San Francisco Votes for 'Homeless Tax' That Twitter's CEO and Other Tech Companies Tried to Block

The city's controversial Proposition C, which would tax technology companies to fund homeless services, passed on Tuesday.

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Nov 7 2018, 7:11pm

Jack Dorsey. Image: Shutterstock

A San Francisco “homeless tax” called Proposition C, over which technology executives publicly squabbled with one another, passed on Tuesday with 60 percent of the vote.

Proposition C would double what San Francisco currently spends on homeless services—providing an estimated $300 million for permanent housing units, shelter beds, and mental health and substance abuse care for the city’s 7,500 reported homeless citizens.

To do so, it would increase gross receipt taxes on companies, including some of the world’s biggest technology giants with headquarters in San Francisco, with an annual revenue above $50 million by roughly 0.5 percent.

The measure’s divisiveness was distilled into a public feud between Twitter CEO Jack Dorsey and Salesforce co-CEO Marc Benioff last month.

Benioff, who supports Proposition C, spent at least $7 million of his and Salesforce’s money campaigning for it, making him the largest donor for the measure. In an October op-ed for the New York Times he said of the tax, “This is a humanitarian emergency and it demands an emergency response,” despite initially questioning it.

Dorsey opposes the bill, once tweeting “I want to help fix the homeless problem in SF and California. I don’t believe this (Prop C) is the best way to do it.” His main reason is that Proposition C would disproportionately affect mobile payments services such as Square (where he serves as CEO) by taxing fees they pay to credit card companies. The tax, Dorsey claimed, would cause Square to pay twice as much as Salesforce, even though its projected annual revenue would be four times less this year.

Other criticisms of Proposition claim that its proceeds won’t be managed responsibly, could cost the city jobs, and will detract from other solutions to homelessness. (“Prop C would likely cause some job loss and reduction in GDP, but only by about .1 percent,” fact-checked Recode.)

At one point, Dorsey tweeted screenshots of his phone, showing that he’d tried to call Benioff to discuss the matter. “Which homeless programs in our city are you supporting?” Benioff tweeted. “Can you tell me what Twitter and Square & you are in for & at what financial levels? How much have you given to heading home our $37M initiative to get every homeless child off the streets?”

The CEOs’ Twitter beef was weird and performative. But it also trivialized the technology industry’s lobbying effort against Proposition C.

The “No on Prop C” campaign, led by San Francisco’s Chamber of Commerce, received a windfall of donations from technology bigwigs.

According to a breakdown from City Lab, contributions included: $100,000 from Lyft; $419,999 from Stripe; $100,000 from venture capitalist Michael Moritz; $150,000 from Y Combinator investor Paul Graham; $25,000 from Square; and $75,000 from Dorsey.

“Prop c is the dumbest, least thought out prop ever. Please get the facts and vote no. Then lets all focus on real solutions for sf,” tweeted chairman and co-founder of Zynga, Mark Pincus.

The mobile payments company Stripe, backed by Peter Thiel and Elon Musk, called Proposition C a “bad policy that will hurt San Francisco” in a statement from its general counsel Jon Zieger.

At the heart of the issue is corporate responsibility—should technology companies be held accountable for the widening inequality created, as many claim, by their presence? The Bay Area’s high concentration of billionaires starkly contrasts its population of 28,240 reported homeless citizens, a situation the United Nations called “cruel” and “unacceptable” in a report this year. What’s more, the technology industry’s deliberate avoidance of taxes—sometimes through tax breaks that let them keep millions of dollars in their coffers—has earned them little good will from the communities they so profoundly impact.

Looking forward, Proposition C is anticipated to face legal hurdles as it failed to win by a two-thirds majority. “No on Prop C” campaign spokesman Jess Montejano told the San Francisco Examiner that it was unlikely to “ever see a penny that Proposition C promised.”

The measure was opposed by Mayor London Breed, who campaigned on fixing the city’s homeless crisis, and claimed in a statement that Proposition C “lacks accountability” and “could make our homelessness problem worse.” It was supported by House Minority Leader Nancy Pelosi and Senator Dianne Feinstein.