Ron,
I got your Revision #2 and read it -- thanks. A couple technical points: In the text, you refer several times to a "section 906(h)" but there is no description of that section there that I can see. You also cite a list of exemptions as having been established by the Board of Supervisors and the Tax Assessors office, but included in that list is one that you say was established by the California Public Utilities Code, which if true, should obviously not be in the list unless the list is described differently.
I'm glad you dropped the wage restriction repeal -- that definitely strengthens the measure. I believe it could be further improved by giving the proposed payroll tax exemption to companies paying less than a certain amount in income tax, rather than having fewer than a certain number of employees. Here I've summarized and expanded on some of the points I made to you previously on this topic:
So if the sole outlet of locally-owned Vinh's Vietnamese Restaurant has 55 employees it doesn't qualify for a payroll tax exemption, but if Burger King has 10 restaurants with 45 employees each, they all do qualify? Ugh. Our opponents could have a field day with that.
When I brought this up, you noted that with fast food enterprises, only *independently-owned* franchisees would qualify. However for purposes of public debate I suspect that distinction wouldn't matter much. Can you recall any debate about a chain outlet opening in San Francisco where the fact of whether it was an independent franchisee or not played a significant part in the arguments? I can't. To most of the public, a Burger King is a Burger King, period.
You also questioned my concern that granting exemptions based on having 50 or fewer employees would create a disincentive to hire more people, saying (IIRC) that if the demand is there, businesses will find it in their economic interests to expand employment. But if hiring that 51st employee means you have to start paying several hundred dollars a year in taxes for *each* existing employee, that is a *major* disincentive to hiring that 51st person. Many business owners would choose to try to get by on 50 employees for as long as possible rather than growing naturally and creating more jobs as they would otherwise.
While basing payroll tax exemptions on having less than X number of employees creates a negative employment incentive, granting exemptions based on a company's most recent income tax filing would create an incentive that libertarians could cheer -- it would prompt businesses to seek ways to lower their income tax payments! That way the measure would indirectly attack the income tax while directly taking on the payroll tax.
You said that qualifying based on number of employees would be simpler and easier for people to understand than qualifying based on tax payments. But basing it on employment necessitates resolving questions of how to handle seasonal employees, interns, independent contractors, part time employees, and the like. Also, a company might have a lot of employees, but just barely be scraping by. If a company had little or no profits in a given year, they would presumably be paying little or no income taxes, and therefore would get relief under a measure that based qualification on income tax paid. But if they had to qualify based on number of employees, then they would have to lay people off in order to avoid being hit by the payroll tax when they were already down. In some cases, it's not that easy to just lay employees off and then get them back later. It can be very disruptive to a business.
Finally, I'd propose that qualification based on income tax be calculated based on the tax paid by an *entire company* and not just by individual location, to avoid the Vinh's Restaurant vs. Burger King type scenario described above.
Yours in liberty,
<<< Starchild >>>
Dear Starchild;
Please read the copy of the proposed Payroll Tax Repeal Revision #2 which was e-mailed to your e-mail address as a sub-committee member. You will note there is no mention of repealing the minimum wage. The only topic is the repeal of the payroll tax.
If you did not receive this Rev.#2 Payroll tax proposed initiative please let me know and I will e-mail this to you again.
Thanks
Ron Getty
SF LibertarianChris,
I concur on both counts. Thanks for the reminder about the single
topic rule.<<< Starchild >>>
> Ron Getty wrote:
> > The LPSF will initiate a ballot initiative not a charter amendment
> to have
> > all of the City declared a: San Francisco Small Business Tax Free
> Zone.
> > Businesses in the Tax Free Zone will not have to pay payroll taxes
> or the
> > SF minimum wage.
>
> I have two concerns here.
>
> First, voter-initiated ballot measures must address a single topic. We
> must be careful, and seek outside legal advice on the matter, that
> payroll
> tax exemption and minimum wage exemption would not be considered two
> topics, and thus cause disqualification.
>
> Second, I think that bundling these measures may cause failure. I
> could
> be wrong, and hope that I am, but I fear not. Small business is an
> apple-pie concept, held as good by nearly everyone. A business
> incentive
> like a tax exemption will probably be regarded favorably by many
> people.
> However, the only thing more important to the so-called progressives
> than
> the small business owner is the minimum-wage employee. Note that the
> minimum wage measure that was passed by the voters included a delayed
> date
> of effect for small businesses; I think that attempting to roll back
> the
> minimum wage will probably fail. Also, the loss of money (perceived at
> least) will be to the government for the tax, and the worker for the
> minimum wage decrease; many people will support the former but not the
> latter.
>
> So my advice: unbundle this, and either offer only the tax exemption,
> or
> offer both but as two separate measures.
>
> ~Chris
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