San Francisco proposes IPO tax as many tech companies set to go public
SAN FRANCISCO (BCN) - A San Francisco proposal for a citywide tax on wealth from initial public offerings is being supported by the majority of city supervisors, Supervisor Gordon Mar announced Thursday, one day before ride-hailing company Uber is expected to go public.
According to Mar, who introduced the proposal at Tuesday's Board of Supervisors meeting, with Uber and other San Francisco tech companies set to go public in the coming months, inequality could worsen in the city, which is already one of the most expensive in the U.S.
"Tomorrow Uber will open its first day of trading on the stock exchange in the largest IPO since Facebook," Mar said, speaking outside of City Hall Thursday. "Not only are these corporations not paying their fare share of taxes on stock compensation here, they use it as a write-off on their federal taxes."
According to Mar, his proposal would restore a 1.5 percent tax on stock-based compensation, the same rate corporations were paying prior to 2012, when the city first began offering tax breaks designed to lure tech companies to the city.
The IPO tax, projected to generate between $100 and $200 million over two years, would be put into a Shared Prosperity Fund for programs for low and moderate-income workers and families, small businesses and for affordable housing.
"I'm proud also to announce that a majority of supervisors support this measure," he said. Co-sponsors include Supervisors Matt Haney, Sandra Lee Fewer, Hillary Ronen, Shamann Walton, Rafael Mandelman and Board President Norman Yee.
"San Francisco has the highest housing cost and the largest income gap in the country and this gap will continue to grow as record numbers of large tech companies seek to go public, accumulating billions in new wealth and lining the pockets of their executives and investors," he said.
"I commend these companies, including Uber, Lyft and Airbnb, for their success. But their success doesn't only belong to their executives and investors. It belongs to gig-workers, who work long hours without benefitsand stable pay, it belongs to union cafeteria workers and security guards and
bus drivers and janitors. It belongs to the city of San Francisco who helped incubate these companies with tax cuts and tax breaks," he said.
If approved by supervisors, the proposal would go on the November ballot.
Mar said he's already met with companies like Uber and Lyft to talk about the IPO tax and hasn't received any pushback.
"I've been meeting with all the companies who have gone public or are planning to go public. We have very constructive dialogue going on right now and there hasn't been any backlash from any of those companies," he said.
On Wednesday, Mar showed up to a rally and one-day strike by Uber drivers outside of the company's San Francisco headquarters to support the drivers. The drivers were calling attention to what they say are diminished wages ahead of Friday's IPO.
Also on Thursday, several San Francisco taxi drivers held a protest outside of Uber's headquarters, also in anticipation of Friday's IPO.
The drivers, many of whom are with the San Francisco Taxi Workers Alliance, are urging the public not to buy Uber stock because they allege the company has contributed to street and airport congestion, undermined the city's public transit system and underserves people with disabilities.