San Francisco has managed to become one of the wealthiest cities in America, yet it still has some of the highest numbers of unhoused people living on its streets. While it’s not uncommon that more expensive cities have larger issues of homelessness, San Francisco voters will consider an uncommon solution this November — a tax hike that applies only to companies that generate more than $50 million in revenue that aims to raise an additional $300 million for homeless services.
That would more than double San Francisco’s current budget to address the homeless crisis. The measure, nicknamed “Our City, Our Home,” qualified for the ballot earlier this month with more than double the signatures it needed. Its technical name is the Homelessness Gross Tax Receipts Ordinance, and its goal is “to house at least 4,000 homeless people and expand shelter beds by 1,000 within five years, fund legal assistance and rent subsidies to keep San Franciscans housed, and fund intensive mental health and substance abuse services.”
And the measure is polling well. A survey this month from David Binder Research found that 66 percent of likely voters support the measure, with just 28 percent in opposition, and a mere 6 percent undecided.
“This is potentially a once-in-a-lifetime opportunity to help people and help our city,” Glide Advocacy Program Manager Ben Lintschinger tells SF Weekly. “There’s probably going to be a lot of opposition from a few groups who think that the tax might not be fair to them. But we’ve structured that very well and very fairly and sought input. It’s much smaller than the Trump tax breaks.”
It is true that the 2017 Trump tax cuts, heavily weighted toward multinational corporations, lowered the federal corporate tax rate from 35 percent to 21 percent, a sweet 14 percent windfall for big companies. This homelessness tax increase is just a half of one percent, so at a glance it appears the Trump tax cut was 28 times larger than this proposed local tax hike.
But that’s comparing apples and oranges. The corporate tax is calculated based on how much profit a company makes, whereas gross tax receipts assess total revenue collected and do not take costs or expenses into account. The two taxes are related, but not the exact same thing, and less profitable companies could face a more significant tax cost.
That’s why the Our City, Our Home measure does not tax all of the affected businesses equally. The proposal was crafted with input from businesses, and is tiered so that not every business type would pay the same one-half percent.
Tech companies like Twitter, Uber, and Dropbox would pay the full half-percent, as would pharmaceutical company McKesson. Retailers like The Gap or Levi Strauss could pay a significantly lower .175 percent rate, while financial companies like Wells Fargo and Schwab could pay a slightly higher .6 percent tax.
We don’t know for sure which companies will pay what, because city tax filings are not public information. And their gross receipt totals will surely change if and when the law goes into effect in 2019. But homeless service providers do see a connection between the booming profits of these companies and the increase in San Francisco’s homelessness problem.
“The kind of pressure produced by incredibly, staggeringly high rents, and also some of the other more subtle ways that displacement might act, creates more homelessness and makes it more difficult for people to find housing,” Lintschinger says.
The San Francisco Chamber of Commerce did not return comment for this article, but has indicated they will oppose the measure. Even the notably philanthropic Salesforce, who could face a tax increase in the tens of millions, put out a cautious statement saying, “We are evaluating the potential ballot measure to carefully assess its merits in addressing this important issue.”
Opposition to this measure may increase sharply once corporate accountants find they’re on the hook for an eight-figure tax hike. So even with the strong support it has now, November’s Our City, Our Home proposal should not be considered home free.
Joe Kukura is an SF Weekly contributor.