Will San Francisco Levy a Tech Tax?

July 14, 2016

By Amar Bhatkhande

San Francisco—home to technology powerhouses such as Twitter, Uber, Yelp and others—is facing a unique ballot proposal that, if it comes to fruition, would require technology companies to pay a 1.5% payroll tax. This tax revenue would be used to fund programs and affordable housing for the city’s 6,700 homeless people. 

The tax would apply to technology companies with more than $1 million in gross receipts. Estimates place the revenue from a tech tax at upwards of $140 million annually.  

This action is the culmination of increasing tension between tech companies, legislators and area residents. Some claim that the tech companies have received generous tax incentives (of more than $30 million), while at the same time tech wages have made affordable housing in the city extremely difficult. The average salary of a technology employee in San Francisco is $150,000 to $200,000. 

However, tech industry advocates, along with the San Francisco mayor, counter that technology companies have used those tax incentives to successfully build-up previously rundown areas of the city. Furthermore, they claim a tech tax will have a negative impact on tech employment and investment—possibly forcing some companies to relocate out of the city or state.  

One way or the other, the tech tax faces an uphill battle. In order to make it on the November ballot, it needs approval of 6 of the 11 members of San Francisco’s Board of Supervisors. Currently, only 3 board members support such a tax. And if the board does approve the ballot resolution, then 2/3 of voters would need to agree to the tech tax at the polls in November. 

About Amar Bhatkhande

Amar Bhatkhandé is an Audit Partner and a leader in the Life Sciences and Technology Services Group for the firm's West Coast practice, with over 25 years of experience in public accounting and 2 years in private.