No deal yet on business tax reform as competing measure are introduced

Regular marches demanding tax equity since last September apparently haven't broken downtown's resolve to keep its money.
Steven T. Jones

Mayor Ed Lee and his business community allies failed to reach an agreement with labor and progressives by today's deadline for submitting fall ballot measures to the Board of Supervisors, leading progressive Sup. John Avalos to introduce a business tax reform measure that would compete with Lee's proposal.

The Avalos measure would raise $40 million in new General Fund revenue to restore recent cuts to city services while Lee's would essentially be revenue-neutral, although Lee did tweak the formulas to raise about $13 million in new revenue that would be dedicated to a new Affordable Housing Trust Fund, which would be created by another ballot measure that Lee was having a hard time funding in the face of business community opposition.

“I don't believe trickle down economics works, except for the 1 percent,” Avalos told the Guardian, arguing the importance of recovering revenue that the city lost when the biggest downtown corporations sued the city in 2001 to invalidate a gross receipts tax. Both the Lee and Avalos measures would gradually convert the current payroll tax into a new version of the gross receipts tax, which is preferred by most of the business community.

So, will voters in the fall be faced with competing ballot measures? Probably not, according to the same sources from the business and progressive sides of the negotiations who told us last week that it appeared a deal was in the offing, something they still believe.

“This is the beginning of the negotiations,” said the business community source, noting that both measures won't be approved until next month, with discussions about merging them ongoing. “I'm sure this is part of the process and they will agree on a number.”

Our labor source agreed, predicting the two sides will come to an agreement because neither side wants competing ballot measure, but noting that Lee appears to be trying to create divisions between the progressive revenue coalition and the affordable housing advocates. “That's just positioning on their part, but it doesn't feel like good faith bargaining,” the source said.

Mayoral Press Secretary Christine Falvey seemed to leave the door open for compromise, telling the Guardian, "The Mayor believes that to be successful, we should continue building consensus around business tax reform and that it's important that the business community continue to be key partners in that effort."

Lee is trying to placate an emboldened business community, which has taken a hard line position on opposing new taxes even while seeking ever more tax breaks and public subsidies. In fact, Sup. Mark Farrell had another business tax cut on today's board agenda, cutting the payroll tax for small businesses at a cost of more than $2 million to city finances.

“I believe we need to do all we can to incentivize job growth in our small business community,” Farrell said.

Avalos said he agrees with helping small businesses – which is why both his and Lee's business tax reform measure shifts more of the tax burden to the large corporations that have been so profitable in recent years – but that “we should not be putting a hole in the city's budget to do so.”

In a sign of just how strong the business community has become at City Hall compared to the progressive movement that had a board majority just two years ago, the tax cuts were approved on a 10-1 vote, with only Avalos opposed.


where everyone and his wife is touting some tax hike measure or other.

The voters have already rejected Avalos.

Posted by Guest on Jun. 12, 2012 @ 6:30 pm

without increasing the city'd budget? Than that's simple - cut city spending by the equivalent amount.

The fact that the board passed Farrell's proposal 10-1 isn't surprising at all. Lee won a landslide victory standing on a pro-business, pro-jobs platform. Even the dimmest Supervisor shouldn't ignore the voters so callously as to oppose this.

Likewise, allowing some revenue increases in the mix in return for affordable housing looks like a compromise we can all live with. Voters might go for that while they definitely will not go for tak hikes that merely boost the general fund, which effectively means it will prop up city workers' lavish pension benefits. No way.

Posted by Guest on Jun. 13, 2012 @ 6:53 am

The business community has not gotten stronger, progressives have been outmaneuvered and have since folded tent.

Until Tim and his friends ask the question of how progressives got to where they are today, and then unflinchingly accept the answers to that question, and then risk hurting their friends' feelings and cutting them out of what are effectively their sinecures to act on that intelligence, then there is no possibility that they can change course and appeal to a majority of San Franciscans again.

Posted by marcos on Jun. 13, 2012 @ 8:25 am

to realise that the Supes were always fairly moderate and pro-jobs prior to 2000, and all that has happened now is that we have reverted to that same model. So it's 2000-2010 that is the aberration, and not what we see now.

