No More Deals: San Francisco Considers Raising Taxes on Tech

drew tech companies to a beleaguered stretch of downtown, the tone at City Hall was chilly. Tech offices—the likes of Twitter, Zendesk, and Uber—had indeed arrived as promised, but residents of the city’s Mid-Market neighborhood told officials that little uplift came with the logos. “I’ve seen the number of people who are sleeping on the street increase. We’ve seen a lot of displacement … affordable restaurants close,” said Sam Dennison, a local resident who served on a citizen advisory board for the tax break. “We felt like we were going to be annihilated, and in a lot of ways we weren’t wrong.”

In the exasperated sighs of local politicians, the message was clear: There’s no way we’re doing that again.

Never say never. In 2011, when the Twitter tax break passed, San Francisco was in a post-recession push to increase tech’s footprint in the city. Mayor Ed Lee was defending tech workers as “not robots” inThe New York Times,and enthusiasm for the industry’s restorative powers was high. In Mid-Market, economists predicted software companies would bring new life to an area known for intractable drug abuse and homelessness. If it had, there was scant data to prove it; the measure had been approved with few accountability measures in place. Today, the area’s changes are hard to untangle from the transformation of the city as a whole—a case of runaway inequality given a booster shot by city policies. “We’re just a particularly good fishbowl to observe the problem,” Dennison tells me after the hearing.

How the pendulum has swung. The city’s recent surge in wealth is legendary, and so too is its growing chasm between rich and poor. It’s gotten dystopian out there—even the techies themselves are saying it. This year, that silicon tide is cresting with a parade of IPOs that will mint riches for employees at the likes of Uber, Lyft, Slack, and, potentially, Airbnb. If the real estate agents are to be believed, the rest of us will soon drown in the melt of ice swans discarded after multimillion-dollar condo showings. (Bring cash, nouveau riche!) The resulting local techlash has made the industry a shiny political target. As the Twitter tax break, which expired in May, fades into memory, elected officials have adopted a boomtime mantra: Pay your share.

Three tech-focused tax proposals have emerged this year: a per-ride levy on Uber and Lyft rides; a so-called IPO tax to increase the rate on stock-based compensation; and a tax on companies based on the ratio of their CEOs’ pay to ordinary employees. Each would fund programs intended to alleviate social ills seen as inflamed by the growth of big business. The proposals, which have been made by memb

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