“Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

Businesses can either pay tax, reduce top executive salary, or pay workers more.

Read the whole story

 

[numerobis]

"But then I usually was far away from everybody else, working on things that they knew nothing about. When I ran into problems, I'd be lucky if the response of anybody else at the site was more than a blank stare... I'm a statistical outlier..."

I'm in a similar boat and considering that the rest of my team (including my direct supervisor), pre-pandemic, were in an office in a city ~800 miles away, I don't think that it has changed. Now they are just in their homes ~800 miles away.

I was in an office building with my boss 600 km away, clients often 11 time zones away, colleagues usually in yet other locations.

It sucked so I left and founded my own gig where one of the founding principles was at least 2 people on each project and we all worked in the office.

COVID has thrown a major wrench in that plan.

 

[brucedurgess]

Easy fix. Either get rid of the lowest paid employees or outsource their work to another company; or, leave San Francisco. Don't expect the city will make a dime on this after the first year. People are moving out in droves now. We live in the area and have avoided making what were at one time monthly trips to the city (for over 30 years) and haven't been in about 4 years now.

 

[lewax00]

Easy fix. Either get rid of the lowest paid employees or outsource their work to another company; or, leave San Francisco. Don't expect the city will make a dime on this after the first year. People are moving out in droves now. We live in the area and have avoided making what were at one time monthly trips to the city (for over 30 years) and haven't been in about 4 years now.

They hired them in the first place because they needed something done. It's not as easy as "just fire them" because then those things don't get done.

 

[kdavis]

The median pay at Google is $248,000 because Google outsources all low-end labor. If you're a janitor working at Google, you don't work for Google. I guess that's one way out of this. Another way out is to set up in a business-friendly location and avoid San Francisco.

 

[OldBob]

"Employees' salaries are based on experience and on value to a company."

This was a written response because there's no way he would've been able to deliver it with a straight face.

Naaah! PR flacks and lawyers are trained to say stuff like this without cracking a smile. It goes something like:

Teacher: CLAAAASSSSS!!!!!!!!!!!!!!!!
Students: Yes'm?
Teacher: REPEAT AFTER ME!!!!!!!!!!!!!!
Students: Yes'm!
Teacher: THE RAIN IN SPAIN FALLS MAINLY IN THE PLAIN!!!!!!!!
Students: The rain in...uh...Spain...falls...uh...on...uh...plane?
Teacher: EMPLOYEE'S SALARIES ARE BASED ON EXPERIENCE AND ON VALUE TO A COMPANY!!!!!
Students: Uh...employee's salaries are based on...uh...value to...uh...company?
Teacher: DONALD TRUMP IS A TRUTHFUL, HONEST, AND DECENT MAN!!!!!!!!!!!!!!!!!
Students: <*laugh-guffaw-giggle-snort*>!!!!!
Teacher: NO!!!!!!! You got it WRONGGGGG!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Student: But, teacher - that was really funny.
Teacher: THAT'S IT!!!!!! I AM GOING TO SEND A NOTE HOME TO **EACH OF YOUR PARENTS**!!!!!!!!!!!
Students: Sorry, Sister Mary Elephant...

 

[electricguy482]

This is also known as the 'make big businesses move out of San Francisco' tax.

Seattle is implementing a tax on Amazon, and, shockingly, Amazon is now building office space in nearby Bellevue for tens of thousands of employees. Who could have foreseen that?

 

[pi.squared]

Easy fix. Either get rid of the lowest paid employees or outsource their work to another company; or, leave San Francisco. Don't expect the city will make a dime on this after the first year. People are moving out in droves now. We live in the area and have avoided making what were at one time monthly trips to the city (for over 30 years) and haven't been in about 4 years now.

They hired them in the first place because they needed something done. It's not as easy as "just fire them" because then those things don't get done.

Outsourcing & sub-contracting. The easiest way in the world to eliminate employees, whilst having somebody do the job.

 

[exabyte]

SFO is no longer a place to want to go, work, play... When I have to dodge human feces on the sidewalk, avoid the homeless beggars, avoid the aggressive beggars and pay the highest rates on EVERYTHING.. i am no longer interested in visting or working in SFO.
it littlearly has turned into a shi# hole...