The Supes now better reflect the city as a whole, most of whom are moderate and pro-jobs, hence Lee's easy victory. The temporary distortion that was introduced by district elections has not been removed.

Posted by Guest on Jun. 13, 2012 @ 8:52 am

At large supes were more progressive than the current Board of Supervisors. One example of that is even though they were all elected in citywide races and would be nominally more conservative, corporate welfare that we've seen and busting the condo conversion cap, moderate/conservative measures both, were not dared to be approached.

The David Chiu presidency era has been more conservative than the Barbara Kaufman era.

Posted by marcos on Jun. 13, 2012 @ 11:04 am

elections should be counter-balanced by increased influence and lobbying by those who create wealth in the city.

Posted by Guest on Jun. 13, 2012 @ 11:11 am

It would also be useful to redefine what we mean by Progressive in 2012.

Speaking personally, in 2000 I voted almost exactly as the Guardian recommended. Today, not so much.

Some of my "shift" comes from my struggle to own a home and raise children here (ie., growing up). Some comes from the lessons of the recession (adapting to reality of the economy/market). And some comes from a disappointment with the leadership.

Posted by Progressive Lost on Jun. 13, 2012 @ 9:27 am

politicians who describe themselves as "regressive". "Progressive" is a label designed to make someone who is left-wing look and sound better. After all, who opposes "progress"? But if course that assumes we all agree what constitutes progressive.

So it's a weasel term, and "liberal" or "left-winger" or "socialist" are better descriptors. The simple choice in any issue or election is left or right - the left like lots of government meddling and control, and the right do not. It's really that simple.

Posted by Guest on Jun. 13, 2012 @ 9:54 am

The term is "conservative," not "regressive." Conservatives believe that we've already devised the best political and economic systems possible and we simply need to conserve and protect them. Progressives believe humans can continue to devise better, fairer, and more sustainable systems, that we can still make progress. Both are descriptive terms (far moreso than liberal or left-winger, a totally arbitrary term) and legitimate positions.

Posted by steven on Jun. 13, 2012 @ 10:36 am

left versus right debate. Rather than make assumptions about who represents "progress" and who doesn't. it's better to think about the contrast in terms of whether you want a bigger government, with more taxes, borrowing and deficits. Or whether you think, as Reagan famously said, that government isn't the solution - it's the problem.

Posted by Guest on Jun. 13, 2012 @ 10:48 am

The size of government ballooned under Reagan, just as it did under W, largely because they each greatly expanded the very biggest of big government functions, the military, something that most progressives would like to shrink. Try again.

Posted by steven on Jun. 13, 2012 @ 1:33 pm

You're mistaken. Entitlement spending is a much bigger expenditure than the military.

Posted by The Commish on Jun. 13, 2012 @ 4:40 pm

That's a great question that goes to the heart of the devolution of politics into a battle of platitudes and personalities, rather than values and ideology. I defined San Francisco's political spectrum last fall here,, and I think it and the comments that followed are worth reading.

The biggest and most misleading platitude these days is the claim to be "pro-jobs" as if it were a political identifier. Everyone is pro-jobs in that they want people to have economic security and for the society's needed work to get done, but the neoliberals (people in SF who call themselves "moderates") who use the "pro-jobs" label the most generally advocate business tax cuts and other corporate welfare programs. They see the main job of the public sector as promoting the growth of the private sector, even at the expense of government jobs, demonstrating that they aren't "pro-jobs" as much as they are "pro-corporations," a more accurate but obviously less attractive label. If they were really "pro-jobs" then a government social service provider would count for at least as much as a corporate cog. 

What's most maddening about the politics that have taken control of City Hall these days is its fundamental dishonesty and one-sidedness. We know that decades of conservative, pro-corporate fiscal policy has created gaps in income and wealth that are at historic highs and worse than in most other industrialized countries. We know that people are working ever longer hours (particularly in the vaunted tech sector where, ironically, they supposedly produce gadgets to make us more productive) for stagnant wages. We have plenty of evidence that these sorts of trickle-down economic policies don't promote sustainable and widely shared prosperity. And we know that when we neglect the social safety net, that results in high incarceration rates, public health problems, and a wide array of social problems. We know that simply catering to the demands of wealthy individuals and corporations doesn't help the vast majority of citizens. 

