Silicon Valley Tech Cities Put Per-Employee Taxes on November Ballot

Google
The Associated Press
Newport Beach, CA

Voters in two tech-heavy Silicon Valley cities will have the chance to vote in November on drastically spiking business taxation by charging a new per-employee tax.

Under the guise of the addressing homelessness, the Seattle City Council unanimously passed a measure on May 14 to tax companies with more than $20 million in annual city revenue a “head” tax of $275 per employee. The tax will generate about $49 million in annual revenue and is mostly aimed at Amazon, which is constructing two new downtown office towers called “Block 18,” and has had plans for a big increase in local employment.

Amazon threatened to abandon the over-half-completed project when the city council first proposed a $500 annual per-employee tax. The company said it reluctantly agreed to finish the project after the city scaled back the per-employee tax rate. But Amazon warned that the tax will weigh on its willingness to fund any future Seattle expansion.

Silicon Valley is booming like Seattle, with Google beginning construction on a massive expansion called “Charleston East” that will take its Mountain View headcount to 20,000 employees. Likewise, Apple Computer is nearing completion of its “Spaceship” headquarters in Cupertino, which will bring its city employment to about 18,000.

But with social justice advocates claiming that the Silicon Valley cities are overwhelmed by affordable housing and transportation needs, the city councils of both Mountain View and Cupertino plan to offer voters the chance to follow Seattle’s lead and vote in November to implement a per-employee tax.

According to a San Jose Mercury News report, Mountain View hired Fairbanks, Maslin, Maullin, Metz and Associates (FM3 Research) to conduct a local voter poll in March to determine support for revising the current business license tax of $30 per location and a maximum of $250 a year per company in favor of a “general purpose employer tax” that would tax every business according to its number of employees,.

FM3 Research found that two-thirds of the 1,365 Mountain View residents contacted either online and by telephone supported a general purpose per-employee tax.

But FM3, as part of its engagement, also produced “Potential Revenue Models” regarding the financial impact to Mountain View if it changed its business taxation model. FM3 estimated that a general business tax of $75 or $100 per employee would generate between $5 to $10 million a year in revenue. That would amount to a 2,000 to 4,000 percent increase in business tax collections versus the current business license tax.

Cupertino Vice Mayor Rod Sink told the Wall Street Journal that in regards to a per-employee tax, “We are pursuing a more aggressive agenda to respond to our housing and transportation crises, which have both gotten significantly worse in the last year.”

As part of Apple Computer’s $5 billion investment to expand its Cupertino headquarters, the company already signed a development agreement with the city to contribute $70 million to fund traffic improvements and community affordable housing needs.

Neither Google nor Apple has yet said publicly whether the per-employee taxes will change their expansion plans.

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