Opinion: Why Mountain View’s proposed head tax is a dumb idea

  • IOPINION

BY DAVE PRICE
Daily Post Editor

I cringed when I watched Mountain View City Council stumble its way into putting an employee head tax on the November ballot the other night. The idea is to tax the big companies like Google and Microsoft by charging them a certain amount per employee — in this case, $150 a year for any company with 5,000 or more employees.

This tax is a dumb idea for a number of reasons.

First, only $600,000 of the $6 million that will be collected each year is going to combat the housing crisis. That will buy you maybe a third of a condo.

Second, much of the money will pay for beefing up the city’s shuttle. Google already voluntarily funds the shuttle. If this tax is approved, Google will just pull their voluntary funding and pay for it with the tax. The tax will have accomplished nothing. It’s as if council is just trying to make the statement that they’re going to punish the big companies. And why is the city even thinking about a new tax when it raked in a $103 million surplus for the fiscal year that ended June 30, 2017?

Third, a head tax affects low-wage workers more than highly-paid employees. That’s because the tax represents a bigger percentage of the cost of employing a low-wage worker than it does a higher-paid one. Big employers will avoid hiring low-wage workers and rely more on outsourcing and automation.

If Google or other big companies have to layoff workers, the low-wage workers will be the first to go in order to cut the company’s head tax payment.

Head taxes aren’t anything new. Chicago had one but decided in 2011 to eliminate it because it was, in the words of Mayor Rahm Emanuel, destroying jobs.

Get the money up front

If you want to combat the impact of a big company moving to town, a city should get the money before the firm builds its offices, not after. It’s fairer for the company to know what they’ll have to pay advance. And the city has more leverage before it approves a development than after the deal is closed.

Mountain View should be commended for getting Google to build 10,000 homes as part of its North Bayshore Expansion. If the city wanted anything more from Google, it should have demanded it then.

This tax will make the city vulnerable in the next recession. Remember 2001 and 2008, when companies were abandoning their offices?

If a company has offices in several cities, they’re going vacate offices in the city with the head tax first. And that will make it harder on all of the stores, restaurants and service-providers who benefit from a large corporate workforce.

Editor Dave Price’s column appears on Mondays. His email address is price@padailypost.com.

2 Comments

  1. I think it’s time we started forcing companies like Google to pay their fair share of local taxes. The burden shouldn’t be exclusively on local residents. I’m voting for this “head tax,” though I don’t like the name, because it will level the playing field between residents and the big companies that have invaded the community.

  2. Andy, a lot of the residence are employees for big companies in most cases paying a lot more property taxes than those living longer with lower rates grandfathered in. All the city improvements benefit most even though some are paying 10-20x less tax.

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