit: NYC's MTA is funded separately, including huge state contributions, so this is a terrible comparison. Let this comment be a reminder of the difficulty in comparing municipal budgets.
Their per capita budget is half of SF's.
I wonder if the median CEO will start making more. The going rate will become 99x approximately the SF average salary of 98k, or just under 10mm.
Did you think it would end any other way?