Keep electing nancy it seems to be working LOL LOL

 

[Wastrel787]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

 

[Cloudgazer]

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

Large businesses—those with over $1 billion in gross receipts, 1,000 employees nationwide, and administrative offices in San Francisco

I seriously doubt that applies to any coffee company. They're either smaller than the minimum size or they don't have administrative offices in SF being based elsewhere. There are many things one can argue are bad about this law but the idea that it will raise the cost of goods and services inside SF itself doesn't appear to be one of them.

 

[numerobis]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

The way markets work, if Charstucks raises prices by a buck but Hipsterville doesn't, then people will go to Hipsterville.

This is the typical ignorance of those who hate equality so much they forget how capitalism even works.

 

[Dzov]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

The way markets work, if Charstucks raises prices by a buck but Hipsterville doesn't, then people will go to Hipsterville.

This is the typical ignorance of those who hate equality so much they forget how capitalism even works.

Not if it takes more time and/or gas to get to Hipsterville. Convenience is a consideration.

 

[numerobis]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

The way markets work, if Charstucks raises prices by a buck but Hipsterville doesn't, then people will go to Hipsterville.

This is the typical ignorance of those who hate equality so much they forget how capitalism even works.

Not if it takes more time and/or gas to get to Hipsterville. Convenience is a consideration.

Sure, same as how both could exist before this tax came up. The point is that anti-tax fundamentalists consistently "forget" that companies can take actions other than raising prices in response to taxes -- they can avoid the tax.

 

[Dzov]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

The way markets work, if Charstucks raises prices by a buck but Hipsterville doesn't, then people will go to Hipsterville.

This is the typical ignorance of those who hate equality so much they forget how capitalism even works.

Not if it takes more time and/or gas to get to Hipsterville. Convenience is a consideration.

Sure, same as how both could exist before this tax came up. The point is that anti-tax fundamentalists consistently "forget" that companies can take actions other than raising prices in response to taxes -- they can avoid the tax.

Yeah, I have doubts about this working at a city-sized level. It seems a less avoidable version would be raising the top marginal tax rate across the US.

 

[numerobis]

Hoo-boy. '[Large businesses would pay] an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of [their] San Francisco gross receipts."'

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

This is the typical ignorance of those who allow their socialist tendencies ("down with capitalism") to evolve into a belief that businesses should be taxed, not individuals. Tax the executives who make 100x more than their employees, instead. That will work. This will not, although it will bring in some badly needed revenue for cleaning up.

The way markets work, if Charstucks raises prices by a buck but Hipsterville doesn't, then people will go to Hipsterville.

This is the typical ignorance of those who hate equality so much they forget how capitalism even works.

Not if it takes more time and/or gas to get to Hipsterville. Convenience is a consideration.

Sure, same as how both could exist before this tax came up. The point is that anti-tax fundamentalists consistently "forget" that companies can take actions other than raising prices in response to taxes -- they can avoid the tax.

Yeah, I have doubts about this working at a city-sized level. It seems a less avoidable version would be raising the top marginal tax rate across the US.

To avoid the tax, you pay executives less or median workers more. It’s not enough extra money to be worth closing up shop unless you were already marginal on having any operations in SF.

 

[dukefrisbee]

"Employees' salaries are based on experience and on value to a company."

This was a written response because there's no way he would've been able to deliver it with a straight face.

For real. Employee salaries are based on how hard hard they are to replace, which comes from the supply of qualified labor and demand of competing positions. The only time the value they bring comes into it is if that value drops below their pay, at which point, they're out of a job.

You hit the nail on the head. However, there needs to be a fair balance between what another qualified person would happily take to do that job and worker exploitation. Most employers - especially large public companies don't do a great job of that. Taken to an extreme however, should employers really be expected to paid a unskilled worker $15, $20/hr to put a burger in a bag and hand it to someone or to sweep a floor even if they can technically "afford" them? Those jobs will just be eliminated over time.