Well, at least it is the progressives who know these things and try to act on that knowledge. Mayor Lee may speak platitudes of concern about the wealth gap -- as he did when cracking down on Occupy SF last fall -- but all his actions simply exacerbate the problems. To his credit, he has finally recognized the need for more affordable housing funding, even if his solution is flawed (much of the money simply subsidizes real estate developers, which is at least consistent with his neoliberalism) and he's afraid to actually make a significant ask of the downtown corporations that have continued to make big profits during a recession that has lingered for the workers.

This is a volatile, unsustainable situation, despite the pro-jobs chorus coming from City Hall these days and the collapse of this city's progressive movement, which certainly had many flaws even if it played a vitally important role in San Francisco. Instead, we have a one-party town, and this Democratic Party has become as ideologically narrow in its neoliberal approach as the Republican Party became in its neoconservative approach -- both of which simply exalt the rich and hope they take good care of us. That's not politics, it's a big corporate scam and most of this city's politicians are complicit.

Posted by steven on Jun. 13, 2012 @ 10:25 am

went to what seemed like unusual lengths to actually ignore the jobs issue, instead merely uttering platitudes about "equality" and "fairness". The people and voters of this city gave their unambiguous verdict on that contrast by giving Lee a resoundling landslide win.

So yes, jobs matter and for most people that doesn't mean more city bureaucrats with unsustainable pensions benefits requiring ever more taxation on a dwindling private sector taxbase. It means first creating the private sector wealth that ultimately pays for every service that you care about.

And it's disingenuous of you to accuse moderates of mis-using a term like "pro jobs" when your weasely use of the word "progressive" suffers from the exact same criticism. Rather than battle over who can pick the smartest euphemism, why not focus on the simple contrast - helping the private sector confer prosperity on the city, or ramp up the government in the belief that they know best?

Posted by Guest on Jun. 13, 2012 @ 10:55 am

Am I wrong or did Avalos win the majority of the votes on election day? Lee took a page from Newsom's play book and stuffed the election with absentee ballots, correct?

Posted by Guest on Jun. 13, 2012 @ 10:05 am

at every point in the election cycle, from start to finish, and ended up with 50% more votes than Avalos.

Posted by Guest on Jun. 13, 2012 @ 10:18 am

I am almost positive that 4 out of every five votes cast for Lee on election day were falsified/illegal. Avalos was the rightful winner. Anyone who doesn't see that is blind.

Posted by Greg on Jun. 13, 2012 @ 11:28 am

I voted absentee last year. Are you telling me that's illegal?

In a close election, like Gore vs Bush, it's possible that some shenanigans at the margin might have made a difference, although that didn't happen then.

But when Lee gets more than 50% more votes than Avalos, then any alleged "fraud" is a non-issue. You can't fake that many votes - not even close.

Or is it all a vast right-wing conspiracy? Yet again?

Posted by Guest on Jun. 13, 2012 @ 11:42 am

Tax reforms are good so long as the various sides of the reforms should be considered. I have learned that when reforms are introduced, there are always two sides of the coins – the advantages and the disadvantages, and usually the disadvantages outweigh the advantages. When I was visiting Pennsylvania, a friend of mine who is a budding entrepreneur who managed to get an investor for his business in a venture competition he joined. While he was engaging Harborcompliance, an online legal document preparation service provider, he learned about the various tax laws, and the reforms that affected the current tax laws. He said that it was an eye opener and these reforms should not be taken lightly, as these would also affect small business start-ups like him. It was a good conversation and I have learned a lot about tax laws through his own research.

Posted by Fred Dahlberg on Jan. 21, 2013 @ 10:48 pm

Progressive is definitely not making any progress while the business community has been greatly outnumbered. It is doubtful that any actions which are in favor of the business alliance will take place anytime soon. I think not much can be done when it comes to an intervention with the authorities.

Posted by Fred Dahlberg on Jan. 28, 2013 @ 1:39 am

Progressive is definitely not making any progress while the business community has been greatly outnumbered. It is doubtful that any actions which are in favor of the business alliance will take place anytime soon. I think not much can be done when it comes to an intervention with the authorities.

Posted by Fred Dahlberg on Jan. 28, 2013 @ 1:44 am