OPINION
BY DAVE PRICE
Daily Post Editor
My head snapped and I did a double take when I read the other day that Redwood City officials want to start taxing businesses based on the number of people they employ, a head tax.
I was shocked because both San Francisco and Seattle have repealed their head taxes, saying they were bad for business and bad for workers.
San Francisco voters repealed the head tax in 2020 (Prop F) and switched to a tax based on a business’s gross receipts. And San Francisco’s tax exempts small businesses, something city leaders say they want to support.
The San Francisco Treasurer and Tax Collector’s office says on its website that eliminating the head tax “was intended to promote economic growth, greater revenue stability, and better equity in the business tax system.”
Think about that. San Francisco, which isn’t exactly business friendly, thought a head tax was too much. San Francisco!
A ‘tax on jobs’
In 2018, Seattle’s city council briefly adopted a $275 head tax.
But the tax drew widespread and bipartisan opposition. Former Gov. Christine Gregoire, a Democrat, called it “a tax on jobs” and said that having such a tax “undermines our international and national reputation,” according to local media reports.
State Sen. Mark Mullet, a Democrat representing a district just southeast of Seattle, warned that the city was “sending a message to the rest of the country that we’re going to penalize you for creating jobs here.”
Seattle’s City Council repealed the head tax before it could go into effect.
With that history, you’ve got to wonder why Redwood City is going to the voters with a head tax.
City has a healthy surplus
The city says it has a “structural deficit” but its certified annual financial report, which is performed by independent auditors, said the city had a $58,393,173 surplus for the budget year ending June 30, 2022. (I would have liked to use more recent data but apparently the city has fallen behind in posting these annual audits known as CAFRs.)
Despite this surplus, the city wants more money for salaries and pensions. That was the reason the council gave in 2018 when it convinced voters pass Measure RR to increase the sales tax from 8.75% to 9.25% to raise city spending by $12 million a year. (Now the sales tax rate in Redwood City is 9.88% due to increases by other government agencies.)
Less than a month after Measure RR passed, Redwood City council gave its city manager, Melissa Stevenson Diaz, and City Attorney, Veronica Ramirez, raises.
Now, the city is proposing this head tax — up to $250 an employee — to squeeze another $7 million out of the community.
The last thing council wants to consider is cutting its own budget to live within its means.
The voters will get the last word on the head tax in November.
The city is trying to promote it as a “modernization measure.” I guess it’s the modern thing to make your city unattractive to business. This head tax really benefits San Carlos and North Fair Oaks.
Editor Dave Price’s column appears on Mondays.