The way to address this is not just protecting workers but overhauling the entire education system so people aren't left with the only options available to them being jobs like fast food and Uber - those will never be "careers" by anyone's standard and no amount of taxes is going to change that.

 

[pi.squared]

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

Large businesses—those with over $1 billion in gross receipts, 1,000 employees nationwide, and administrative offices in San Francisco

I seriously doubt that applies to any coffee company. They're either smaller than the minimum size or they don't have administrative offices in SF being based elsewhere. There are many things one can argue are bad about this law but the idea that it will raise the cost of goods and services inside SF itself doesn't appear to be one of them.

'

This law won't apply to any company that has a board of directors that is semi-competant.
Each office is its own company.

 

[pi.squared]

"Employees' salaries are based on experience and on value to a company."

This was a written response because there's no way he would've been able to deliver it with a straight face.

For real. Employee salaries are based on how hard hard they are to replace, which comes from the supply of qualified labor and demand of competing positions. The only time the value they bring comes into it is if that value drops below their pay, at which point, they're out of a job.

You hit the nail on the head. However, there needs to be a fair balance between what another qualified person would happily take to do that job and worker exploitation. Most employers - especially large public companies don't do a great job of that. Taken to an extreme however, should employers really be expected to paid a unskilled worker $15, $20/hr to put a burger in a bag and hand it to someone or to sweep a floor even if they can technically "afford" them? Those jobs will just be eliminated over time.

As far back as 1970, the fast food industry was experimenting with automating everything after the order was taken. That included picking meat off the grill, placing it on a bag, dabbing the veggies and condiments on it, capping it, bagging it, and then giving it to the customer.

Circa 1980, Hilton Hotels started designing their rooms, so that cleaning staff would spend less time in them, but ckeanliness remained constant. Around 2010, Hilton started replacing cleaning staff with bots. It is entirely possible to operate a 100 room motel, with no cleaning staff today, and guests not realize it. Bots do everything from stripping the bed, to wiping down walls and doors. More pointedly, they are more consistant than humans.

The way to address this is not just protecting workers but overhauling the entire education system so people aren't left with the only options available to them being jobs like fast food and Uber - those will never be "careers" by anyone's standard and no amount of taxes is going to change that.

Official government predictions of the future, especially related to employment, are consistently wrong.

 

[Cloudgazer]

And what is to prevent these businesses from considering the tax a cost of doing business and raising their prices for goods and services to maintain the same return on investment? Nothing. San Franciscans, your $10 cup of coffee that keeps you "woke" just went up to $11. Suck it up.

Large businesses—those with over $1 billion in gross receipts, 1,000 employees nationwide, and administrative offices in San Francisco

I seriously doubt that applies to any coffee company. They're either smaller than the minimum size or they don't have administrative offices in SF being based elsewhere. There are many things one can argue are bad about this law but the idea that it will raise the cost of goods and services inside SF itself doesn't appear to be one of them.

'

This law won't apply to any company that has a board of directors that is semi-competant.
Each office is its own company.

A person engaging in business within the City must file gross receipts tax returns as provided in Article 6. Those returns must be filed on a combined basis with all of that person's related entities. That person, and all of that person's related entities, constitute a combined group. Every combined group must file a single return; the combined group must choose a single person to file the return on its behalf. Each person within the combined group engaging in business in the City must provide a power of attorney to the person filing the return, authorizing the person filing the return to file said return and to act on behalf of each person with respect to payments, refunds, audits, resolutions, and any other items related to the tax liability reflected in the return. The power of attorney shall be substantially in a form prescribed or approved by the Tax Collector. Each return filed by a combined group constitutes a combined return under this Article and Article 6. The person filing any combined return shall pay the tax liability reflected on the return and any liability determined on audit at the time and in the manner set forth for returns and liabilities in Article 6.

SF's existing Admin Office law already covers this - simply splitting a firm up isn't going to have much impact. Outsourcing low wage functions would. Moving the admin offices out of SF would.

 

[Dzov]

I wouldn't be surprised if SF isn't hoping various businesses really do leave.

