Constant Readers,
I'm trying to make sense of the Twitter/stock option tax/payroll tax debacle for a piece in The Examiner on Tuesday. I want to understand what is going on here, and I bet y'all do, too.
As part of my research for the piece, I'm watching last week's Board of Supervisors meeting so I can check out out all the proposals by the Supes. And Ross Mirkarimi is a truly nice man. A lovely soul. But just...just...LOOK at what I am dealing with here...
Here's his introduction of legislation:
There has been much attention placed over the last few days on the issue of us advancing legislation in providing for growing technology companies the exemption of their stock compensation as they are routinely required to pay to San Francisco. This idea, which I think has been floating for quite some time, and how we might be able to retain, grow, nurture businesses in San Francisco has now I think reached an appropriate juncture as a result of the deliberations on the Twitter proposal. I think the Twitter proposal, as many of us may opine, publicly or privately, has taught us that there is something very uneven and I have to say clumsy about the approach and us trying to do everything we can to marshal the resources of helping a company stay in San Francisco while it certainly threatens to leave, while at the same time, we want to see the double benefit of relocating a company or incentivizing that they relocate to an area that is distressed.
There are a number of technology companies in a number of districts that are also claiming a very similar point as Twitter has, too, and I think many of us knew that this inevitability was just a matter of time. And with the discussion that I think has been very critical for the question of overall city-wide reform that both President Chiu just referenced and I know that Supervisor Farrell and I know Supervisor Campos and Avalos and others have mentioned at one time or another, I think is coming to its natural head where it gives us an opportunity to laser in, in the most effective way possible, what are those remedying strategies. In my opinion, one of those strategies perhaps is a law that we’re submitting today, and I’d like to thank Supervisors Campos and Mar for the co- sponsor ship, that provides two years moratorium for technology companies that may soon go public.
Companies with more than 100 employees, 100 employees or more, companies founded after 2001 that are not currently traded on the stock exchange. We believe this is a unique period in history where there are a number of growing tech companies that may soon go public, making the timing here I think extremely important of our impending deliberations on this and other laws. Requiring that every company pay at least $1,500 per employee, even with the exemption; only applies to companies affected by the SF payroll tax. Those that have payrolls above $250,000. SF as it has been already mentioned is the only city with a payroll tax bundled with the stock option.
The city' s taxes are some of the highest in the state and in the nation. I believe there is a more progressive approach that helps answer the question that all of us want to see realized, and that is -- how do we retain companies in San Francisco, at least in this genre of industry, the technology companies? How do we incentivize that those companies be located and be host in neighborhoods that we also want to see benefit, I think, from their presence so that a wave effect is extended to other neighborhoods that would like to certainly I think, certainly enjoy that particular dividend, whether direct or indirect? And for us not to be triaging by happenstance every time a tech company says they’re about ready to leave San Francisco unless we react in a way that is not fluid or consistent with existing practice.
And I think what has been called into question is exactly what that existing practice is. I believe there is probably more wholesale reform in the making, but at least in the short term, our legislation specifies two years, I have already talked to a number of colleagues here who have asked and inquired about the legislation. That I am certainly pliable that we may be able to negotiate what those years may be. But I think it is important though that we do everything we can to look for the win-win to communities that may feel the double bang adversely by the potential gentrification that could be constituted by well- intentioned policies that are being discussed right now but might have the unintended consequences of not being able to help communities in which we hope that they serve.
We’re thinking that companies that exist, such as in District 10 or District 9, and other companies that I know would like to come to, say, District 5 – technology companies - we are looking to find a way to incentivize them. By spot firing the potential remedy, I think of course we are at that particular intersection where we are able to institute hopefully some citywide reform that provides that particular incentive. I look forward to the deliberations on this and the others over the next few weeks and months.
Watch it for yourself at about minute 53 of the March 29 BOS meeting.
Now, if you'll excuse me, I've obviously got to unscramble these Legislative Poetry Magnets before my deadline...
-Melissa
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