San Francisco voters will not be voting on an IPO tax come this November after all, but may consider a similar tax in 2020.
Supervisor Gordon Mar pulled his ballot measure on Wednesday that would have placed a 1.12 percent payroll tax on stock-based compensation. He proposed the measure in April, seeking to capture wealth gained by the slew of initial public offerings from local tech companies.
“IPOs exacerbate these crises, but they did not cause them, and by making this proposal part of a longer-term, more comprehensive strategy to address economic inequality, we can more effectively and responsibly tackle the long-term challenges facing our City with long-term solutions,” Mar said at the Budget and Finance Sub-Committee on Wednesday.
Instead, Mar will soon introduce a similar measure for the November 2020 ballot. The 2019 measure would have needed two-thirds of voter approval while the 2020 measure would be a general tax requiring a simple majority.
Removing the IPO tax measure means one less tax or bond approval from voters this November. A “Traffic Congestion Mitigation Tax” would place a surcharge on rideshare ride, ranging from 1.5 percent to 3.25 percent. It’s expected to raise more than $30 million annually for transit safety projects, which Uber and Lyft are on board with.
Voters will also be asked to approve a $600 million affordable housing bond, $20 million of which is designated for educator housing. The bond is put forward by Mayor London Breed and the Board of Supervisors, as is the rideshare tax.
Chief Economist Ted Egan said the stock-based compensation tax is more progressive, but also unstable. Plus, it doesn’t capture the influx of wealth obtained from former IPOs and companies may be more inclined to offer cash bonuses to avoid such a tax.
“It’s not necessarily the only way to achieve that equity goal,” Egan told supervisors.
Earlier this month, Breed and Board of Supervisors President Norman Yee announced a working group to restructure the city’s business tax system. It would inform a November 2020 measure, when the new stock-based compensation is rescheduled.
“We need a collaborative, data-driven approach to make sure our business taxes are working for everyone and generating the revenue we need to fund critical city services,” Breed said in the announcement. “By bringing together all stakeholders and leading a consensus process, the Controller can help guide a measure that will ensure we have a stable and progressive business tax that addresses some of the challenges of our current system, including impacts on small businesses.”
Mar also announced on Wednesday that he convened his own group, a Shared Prosperity Coalition, to bring the perspective of community and labor organizations to craft a measure mitigating income inequality.