The measures all grew out of the widespread belief that Silicon Valley’s booming tech companies add heavily to the region’s traffic and high housing costs but don’t pay enough to address them. From San Francisco Mountain View to East Palo Alto, were strongly endorsed by voters.
Both sides in the debate over whether Bay Area businesses should pay more taxes to help solve the region’s housing, traffic and affordability problems predict that cities will increasingly turn to squeezing Big Tech after voters in three cities approved new levies aimed at tech companies.
Mountain View said yes to an employee “head tax” that will fall primarily on Google, the city’s largest employer by far. San Francisco gave the nod to a revenue tax on large companies, most of them in technology, which will help combat homelessness. And East Palo Alto, where Amazon just opened a large facility and the proximity of Facebook and Google has driven up housing costs, approved an office-space levy on large properties.
“Our concern is that there is contagion around these types of measures, that other cities look to front runners on this, to test the waters to see whether there is support politically for these types of measures,” said Rufus Jeffris, spokesman for the Bay Area Council, which represents Apple, Google, Facebook, Oracle and a host of other firms. “We definitely worry about a floodgate opening.”
All three measures grew out of the widespread belief that Silicon Valley’s booming tech companies add heavily to the region’s traffic and high housing costs but don’t pay enough to address them, said Mountain View Mayor Lenny Siegel, who spearheaded the head tax but lost his own re-election bid Tuesday.
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“We basically have some of the biggest concentrations of wealth in human history here and not enough money to deal with housing and transportation issues that are aggravated by the growth of these companies,” Siegel said.
The themes are similar to those that prompted Seattle’s City Council last spring to unanimously approve a head tax aimed at raising an estimated $47 million to address homelessness through a scaled-down $275 per employee levy on companies with revenues above $20 million. Opposition from Amazon and other business interests led the council to reverse itself the following month.
In Silicon Valley, companies have begun playing bigger roles in housing and transportation. Facebook, LinkedIn and Cisco are all contributing money and clout to building more housing. Earlier this year, Cisco pledged $50 million over five years to Destination: Home to help end homelessness in Santa Clara County. And late last year, Mountain View approved a massive Google-backed plan to build a dense complex of offices with 10,000 new homes and apartments in North Bayshore, home to the company’s headquarters.
Still, a Bay Area-wide poll conducted early this year for the Mercury News and the Silicon Valley Leadership Group, which opposed Mountain View’s head tax, found that 48 percent of those surveyed pointed to tech companies as a major contributor to the region’s housing shortage. Only developers ranked higher, with 57 percent of residents saying they were a major factor.
Tuesday’s election results point to strong public support for making business pay more. In San Francisco, Proposition C, which imposes a new tax on businesses with revenues of $50 million or more, passed with 60 percent support, city records show. Mountain View’s Measure P drew nearly 70 percent approval, according to Santa Clara County records. And 77 percent of voters in East Palo Alto voted in favor of the Measure HH commercial office-space tax, intended to raise $1.7 million a year for housing programs and STEM-job creation.
Siegel said he expects those decisions will put pressure on other Bay Area cities and could even boost support for a broader regional corporate tax.
Cupertino this summer briefly considered imposing a company head tax to raise $10 million a year to combat traffic, but shelved the proposal until December 2019 in the face of opposition from local businesses, including Apple, which would have born the brunt of the levy.
Cupertino Vice Mayor Rod Sinks believes Tuesday’s results will put the region’s large tech companies on notice that communities expect them to play a key role in battling the area’s housing and traffic problems.
“If companies want to avoid a further movement toward taxation, I think they need to be willing to step up to the plate,” Sinks said. “I’m definitely expecting Apple to get serious, with other major employers in the region, and present a vision of how we’re going to fix this.”
Apple did not immediately respond to a request for comment.
In neighboring Sunnyvale, which already has a head tax, two council members this spring started pushing to increase the amount larger firms would pay as a way to solve traffic problems.
“The employers with the greatest impact on traffic should do the most to alleviate it,” said Michael Goldman, one of the council members urging colleagues to study a tax increase.
Passage of new taxes on business in three other Bay Area cities won’t hurt his cause, Goldman said, but he’s not optimistic a tax hike would happen soon in Sunnyvale. “If the companies fight it, it’ll be much harder,” Goldman said, adding that Google, Apple and LinkedIn all have a significant presence in Sunnyvale. “In the long run I think it will gain public support. When the next election comes, I do not expect the traffic to be all fixed — that will be a great campaign issue.”
For the region’s businesses, the new levies represent a threat to growth and job creation, the Bay Area Council’s Jeffris said.
“We definitely are concerned that any type of tax targeting business or jobs will cause those employers to consider where they want to grow, where they want to create jobs in the future,” Jeffris said. “Everyone would agree that we have housing and transportation challenges, but killing jobs, discouraging jobs, and discouraging economic activity is not the answer to those problems.”