Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

November 10, 2018 | San Francisco Forces Large Corporations to Pay “Homeless Tax”

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Expect homelessness to rise in San Francisco as a result of the city’s passage of a homeless tax.

Proposition C, the largest corporate tax increase in San Francisco history, passed with 59.9 percent of the vote. As a result, San Francisco’s Biggest Companies Now Forced to Pay a Homeless Tax.

Companies with more than $50 million in gross annual receipts will now be taxed on any gross annual receipt revenue in San Francisco. The city already has a gross receipts tax, which is usually calculated by taking a company’s global revenue and multiplying it by an “apportionment percentage,” which is based on their business category.

The tax code is complex and will not hit corporations equally.

Salesforce, the largest employer in San Francisco, would pay around $10 million per year, according to estimates, while Square, which is one-third the size of Salesforce, would pay more.

Image from the San Francisco Chronicle article Situation On the Streets.

The article notes that the overall homeless population in San Francisco has fallen from 8,640 in 2004 to 7,499 in 2017. Yes, but at enormous expense. Since 2004, San Francisco has doubled the money it spends on homelessness, to more than $300 million.

And the result feels worse. Why?

  • Tents:The proliferation of tents all over the city, in places where before there were mostly just blankets and tarp lean-tos, has been perhaps the biggest driver. The Occupy protest movement that flared in 2011 and died out in 2012 infused hundreds of tents onto the streets, and kindhearted residents followed by raising donations to buy even more.
  • Gentrification:As the city’s tech-driven economy exploded, traditional homeless hangouts in places like central SoMa or around the Transbay Terminal were revitalized. Unable to blend in so easily, the homeless migrated elsewhere, causing fresh alarm to those unused to seeing camps.
  • Panhandlers: As many as 50 percent of them, by some estimates, are formerly homeless people who now live inside but are so dysfunctional they revert to the one moneymaking technique they’ve always known. They look homeless, but they’re not.

Sheer Idiocy

The proposal is so stupid that even the mayor London Breed opposed Prop C.

Funding for homeless services has “increased dramatically in recent years with no discernible improvement in conditions,” she said in a statement. “Before we double the tax bill overnight, San Franciscans deserve accountability for the money they are already paying.”

Expect Problems to Rise

If you want more of something, subsidize it. Reported homelessness is down slightly, but tents are up, panhandlers are up, and problems are up.

Throw enough money at the problem and people will move in from all over the county.

Prop C is lunacy.

Mike “Mish” Shedlock

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

November 10th, 2018

Posted In: Mish Talk

One Comment

  • Jdog says:

    It is a fact that if you subsidize something you will get more of it. Thank You SF for making yourselves a magnet for bums, as it will lessen the populations in more conservative areas…

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.