Mayor Edwin Lees Says Payroll Tax is a “Business Punisher,” So Why Did Gavin Newsom Sign It Into Law in 2004?

All right, work with me here, “Interim Mayor” Edwin Lee is now saying that San Francisco’s unique stock option payroll tax scheme is a kind of “business punisher,” right?

Edwin Lee, seen here with popular new Supervisor Malia Cohen:

Check it, from a recent ditty from Adam Lashinsky in Fortune magazine:

“We have kind of a unique taxing system here in San Francisco where historically we’ve actually taxed employees’ growth, and that’s kind of a business punisher, if you will. If you’re going to grow the employees, why would we punish that?”

All right, so who signed this horrible, terrible, horrible tax into law? None other than former Mayor Gavin Newsom just seven years ago.

Check it:

On February 19, 2004, San Francisco Mayor Gavin Newsom approved recent changes to San Francisco’s Business Tax ordinance adopted by the Board of Supervisors on February 10, 2004. These changes become effective March 20, 2004, 30 days after signing by the Mayor.”

So, how can we reconcile this? Here’s a stab at it, again from Mayor Lee:

“Now, we’ve never really distinguished stock options; we’ve always taxed compensation just like any payroll tax would. But we didn’t realize that stock options was something very special to the tech companies. And as they’ve grown, they’ve educated us about how valuable those stock options are.”

But didn’t we have stock options and tech companies about back in the dotcom era? Yes we did. Has anything changed since then, are stock options new? No, not at all.

I cry foul.

And I’ll tell you, I don’t see a way out of this one. Tell me, Gentle Reader, how can we reconcile dese tings?

(Also, note how the Supervisors voted back int the day. Do you think Sean Elsbernd, if he had gotten his current gig just a little earlier, would have voted against this “job punishing” biz tax back in the day? Don’t know. It’s hard to imagine him defying Gavin Newsom, but anything’s possible, I suppose.)

Enjoy:

031990

[Business Tax]

Supervisors Ma, McGoldrick

Ordinance amending the Business and Tax Regulations Code to: (1) amend Article 12-A (Payroll Expense Tax Ordinance) to (i) conform Article 12-A (Payroll Expense Tax Ordinance) with the amendments to Article 6 (Common Administrative Provisions) and (ii) consolidate exemptions, definitions and other administrative provisions, as amended, that apply to Article 12-A (Payroll Expense Tax Ordinance) and other Articles of the Business and Tax Regulation Code, and place them in Article 6 (Common Administrative Provisions); (2) amend Article 12 (Business Registration Ordinance) to conform business registration requirements with amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 6 (Common Administrative Provisions); and (3) amend Article 6 (Common Administrative Provisions) to (i) clarify common administrative provisions and conform them with amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 12 (Business Registration Ordinance), (ii) consolidate exemptions, definitions and other administrative provisions that apply to Article 12-A (Payroll Expense Tax Ordinance), Article 12 (Business Registration Ordinance) and other Articles of the Business and Tax Regulations Code, and (iii) eliminate the Board of Review. (Treasurer-Tax Collector)

PASSED ON FIRST READING by the following vote:
Ayes: 11 – Alioto-Pier, Ammiano, Daly, Dufty, Gonzalez, Hall, Ma, Maxwell, McGoldrick, Peskin, Sandoval”

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