San Francisco Tax Reform Exemplified

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    San Francisco city officials on Monday highlighted a local organic produce distributor as a company that would benefit from a ballot measure  that seeks to reform the city's business tax.

    Mayor Ed Lee and three members of the Board of Supervisors visited  Veritable Vegetable in the city's Dogpatch neighborhood this morning to push  the consensus measure, which would replace San Francisco's 1.5 percent  payroll tax with a gross receipts tax.

    The board voted last week to combine two separate proposals by  board president David Chiu and Supervisor John Avalos into one measure that  they plan to place on the November ballot via a vote at this Tuesday's  meeting.

    Lee said today that he wanted to "showcase an example of the kind  of company that will benefit" from the measure.

    "We did not want to punish companies that are creating jobs," he  said.

    Bu Nygrens, a co-owner of Veritable Vegetables, said her company  stands to save about $7,000 under the new system.

    "We're excited that we're going to see a reduction in our taxes,"  Nygrens said, adding that the measure will "more equitably distribute the tax  burden" among businesses in the city.

    San Francisco is the only city in the state that levies a payroll  tax, which charges companies for adding new employees. The new tax would  charge the annual revenue of a business and would be phased in while the  payroll tax is phased out.

    Chiu said the current tax "penalizes the hiring of employees" and  needs to be overhauled.

    San Francisco used a hybrid tax system in the 1970s and 1980s that  allowed companies to pay whichever was the higher amount between its gross  receipts or payroll tax, but the system was eliminated in the 1990s after a  similar system in Los Angeles was ruled unconstitutional.