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San Francisco Business Leaders Split On New Tax Proposals

Written by Ken Gaebler
Published: 6/30/2010

A new proposal for San Francisco small businesses would institute a rent tax to pay for lower payroll taxes.

A proposal to modify San Francisco's payroll tax and replace it with a new commercial rent tax is drawing both criticism and praise from various small business supporters in the city.

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The proposal would reduce the city's 1.5 percent payroll tax to 1.3 percent for workers making less than $85,000 per year, and give companies a $1,500 tax credit. Those reductions would be counteracted by a new rent tax - which exempts lower-revenue landlords and companies with less than $250,000 in payrolls.

Board of Supervisors President David Chiu says that the new tax structure is more fair, because it spreads the tax burden out to other companies - such as banks and insurance companies - which had been exempt from the business tax.

A report from the City Controller's office said that the proposal would eventually make it cheaper for companies to bring in additional workers. It would also increase commercial rent costs - bad news for small business owners in a city with already high rents.

The proposal is one of many new tax proposals - worth a potential $100 million - likely to be included on a November ballot. The San Francisco Chronicle says that voters will also cast their votes on proposed hotel and parking tax increases.

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