New taxes rankle Big Tech
San Francisco has just sent Big Tech a warning, said in The success of Proposition C, a controversial ballot measure that taxes big companies to combat homelessness “offers a peek into the future of tech companies’ already tense relationship with America’s most vibrant cities.” The tax, backed last week by some 60 percent of voters, could raise more than $300 million, doubling the city’s budget for homeless services. “Tech is increasingly seen as the villain, and the savior, for urban voters facing challenges the digital economy is bringing to their cities.” The Prop C campaign “quickly evolved into a battle of the billionaires.” Salesforce’s CEO Mark Benioff was a vocal supporter and spent $7 million to help pass it, while Twitter’s Jack Dorsey and Zynga’s Mark Pincus vehemently opposed the tax, calling it the “dumbest, least-thought-out prop ever.”
It’s the political momentum, more than the expense of San Francisco’s tax, that worries the tech industry, said Nitasha Tiku in Wired.com. Voters in Mountain View, Calif., home to Google’s headquarters, passed a “head tax” that companies would pay for each employee. In Amazon’s home base, Seattle, voters passed, then rescinded, a similar measure, but this “won’t be the end of local efforts to hold tech companies accountable.” Support for these measures on the industry’s home turf suggests that “even voters concerned about keeping tech jobs in the region seem open to the idea that profitable companies should pay.” And it’s not just in the United States. In Europe too, proposals for new taxes on Big Tech are being vigorously debated, said Andrew Hill in the Financial Times. “The dispute over a tech tax could become a defining clash for modern capitalism.” For now, a proposed EU-wide 3 percent tax on tech companies is faltering, over concerns that it could scare off business. But several countries, including the U.K., are moving ahead with their own taxes.
For all the attention it has garnered, San Francisco’s tax could spend years in legal limbo, said Christian Britschgi in Reason .com. It wasn’t just tech titans who opposed Prop C; the city’s progressive mayor also came out against it. The money collected will go into escrow, and litigation will keep the city from using it. And Californians should realize: Tech companies didn’t create the homeless problem. If the money’s not used to create affordable housing—which San Franciscans have been woefully terrible at doing—the homeless problem will persist. “Before jacking up taxes on the goose that lays the golden egg, San Francisco voters and politicians could look at city policies that make it difficult and damn expensive to build new housing.”