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Comment by colordrops | Hacker News Reader

CEOs are all just going to move out of San Francisco.

And/Or move their companies too. Particularly all the "tech startups" that think they don't need physical office buildings anymore. For a lot of companies, SF is becoming difficult to justify.

Well-intended ideas, not fully thought out, leading to unintended consequences... nothing really new for SF.

That’s because the “mostest wokest” dont live in SF long enough to be bothered by the consequences of their votes.

People in San Francisco have long been angry at tech workers for driving up prices... Driving them out may be on purpose!

If that’s the goal then I think this is a good initiative.

That would be a foolish goal, SF is part of Silicon Valley, that will be like a suicide.

And then wonder why the city's tax base dies and turn into detroit.

getting tech out of SF would actually do a lot of people good. I've worked at countless software companies and always wondered why the companies had to be located in the most expensive city in the US.

Isn’t it the most expensive city because of all the tech workers? Wherever you get a congregation you’ll get that effect (as Austin and Colorado are finding out), and companies generally start where workers are available (that‘a why film and entertainment industries are still largely is in LA, New York, London even if they film around the world)

Only partially. You are correct that congregation does drive up prices. However congregation drives building more housing and other things which drives prices back down. SF has done less to drive prices back down than any other city and as a result has the most expensive housing. Eventually an equilibrium is reached (in practice this is false as things are always changing, but close enough)

I understood this to be the primary intended consequence!

San Francisco is overheated and a majority of residents would expect to benefit from CEOs or tech companies reducing their pressure on housing and services.

Then they will realize the majority of landlords already don't live there: domestic and foreign investors.

The tax doesn't care about where the CEO lives. It applies to any company that does business in San Francisco which has a CEO that meets the criteria.

And to be clear, it's only on business that is done in San Francisco. Essentially, it's going to turn into a sales tax for SF.

> The tax will levy an extra 0.1% to 0.6% on gross receipts made in San Francisco for companies whose highest paid executive makes 100 times or more its median worker’s salary. The amount levied will increase in 0.1% brackets proportionally to the pay ratio. A company whose highest paid employee earns 200 times more than its median San Francisco worker will get a extra 0.2% charge on its gross receipts. For companies whose CEO makes 300 more, the charge jumps to 0.3% and son on. The tax caps at 0.6%, and only companies with gross receipts over $1.17 million will be targeted.

The interesting question, in my opinion, is whether Stripe's revenue from other San Francisco companies is considered gross receipts within the city or someplace in Delaware or Ireland.

I'm sure they could figure out a way to get that revenue to be transferred elsewhere. That said, Stripe doesn't likely pay its CEO 100x the average employee wage since it's a pre-IPO company. The CEO likely earns a few million in raw $$$ and the average salary at Stripe is likely past $100k. So, I doubt it's a real issue.

So, for now, it's probably a non-issue... and they have time to adjust.

That makes it even more unlikely that there will be much revenue at all generated by this tax. Seems like the beneficiaries of this new plan will be tax accountants and lawyers creating new complicated business structures to bypass the tax...

or just use hollywood accounting. You have a parent company with high paid employees. You have a separate company with low paid employees. Or move. Or change title.

I see the headlines now: Darling Startup Raises $20 million Series-A As First CEO-less Company

There are rules such as Common Ownership or Common Control that prevent that kind of avoidance. I'm sure SF can come up with something similar.

https://www.law.cornell.edu/cfr/text/26/1.414(c)-4

https://healthcareexchange.com/article/common-ownership-what...

http://wkins.com/aca-common-ownership-rules-explained/

I wonder whether blocking any/all avoidance of this tax truly* what they want though.

Haven't read the law, but if the impact is large enough wouldn't some companies think about outsourcing their decision making to a different company? I'm sure the lawyers can come up with an agreement that in day to day operations is the same as the management team being employees but that doesn't trigger the extra tax because the decision makers aren't really employees. You just bifurcate the company into two separate companies, the highly paid people and everyone else.

It's about the business location not the CEO, but the point stands. I'm not that familiar with US law, but can't a business be incorporated anywhere in the US/California and still do basically all its activity in SF?

The tax is based on entities "engaging in business within the City as an administrative office" as defined elsewhere in city law (for the payroll tax component) or just plain "engaging in business in the City" (for the tax on gross receipts attributable to the City portion), not by place of incorporation, so, yes, a business can be incorporated anywhere else on the planet, and do basically all of its activity in San Francisco, but that's not going to limit its exposure to the tax.

> CEOs are all just going to move out of San Francisco.

Doesn't help at all to move high-paying managers out of SF the way this is structured.

Moving low-payed workers out of SF while keeping high-paid workers in SF, OTOH.

The law doesn't care for the work location of the CEO. It could even be outside of the US, where exchange rates and different laws around stock based compensation could make this a nightmare.

No they aren't. Part of being rich is not having to worry about money, which is why plenty of rich people live in cities, states and countries that tax them more: the benefits of doing so outweigh the costs.

Maybe not a bad thing really

Yeah, let the city collect taxes from all the woke millenials who are neck-deep in student debt and the homeless...

Or, move some of the obscene wealth away so the residents aren't gentrified out of existence, like they already have been? It won't just be CEOs, it'll be all the software engineers and the like too.

and five years from now i get to hear how it is everyone else's fault that real estate property prices fell in san francisco, which destroyed people's equity and retirement plans.

Not to mention how they will be complaining about the underfunded schools, the lack of investment in infrastructure, social programs, free clinics, "no one is there to help the homeless", etc, etc...

It has been 5 years since France tried and failed to put 75% taxes on the "super rich" and they ended up with less tax revenue than previous years. Those who don't learn History are bound to repeat it...

How naive to think salaries are not paid out of that wealth

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