 

[imnotgerman]

What about Conde Nast's CEO? "Of this total $187,500 was received as a salary, $216,666 was received as a bonus, $5,648,486 was received in stock options, $6,390,772 was awarded as stock and $252,794 came from other types of compensation."

 

[numerobis]

What about Conde Nast's CEO? "Of this total $187,500 was received as a salary, $216,666 was received as a bonus, $5,648,486 was received in stock options, $6,390,772 was awarded as stock and $252,794 came from other types of compensation."

That means that if the median Conde Nast employee in San Francisco makes less than about $110k, Conde Nast owes some additional tax on either its SF payroll or its SF sales.

Why did you phrase this as some kind of gotcha?

 

[Cloudgazer]

What about Conde Nast's CEO? "Of this total $187,500 was received as a salary, $216,666 was received as a bonus, $5,648,486 was received in stock options, $6,390,772 was awarded as stock and $252,794 came from other types of compensation."

That means that if the median Conde Nast employee in San Francisco makes less than about $110k, Conde Nast owes some additional tax on either its SF payroll or its SF sales.

Why did you phrase this as some kind of gotcha?

Well, it almost certainly doesn't, since Condé Nast is a NYC based publishing house, with a NYC based parent company, they probably do not have an administrative office in SF, so they're not subject to this tax at all.

 

[numerobis]

What about Conde Nast's CEO? "Of this total $187,500 was received as a salary, $216,666 was received as a bonus, $5,648,486 was received in stock options, $6,390,772 was awarded as stock and $252,794 came from other types of compensation."

That means that if the median Conde Nast employee in San Francisco makes less than about $110k, Conde Nast owes some additional tax on either its SF payroll or its SF sales.

Why did you phrase this as some kind of gotcha?

Well, it almost certainly doesn't, since Condé Nast is a NYC based publishing house, with a NYC based parent company, they probably do not have an administrative office in SF, so they're not subject to this tax at all.

Every company gets taxed. Exactly what and how much depends on their activities in SF; it they’re mostly selling stuff they get taxed on revenue, if they’re mostly pushing papers they get taxed on payroll.

 

[thejynxed]

No, it fucking isn't. Not even close.

If you want to be taken seriously, it helps to actually think about the topic for 2 seconds.

Substance (and maybe a touch of civility) over pure emotions and profanity please. Why is it you start to recognize certain user names for consistently decreasing the signal to noise ratio on article after article?

As opposed to the signal to noise ratio of the comment this was replying to? Really the boogieman of crying communist or socialist should have died right about the time Joseph Welch got through gutting Joe McCarthy on national television. It's a stupid attack and frankly should be treated with scorn at this point.

McCarthy is probably a bad example to bring up on this because those Soviet papers that were released 30 years after his death and well after his (in)famous list of accusations was made public proved he was rather accurate in whom he accused except for the single accused person out of the 110 people named.

McCarthy was bad for other reasons, but he turned out to be shockingly good at sniffing out actual communist spies.

 

[latoya]

Easy fix. Either get rid of the lowest paid employees or outsource their work to another company; or, leave San Francisco. Don't expect the city will make a dime on this after the first year. People are moving out in droves now. We live in the area and have avoided making what were at one time monthly trips to the city (for over 30 years) and haven't been in about 4 years now.

Are the people downvoting this because they also live or have often been to SF and have different observations or are the downvotes b/c this poster's observations conflict with their ideological worldview?

 

[maximara]

It seems more and more obvious that the methods for checking corporate power through the legal system in America have been nearly exhausted. Additionally corporate control of media and skill in psychological manipulation (learned from advertising) preclude popular movements except in the most egregious cases of corporate failure. And even then many slip through the cracks. Even more unfortunately, corporate hoards of money offshore (hundreds of billions of dollars) are large enough to pose actual security threats to smaller sovereign nations (Apple could run the Manhattan project several times over in secret with offshore money reserves). It may be time to seriously and publicly consider the least palatable tool available to us as US citizens. The best case scenario would be that simple discussion conveys the seriousness of the issues at hand, that behaviors will change seeing that the consumer base is even willing to talk about such an option. If not then the number one most important thing to remember is that it's a scalpel, not a hammer. It must be wielded with clear limits and clear goals in mind. The wielder must understand, nearly fully, every consequence of every usage.

