San Francisco is considering a revenue tax to fight homelessness

Earlier this year Seattle passed and then, a month later, rescinded a head-tax which would only have applied to the wealthiest companies in the city, places like Amazon and Starbucks. The intent was to raise as much as $40 million a year to fight the homelessness problem the city is struggling with. Next month, San Francisco will vote on a similar proposal. Proposition C is meant to raise as much as $300 million a year from top-earning companies in the city and will spend that money in addition to the $380 million San Francisco is already spending to fight homelessness.

But just as happened in Seattle, some leaders are already coming out against the new tax, including the city’s new mayor, London Breed. Ten days ago, Breed, who was elected on the promise to clean up the city’s streets, came out against the proposal citing a lack of accountability in the plan:

The City needs to audit the $300+ million we are already spending on homelessness. My administration is at work on that now, and until the audits are done, we don’t actually know how much or what type of new homelessness funding is needed. Yet Proposition C does not audit the money the City already spends. It does not include a detailed spending plan for the $300M in taxes it seeks to add, nor regular audits of that money, nor adequate public oversight over how it’s spent.

Our homelessness spending has increased dramatically in recent years with no discernible improvement in conditions. Before we double the tax bill overnight, San Franciscans deserve accountability for the money they are already paying.

Mayor Breed went on to say that the new spending could actually make things worse:

By dramatically increasing our homelessness spending without working with neighboring counties, Proposition C could put us in the untenable and expensive position of funding services for residents from other counties…San Francisco cannot solve homelessness simply by writing ever-larger checks itself. There is a limit to what we should — and can — spend.

This is a problem that Seattle has also seen. When you offer more services for homeless people, word travels fast. That brings more homeless people to the area looking to gain access to those services. So by doubling the budget, you could actually wind up making the problem worse.

But Prop. C has proponents as well including Marc Benioff, the CEO of Salesforce, which is San Francisco’s largest employer. Last week, Benioff and Twitter CEO Jack Dorsey had a discussion about the proposal on Twitter:

Today the Associated Press reports that other companies in the city are remaining on the sidelines of the debate:

Online payment processing company Stripe has voiced opposition and contributed $120,000 to the campaign against Proposition C, but other companies have stayed quiet. The San Francisco Chamber of Commerce, whose board includes representatives of Microsoft, LinkedIn and Oracle, is leading the fight.

Up to 400 businesses would be affected, with internet and financial services sectors bearing nearly half the cost.

The city says confidentiality precludes revealing tax information, but some of the companies expected to pay the most are big names across major industries. Wells Fargo & Co., retailer Gap Inc. and ride-hailing platform Uber declined to comment.

My take is that Benioff seems focused on this solution because he’s already poured money into fighting homelessness in the city. You may have noticed that was the point on which he challenged Jack Dorsey, i.e. how much have you spent? But Mayor Breed is right that spending more could make the situation worse. Things are bad now with the city mired in filth and struggling to keep the poop off the streets. If the number of street people doubles as a result of the additional spending, the situation will be no better and possibly worse than it is now.

There’s another problem with this. One of the reasons Seattle’s City Council rescinded the head-tax so quickly is that a majority of city residents didn’t believe the money would be spent wisely. But if Prop. C passes, you can bet that other large cities will see similar pushes to raise funds using some kind of tax on top earners. Handing millions of dollars to far-left city councils is like handing a bottle of liquor to a homeless person with a drinking problem. The bottle will be consumed but it won’t improve the situation in the long run.