Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, May 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

San Francisco Voters Eye Homeless Tax on Big Business

Supporters of a ballot measure to raise taxes on San Francisco's biggest companies to fight homelessness say the city must take bold steps to address the crisis. But opponents say it will accomplish little more than harming the city's booming job market.

SAN FRANCISCO (CN) – Supporters of a ballot measure to raise taxes on San Francisco's biggest companies to fight homelessness say the city must take bold steps to address the crisis. But opponents say it will accomplish little more than harm to the city's booming job market.

"If you make the wrong tax policy decisions, you risk your economy," said Jim Lazarus, vice president of the San Francisco Chamber of Commerce.

Proposition C would add up to $300 million to city's current $380 million homelessness budget to fund new affordable housing units, shelter beds, mental health and substance use treatment, and other services.

Supporters say the new funding is necessary to help get the city's estimated 7,500 homeless people sheltered and into treatment. The city currently has a 1,200-person waiting list for shelter beds.

"We need new housing units for people to get off the streets, or we can choose not to do that and have a humanitarian crisis that we have today," said Jennifer Friedenbach, director of San Francisco's Coalition on Homelessness.

The money would come from a 0.5 percent gross receipts tax on corporate revenue above $50 million. It would impact 300 to 400 companies and cost about 725 to 875 jobs over the next 20 years, according to an analysis by San Francisco's chief economist Ted Egan. Egan also concluded the new revenue would likely reduce the city's homeless population.

But critics, including San Francisco Mayor London Breed, say Egan's analysis does not quantify the risk of headquartered companies fleeing San Francisco for cheaper cities. That could eliminate middle-class jobs that serve big tech companies and their high-paid employees, she said.

"We cannot afford to lose even more jobs for middle-class San Franciscans," Breed said in a statement in early October.

Breed also insists the problem requires a regional and statewide solution, since adding to San Francisco's budget could attract people from other communities and force the city to fund services for residents from neighboring counties.

Friedenbach rejects that reasoning. She said the "magnet theory," which predicts added funding and services will encourage unsheltered people to flock to the San Francisco, is a "ridiculous" and "debunked" concept.

According to the most recent homeless count and survey in 2017, 69 percent of the city's unsheltered population were living in San Francisco when they became homeless.

"Impoverished people don't move around because there are services offered somewhere else," Friedenbach said.

Breed also insists the city needs to audit the effectiveness of its current homeless spending before injecting another $300 million into the program.

San Francisco District 5 Supervisor Vallie Brown agrees that an audit should occur, but also thinks the city needs more money now to address the crisis. At every community meeting she attends, Brown hears complaints about tent encampments, open drug use, human feces, and the unpleasant sight of human misery on the street.

"We just don't have the kind of money and the kind of resources to address what's happening in the city," Brown said. "We need shelter beds, housing with supportive services, and psych beds."

The homeless tax proposal has also sparked debate among two of the city's most prominent tech titans: Salesforce CEO Marc Benioff and Jack Dorsey, CEO of Twitter and payment company Square.


Benioff injected $2 million into the “Our City, Our Home” campaign supporting Proposition C. Dorsey has called the proposed tax unfair because finance startups like Square would have to pay more than bigger companies like Salesforce because the tax comes from total revenue rather than profit.

The two exchanged fiery tweets in early October. Benioff asked Dorsey how he and his companies were supporting homeless programs in San Francisco. Dorsey called the question "distracting," and said he wants to let the newly elected mayor decide how to best solve the problem.

"We're happy to pay our taxes," Dorsey tweeted. "We just want to be treated fairly with respect to our peer companies, many of whom are 2-10x larger than us. Otherwise we don’t know how to practically grow in the city. That’s heartbreaking for us as we love SF and want to continue to help build it."

Meanwhile, the city struggles to cut down long wait lists for shelter beds and Section 8 housing.

Tamara Mitchell, a 32-year-old mother who became homeless nine months ago, said she has been on the Section 8 housing wait list for years. She grew up in San Francisco and was renting a 2-bedroom apartment in East Oakland with her two children and their father for $1,450 per month. She had to leave due to a roach infestation, frequent gun violence and a rent increase she couldn’t afford.

She now sleeps in a car or at a friend's house while her daughters, aged 5 and 10, stay at her mom's subsidized supportive housing unit where she is not allowed to stay the night.

"I'm hoping there will be more housing," Mitchell said. "I feel like there's so many other things that are getting built that they're spending a lot of money on when they could be providing more housing."

Over the last three years, the city has created four navigation centers with 500 new shelter beds. Unlike traditional shelters, navigation centers allow guests to bring their partners, pets and belongings. They also provide a panoply of services including housing assistance, mental health and drug counseling, and other services aimed at getting people stable.

Outside a navigation center at 12th and Market Streets, a homeless man who goes by the name Saint Louis said he used to stay at the center but had to leave; he wouldn't say why. A senior citizen who has lived in San Francisco 43 years, Saint Louis coughed violently as he explained how he had to sleep on the street the previous night.

A few feet away a disheveled man was sprawled out on the sidewalk baking in the sun as people stepped around him. It's an all too common site in downtown San Francisco, where the sidewalks are dotted with tents, trash and people openly injecting needles in their skin.

Most everyone agrees something must be done to address the homeless crisis, but not everyone thinks a tax on the city's biggest corporations is the right approach.

Working behind the counter at a store in the city's Castro district, longtime resident Larry said he voted against Proposition C. He believes the new tax will put more money into the same strategies that haven't worked.

"There's nothing new so they're just throwing money in the trashcan," Larry, who declined to give his last name, said.

With its $380 million homeless budget, the city already spends about $50,000 per homeless person. The new tax revenue would boost spending to about $90,000 per person.

A poll conducted by EMC Research on behalf of the "No on Prop. C" campaign in September found 56 percent of 800 likely voters would approve the new tax.

If it passes by a slim majority, Proposition C will likely suffer the same fate as another new tax for universal preschool that was approved by 50.87 percent of voters in June. A coalition of business groups sued the city in August, claiming the measure is a "special tax" that requires a two-thirds majority to pass under the state Constitution.

"The question is already in the courts," said Lazarus of the San Francisco Chamber of Commerce.

Follow @NicholasIovino
Categories / Business, Regional

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.