Businesses in the retail, real estate, and other trades that rely on sales of goods would have to dig deeper under a plan to replace the San Francisco payroll tax -- something that tech firms say targets them unfairly -- with a tax levied on the gross sale of goods.
Technology firms are the economic engine of the Bay Area. But so are real estate and restaurants, which would be asked to pay more taxes under a plan pushed by technology companies and investors.
San Francisco's tax plan is due to be overhauled, and one way to do it is to institute a gross receipts tax instead of a payroll tax. Tech firms and investors like Ron Conway, a Silicon Valley billionaire, like that plan because tech firms spend much more on payroll than they do on sales of products, according to the San Francisco Examiner.
Tech firms pushed a gross receipts tax "hard" during a meeting at City Hall with Mayor Ed Lee and Board of Supervisors President David Chiu, according to reports.
San Francisco-based companies currently pay a 1.5 percent tax on their payrolls, the newspaper reported. Twitter, however, convinced city leaders to write laws allowing for a special payroll tax exemption zone, and Zynga also convinced the city to write an exception on taxation of stock option compensation.
If the payroll tax is replaced with a gross receipts tax, retail, restaurants and real estate would pay almost double the tax currently paid, the newspaper reported. They'd pay 26 percent of the total tax revenue, compared to 16 percent now, the newspaper reported.
The payroll tax currently brings in $400 million a year, the newspaper reported.
"The tech companies don’t seem to be team players,” small-business advocate Scott Hauge told the newspaper.
Any final language on taxation issues will be fleshed out by June, when city leaders would have to make moves to place a change in the tax structure before voters in November.