UPDATED, May 10, 2019: San Francisco Supervisor Gordon Mar introduced his proposal for an initial public offering (IPO) tax outside of city hall on Thursday, just before Uber's first day of trading on the stock market in the largest IPO of the year. Mar said six supervisors support the proposal, according to the San Francisco Business Times, which would be enough support to get the measure on the Nov. 5 ballot.
Mar estimated the tax would generate between $100 million and $200 million in its first two years. The Board of Supervisors are to vote on the tax in the coming weeks. If the measure lands on the ballot, it would require support from two-thirds of voters to pass.
- With various technology companies either preparing or rolling out initial public offerings (IPOs), San Francisco Supervisor Gordon Mar announced he is proposing a payroll tax on stock compensation. The proceeds would go to programs to address income inequality, Mar said.
- Mar’s proposal would put a 1.12% payroll tax on stock compensation, on top of the existing 0.38% payroll tax. That would restore the rate to 1.5%, which had been the standard in San Francisco until it was lowered in 2011. The proposal will be formally introduced before the Board of Supervisors in May; if approved, it will be on the November ballot and would require two-thirds of the vote to pass.
- "I want to be clear: the conversation we’re having today is not just about IPOs or the tech sector. This is about who we are as a City today and into the future," Mar wrote.
Several major tech companies have filed or are expected to file paperwork to go public this year. Lyft, Pinterest and Zoom have already debuted on public markets. Uber and Slack have filed paperwork to do the same, and Airbnb and Postmates are also likely to file IPOs soon. That means San Francisco, the epicenter of the tech industry, could see an influx of wealth, potentially exacerbating the city’s income divide.
In introducing the proposal, Mar said it was "time we disrupt inequality, and put the interests of the public above private profit." He added that he wanted to "work towards a future where all people benefit from the prosperity that San Francisco helped incubate, where the success created by the many doesn’t only benefit a few, where corporations are responsible neighbors, and where technology and innovation acts in service to society, instead of the other way around.”
Mar has not detailed how the new money might be spent, although he named organizations like San Francisco Rising and Jobs With Justice as partners. Both groups advocate for working class families and have targeted the tech industry for a spike in housing prices. According to Jobs With Justice executive director Kung Feng in an interview with Bloomberg, the new funding would support affordable housing, low-income workers and education. Housing costs have been a particular pain point for the city, as wealthy tech employees have driven up rents and contributed to an affordability and homelessness crisis.
There is likely to be push back on the proposal, as with other measures meant to tax tech to help inequality. In San Francisco, business groups have fought Proposition C, which would impose a half-percent tax increase on businesses making more than $50 million a year to support homeless services. Similarly, Seattle overturned its own “head tax.” Instead, many tech companies have pointed to voluntary donations, like ones recently made by NetApp and Okta, as evidence that they are helping the community.