Business tax measures lead in Bay Area cities – The Real Deal

A photo illustration of Palo Alto Mayor Pat Burt (Getty)
A photo illustration of Palo Alto Mayor Pat Burt (Getty)

Bay Area voters to large businesses: Pay up!

The latest election tallies show business tax measures in Oakland, Santa Clara, Palo Alto and Los Gatos passing by double-digits, the San Jose Mercury News reported.

For cities with looming budget deficits, millions in new business dollars will mean new revenue to fund programs and housing, fewer spending cuts and less reliance on debt and outside money.

Some credit electoral success to carefully crafted voter pitches vetted by big business and warding off expensive anti-tax campaigns. In Palo Alto, the city collaborated with the Palo Alto Chamber of Commerce and the Silicon Valley Leadership Group to thwart a negative campaign.

“The compromise approach was essential,” Mayor Pat Burt told the Mercury News. “They were indicating they were going to spend unlimited funds to oppose not only the business tax measure but the gas transfer fee ballot measure that was also on the ballot.”

The business tax in Palo Alto, the first of its kind in city history, won a resounding victory as 10,372 voted for it while 5,080 voted against, as of Thursday.

The tax, a 7.5-cent levy on office space, would begin in 2026 and is expected to raise $8 million a year to fund affordable housing, public safety and other programs. It would tap large companies such as Palo Alto Networks, VMware and Tesla.

Oakland and Los Gatos also struck compromises with business organizations.

In Oakland, voters approved a business tax measure by 25,399 to 12,685, in the most recent count. The progressive tax overhauls a tax that had small mom-and-pop businesses paying the same flat tax rate as giant corporations such as Kaiser Permanente, Clorox and Sutter Health.

New rates mean big businesses will pay a much higher tax rate than smaller companies, with the city expected to reap $20.9 million a year.

Los Gatos City Council members worked with business leaders such as Netflix, which is headquartered there, to devise a tax that avoided corporate ire. Voters approved that tax by 4,373 in favor and 3,699 against.

The measure will revamp the city’s business licensing tax of 30 years to capture more dollars from e-commerce and deliveries.

The tax will increase contributions from the city’s top employers. The top five companies would pay $165 for every $550,000 earned above $12 million. The current tax requires companies such as Netflix to pay $75.

The new revenues of $1.2 million will help Los Gatos fill a $3.5 million budget hole.

In Santa Clara, voters approved a measure to overhaul its business tax to help fill a $20 million budget deficit. The tax will include a new “headcount” system and charge $45 per employee with a cap of $250,000 starting July 2023.

Santa Clara also had not updated its tax system in 30 years on top employers that include Nvidia, Applied Materials and the San Francisco 49ers.

— Dana Bartholomew