Thursday, January 28, 2010

CALL TO ACTION! Support Tax Relief Measures For Businesses

BOMA San Francisco Members:

Please see the information below on three targeted local economic stimulus measures that are desperately needed in these tough economic times.  BOMA San Francisco and the San Francisco Small Business Commission believes that these proposals provide meaningful tax relief to businesses that create jobs and provide heath care coverage for their employees.  Please take a minute to review and, if you agree that local businesses need tax relief during this recession, please email the San Francisco Board of Supervisors President as well as members of the Budget & Finance Committee member to voice your support and ask that the items be calendared immediately.

  Board of Supervisors President David Chiu  -

      Supervisor John Avalos -
      Supervisor Ross Mirkarimi -
     Supervisor Sean Elsbernd -

Biotechnology Payroll Tax Exemption Extension

Supervisor Michela Alioto-Pier's proposed extension of the Biotechnology Payroll Tax Exemption would allow for a rolling sunset of the exemption. Currently, the exemption is in effect from 2004 to 2014 and is available to a qualifying biotechnology company  for a total of 7 1/2 years. However, because the exemption sunsets in 2014 a new biotechnology business can only take advantage of the exemption for 4 years.  The proposed measure would create rolling sunset and allow any qualified biotechnology business to take the full 7 1/2 exemption so long as they initially apply and qualify for the exemption before December 31, 2014.  As the report, below, from the Office of Economic Analysis states, this targeted tax exemption is working -- in
2004 there were 2 biotechnology companies in San Francisco, today there are 56.  In 2000, San Francisco had only 1.3% of the total life sciences occupied building base in the Bay Area. This figure did not begin to rise until 2005, after the exclusion went into effect in September 2004. Today, the percentage has risen to 6.1% of the regional total, approximately a five-fold increase over 2004. Estimates suggest there could be 2,750 life science jobs in San Francisco, up from only 500 in 2004. Yet the exclusion has applied to only eight companies and 231 employees. This targeted payroll tax exemption acts as a catalyst for growing the entire life science sector in San Francisco.

Payroll Tax Credit for Small Businesses that comply with the Health Care Security Ordinance

This measure will provide small businesses with between 20-49 employees that are complying with San Francisco's Health Care Security Ordinance (HCSO)--a one time payroll tax credit of $2,000 per businesses. The HCSO requires that businesses with between 20-49 employees spend $1.39 per hour, per employee on qualified health care expenditures.  Small businesses tell OEWD that the cost of complying with this measure is between $30,000 - $70,000 annually. This measure will incentivize compliance and support small businesses who are struggling during this recession.  This proposal was developed after hearing from small business owners and members of the Small Business Commission (SBC) that the cost of compliance with the HCSO is extraordinarily difficult in this economic climate and that the city's local economic stimulus efforts should include providing tax relief to struggling small local businesses. In fact, the SBC recommends that this measure apply to all  small businesses with less than 50 employees that are providing health care coverage to their employees and that the credit be in effect for three years.

New Jobs Payroll Tax Exclusion

The New Jobs Payroll Tax Exclusion would cap a businesses' payroll tax liability at 2009 level for two years. This means that any business that creates a job in 2010 or 2011 would not have to pay payroll tax on that hire until 2012. By eliminating the payroll tax on new jobs, the city will remove a disincentive to create a job in this down economy. The city's chief economist said last week that the this exemption is one of the most cost-effective ways for the city to spur private sector job-growth.
Your BOMA San Francisco's Advocacy Team would like to thank Regina Dick-Endrizzi, Executive Director of the San Francisco Office of Small Business, for this information.  

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