If this seems extreme, well it is. Hopelessness will make people consider very extreme options.

We've had decades of proof that spending billions of dollars tilting at windmills in a broken legal system doesn't work. But at this point, the alternative may not be any cheaper in terms of things that matter, but maybe at least it will bring the inevitable quicker.

The French Revolution did not really make France any 'better.' It just swirled the mess around. As evidenced by the state of the US now, the American Revolution (and it's second cousin, the Civil War) didn't really make a dent in the issue either. Russia has been through 3 failed governments in the last century and a half (including its current one). Italy and Greece are both in sorry shape. Great Britain is in a precarious position of backsliding into nationalist extremism. And then there are the number of middle-eastern powers that have overthrown their governments only to fall right back into the same corruption and inequality as before. In the end, revolutions take the support and cooperation of wealthy and corrupt powers to overthrow other wealthy and corrupt powers, so all revolutions really accomplish is replacing one group of wealthy and corrupt people with another group of wealthy and corrupt people. Whichever group of wealthy and corrupt comes out ahead after a revolution (in whatever form it takes) aren't going to just 'surrender' their wealth and give up their wicked ways. No, they're going to use the newly created power vacuum to double down on their greed and power lust. The song remains the same. If nothing is done about the institutional corruption and inequality, nothing you try to build on it will end any different than what came before it, no matter how good the intentions may start out. It's just planting crops in a poisoned field.

CGP Grey's The Rules for Rulers video gives a quick thumb nail as to why this happens. The Wealthy and corrupt are the keys to power and want the "treasure" of the country in return for supporting those in power. It explains why, after a revolution, you see many of the same (or very similar) types of corruption. It is a depressing look ar the reality of the world and no amount of downvoting is going to change that.

 

[maximara]

No, it fucking isn't. Not even close.

If you want to be taken seriously, it helps to actually think about the topic for 2 seconds.

Substance (and maybe a touch of civility) over pure emotions and profanity please. Why is it you start to recognize certain user names for consistently decreasing the signal to noise ratio on article after article?

As opposed to the signal to noise ratio of the comment this was replying to? Really the boogieman of crying communist or socialist should have died right about the time Joseph Welch got through gutting Joe McCarthy on national television. It's a stupid attack and frankly should be treated with scorn at this point.

McCarthy is probably a bad example to bring up on this because those Soviet papers that were released 30 years after his death and well after his (in)famous list of accusations was made public proved he was rather accurate in whom he accused except for the single accused person out of the 110 people named.

McCarthy was bad for other reasons, but he turned out to be shockingly good at sniffing out actual communist spies.

Harvey Klehr, a professor of politics and history at Emory University has shown that those claiming this have no freaking idea what they are talking about:

"(V)irtually none of the people that McCarthy claimed or alleged were Soviet agents turn up in Venona. He did identify a few small fry who we now know were spies but only a few. And there is little evidence that those he fingered were among the unidentified spies of Venona. Many of his claims were wildly inaccurate; his charges filled with errors of fact, misjudgments of organizations and innuendoes disguised as evidence. He failed to recognize or understand the differences among genuine liberals, fellow-traveling liberals, Communist dupes, Communists and spies — distinctions that were important to make. The new information from Russian and American archives does not vindicate McCarthy. He remains a demagogue, whose wild charges actually made the fight against Communist subversion more difficult. Like Gresham’s Law, McCarthy’s allegations marginalized the accurate claims. Because his facts were so often wrong, real spies were able to hide behind the cover of being one of his victims and even persuade well-meaning but naïve people that the who le anti-communist cause was based on inaccuracies and hysteria. " - quoted in Rehabilitating Joseph McCarthy? (October 29, 2009)

As Increase Mather wrote back in the 1692, “It were better that Ten Suspected Witches should escape, than that one Innocent Person should be Condemned.” McCarthy was effectively a right wing maniac with a scattergun who effectively pissed all over the Constitution and the Bill of Rights.