San Francisco’s tech billionaires fight for the homeless - Activate World

San Francisco’s tech billionaires fight for the homeless

Storyline:

Next week, San Francisco residents will vote on Proposition C, a bill to fight homelessness with a new business tax. Marc Benioff, founder and co-CEO of Salesforce – San Francisco’s largest private employer – has emerged as the ballot measure’s most ardent supporter, pitting himself against Jack Dorsey, the CEO of Twitter and Square, who opposes the measure along with Mayor London Breed.   

Benioff spent millions of dollars in support of Prop C and called out his fellow billionaires by name, on social media and in public appearances – and they responded defensively. He wrote an op-ed in the NYTimes describing the crisis in San Francisco with an estimated 7,500 individuals and 1,200 families homeless including about one in 30 children in public schools. Every night, more than 1,000 people are on wait lists for emergency shelter. “This is a humanitarian emergency and it demands an emergency response. San Francisco’s epidemic of homelessness is solvable, but only if we devote the resources that are necessary,” wrote Benioff.

Prop C would tax the gross receipts of businesses with administrative offices in San Francisco and more than $50 million in revenue, at a rate ranging from 0.175 percent to 0.69 percent. Over $1 billion in gross revenue, it taxes payroll instead, at 1.5 percent.  

As reported in Wired, this approach may be the biggest hurdle for the opposition as it taxes companies based on gross revenues without taking into account profits and expenses. This goes to the heart of how Silicon Valley and venture capital funded technology businesses work. Companies opposing Prop C., such as Stripe and Square, attract high valuations even as low-margin, high-expense businesses because they have investors willing to float them for long periods of time. Those companies were fine with that business model when it made them richer. Now that the model may hurt them, they say the proposed tax is unfair.

Over all, Benioff has poured a combined $7.9 million in personal and corporate money into the effort to pass Proposition C. In the NYTimes op-ed he points out that Twitter received a sweetheart tax deal to locate its headquarters downtown, and that in his role as philanthropist, he knows exactly who donates money and who does not. These companies made it in San Francisco,” he says. “The companies that have given the least are the ones who are opposing this the most.” Jack Dorsey and Marc Benioff have sparred on Twitter for weeks arguing over the measure’s merits to an audience of millions. In one Twitter exchange Benioff wrote, “Hi Jack, Thanks for your feedback. Which homeless programs in our city are you supporting?” “Marc: you’re distracting,” Dorsey replied.

Funding the opposition are some of the city’s prominent tech titans, according to campaign filings. This includes Stripe, an online payment service backed by Elon Musk and Peter Thiel. In addition to being an “ill-conceived half-measure, Prop C could easily push more people into homelessness or out of our city altogether,” wrote Patrick Collison, Stripe’s CEO and co-founder. 

In his op-ed, Benioff presents Proposition C as a referendum on the role of business in our communities and, by extension, our country. He makes the case that “the business of business is no longer merely business. Our obligation is not just to increase profits for shareholders. We must also hold ourselves accountable to a broader set of stakeholders: to our customers, our employees, the environment and the communities in which we work and live. It’s time for the wealthiest businesses and business owners to step up and give back to the most vulnerable among us.”

Noteworthy:

  • “The reality is unbridled capitalism is not good for anybody, including all the companies benefitting from it. We want society to be successful. We are connected to it, not apart from it,” said Marc Benioff. 
  • “I really struggled with this, but this measure was vetted only within the homeless advocacy community and then placed on the ballet. If were going to move forward with a tax increase larger than we have proposed before, this is not the way to do it,” said state senator Scott Weiner.
  • “I want to help fix the homeless problem in SF and California. I don’t believe this (Prop C) is the best way to do it. I support Mayor London Breed and Senator Scott Weiner’s commitment to address this the right way,” said Jack Dorsey.

Quest and Actions (Q&A):

  • San Francisco’s Central Market Tax Exclusion (aka the Twitter tax break) was adopted in 2011 saving companies $34 million in city taxes. Last December, the Trump administration slashed the corporate tax rate nationally by more than 10 percent.  Should the same businesses fighting Prop C’s half-a-percent tax hike be satisfied with the local and federal tax cuts they’ve already received?
  • Mayor London Breed says that San Francisco needs to audit the $300+ million they are already spending on homelessness, and until the audits are done, they won’t know how much or what type of new homelessness funding is needed. Do you agree? Is this a reasonable and responsible position for an incoming mayor to take?
  • In the midst of a national tech backlash, why are the fiercest battles over taxing big tech at the city level? How can proponents of Prop C avoid what happened in May in Seattle when Amazon pushed back on a payroll tax passed by the Seattle City Council? 

Sources:  Citylab, NYTimes, San Francisco ChronicleWired

Photo by Chris Murray on Unsplash