UPDATE - As of May 11, 2010
Please click here to access the Controller’s interim report on the two alternative proposals to the current payroll tax structure in San Francisco that was just published. The rational for a tax on commercial rent is found on page 18 of the report. Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at email@example.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at firstname.lastname@example.org with any comments you may have.
- Property tax costs can be deducted from the rent receipts the landlord receives for the purposes of paying this new rent tax, but no other costs.
- The Controller's office is estimating a 5-year phase-in period for this new tax to gauge its impact. With either proposal, the City and County of San Francisco is attempting to tax those industries (banking/financial services and insurance) that currently are exempt from local payroll taxes under state law.
- The City’s payroll taxes currently yield approximately $350 million a year to the general fund. This commercial rent tax would probably increase what the commercial real estate industry pays in payroll tax by almost a factor of 10--approximately $1 million in payroll taxes is collected from our industry currently; this will go up to an estimated $8-9 million a year. At present, there are 80,000 businesses in San Francisco, but only 6,000 pay payroll taxes. A commercial rent tax would expand the tax base and spread this obligation, according to Mr. Rosenfield and Mr. Egan.