SF Budget

The mayor's tech tax talks -- and the legacy of the "Filthy 52"


Tech tax talks. I've always wanted to use that headline.

And of course, the meetings in the Mayor's Office on the city's business tax involve more than the tech folks -- but from what I hear, they dominated the discussion.

The issue is the way the city taxes businesses. Way back in the 1990s, the city had two types of tax -- a payroll tax and a gross receipts tax. The system was complicated, but essentially, companies paid a portion (about 1.5 percent) of payroll or gross receipts, whichever was higher. That made a certain amount of sense; since under California law, cities can't tax corporate income (profits), there's no simple way to enact a perfect local tax, but payroll and gross receipts are both rough approximations of the size of an company.

But in the late 1990s, a group of big corporations, including Pacific Gas & Electric, Chevron, Bechtel, the Gap, Levi Strauss, General Motors, Equity Office Properties, Eastman Kodak, Safeway, Charles Schwab, the Hearst Corporation, the Giants, Macy's, Neiman Marcus, Nordstrom, the Shorenstein Company, and others filed a lawsuit to overturn the tax system. We called them the "Filthy 52." The gross receipts tax was unfair, they argued -- and in 2001, with only three dissenting votes, the Board of Supervisors settle the suit by repealing that part of the tax structure.

Read more »