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Comment by jeffreymcmanus | Hacker News Reader

I'd be much more interested in helping Ron Conway restore the one week of instruction per year that's been cut because of lack of funding to SF schools, assuming Ron Conway cares about such things. Which, you know, he should, since schools are responsible for producing raw materials (educated young people) for the startups he invests in.

The mindless drive to cut taxes (particularly taxes for the wealthy) is degrading American society. It's time to set aside "tax cut" as the universal solution to every conceivable business problem.

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This is not a tax cut. San Francisco is the only major city in the US that taxes the company for an employee's personal gain on stock options.

This is eliminating a tax that was very, very poorly thought out as it effectively precludes any company from going public in the city of San Francisco. A company doing an $100M IPO might effectively be required to pay all $100M raised to the city of San Francisco as tax on the stock options gains of employees.

Discuss the merits of tax cuts elsewhere -- this is an obvious situation where this tax never should have been in the first place, and will be doing a considerable amount of harm to San Francisco if it is not repealed.

If you're advocating the removal of a tax, then yes, it's a tax cut. Whether it does harm to San Francisco or not is absolutely worth discussing. Let's start by asking where the city will make up the revenues it loses from removing this tax. Or is your solution to lay off more teachers?

San Francisco does not currently enforce this tax, and it does not currently collect any revenues from it, so there is no revenue to be made up. No one was even aware of it until it was discovered recently.

Which makes its repeal a priority why, then?

Because a lot of SF-based startups are looking to go public in the next few years. This has not been the case before.

So this is a tax cut for millionaires, then. Got it.

If you want to blindly support any tax because it's a tax, and blindly hate any company that makes money because it's "an evil corporation", you are free to do so.

But it's abundantly clear by the facts in this situation that this is a net positive for San Francisco.

If you want to alienate people from your point of view, caricature their own views. The person you're responding to doesn't seem to support taxation for taxation's sake, and doesn't seem to believe companies that make money are "evil".

I agree, that response was out of line on my part. There were many better ways to phrase that.

Yet, despite the taxes, companies keep starting up in San Francisco. Maybe some people in SF don't want a Google-plex in the city? If you want to argue that it is bad for the city, post commentary from someone who isn't an investor in startups.

I am not an investor in startups, I'm running one. I have the same perspective: We are more than happy to pay San Francisco's unusual payroll tax, but this tax on employee options would force us to move out of the city in a few years.

If your argument is that you don't want startups in San Francisco, that's a very fair position to hold, but it's not what we're discussing.

The likelihood that this tax would drive startups out of the entire SFBA seems very low. Meanwhile, the tiny city of San Francisco proper is likely to remain well stocked with upwardly mobile tech company employees whether their employers are in SOMA or San Mateo.

> The likelihood that this tax would drive startups out of the entire SFBA seems very low.

Absolutely agree. The likelihood that it would drive startups out of San Francisco proper is very high. We are discussing what the city of San Francisco needs to do to not force companies to move out of the city.

> Meanwhile, the tiny city of San Francisco proper is likely to remain well stocked with upwardly mobile tech company employees whether their employers are in SOMA or San Mateo.

Also likely, although there won't be as many of them. Another big issue is that the city of San Francisco will lose out on significant tax revenue from companies based here, since they will be forced to leave.

Wouldn't both proposals address that? One appears to want to repeal it entirely, while the other proposal would cap the tax at $750,000 annually, so both would remove the potential of owing $100m in taxes for an IPO.

I agree completely. We just gave a big tax break to Twitter (and everyone else who happened to be in the area) - I don't want to see SF city hall turn in to a mini D.C. run by business lobbyists looking for deals.

This whole argument that "business is going to leave unless we cut their taxes" strikes me as just false. San Francisco's economy is booming, and there's a lot of talent here because it's a great place to live

The Twitter tax cut is very different than this. That was an actual income tax cut that the city enacted to keep Twitter in SF.

This is a measure that is repealing a very poorly thought out tax on stock options that would preclude any company from going public in San Francisco.

I would tend to agree with you on tax cuts -- everybody should pay their fair share -- but I disagree that keeping a poorly thought out, highly unusual and unique tax in place that would severely affect the SF economy is the right solution.

The number of companies who failed to go public in SF because of this tax is zero. On the other hand, the number of startups that failed to get off the ground because of insufficiently educated workers is much larger.

"The number of companies who failed to go public in SF because of this tax is zero." Do you have a citation for that, or is it just a blind assertion?

The reason this is a hot button issue is that San Francisco is becoming more attractive to startups, many of which are now looking to IPO in a couple years. These startups will not be able to IPO in San Francisco if this stays the same.

Most people would consider startups in San Francisco a good thing; Although, admittedly, not all people -- some people just want everything to stay the way it is.

Further, education issues have no place in this discussion. Education will be impacted exactly 0% by eliminating this tax, because the city currently does not collect any revenues from it.

Might the city collect more revenues in the future by keeping the tax? Absolutely not: if it keeps it, it will become literally impossible for fast-growing startups to stay in the city, and San Francisco will lose a significant amount of payroll taxes from those startups leaving.

Blindly support all taxes if you will, but the facts are that San Francisco is the only major city to tax companies on employees' personal gain from stock options, that it would be untenable for any fast-growing startup to be based in SF with this tax, and that the city does not currently receive any revenue from it, so there will be no revenue to make up.

San Francisco has been a hot location for startups --- maybe the hot location, but at least prominent in the shortlist --- for over a decade. Where's the urgency coming from?

That's just not true. All tech companies have traditionally been down south. First San Jose, then Mountain View/Cupertino/Palo Alto. Few have traditionally been based in San Francisco proper.

The urgency is that this section of SF tax code was just discovered. The fear is that it will now be enforced, which would force the best SF-based companies to move.

I know that not to be true, unless there was a fallow period between the time that my company paid ridiculous $/sqft for space in SF to be among the VC-funded idiots of the time (2001) and today. But I don't buy that there was such a time. And, if anything, SF seems to have gotten even trendier since ~2005.

If you want to make the point that the particular wave of companies domiciled in SFBA are now anomalously likely to be going public, I won't argue with you, but that's a narrower point than the one I feel you originally made.

I was not around in 2001 so I will take your word on that one. It looks like there may have been a lull and then a resurgence around ~2007:

http://venturebeat.com/2007/01/14/weebly-offers-free-easy-we... "The company is just three people from State College, PA. Co-founder David Rusenko originally told VentureBeat he would move to Mountain View. He changed his mind, he said, because he found a vibrant Internet start-up ecosystem in hipper San Francisco — the latest sign that San Francisco has become more of a magnet for these kinds of companies."

http://replay.web.archive.org/20070118083006/http://www.bizj...?

You asserted that the tax is somehow driving public companies out of SF, so you get to back up your assertions first. Pointing out that Twitter threatened to move to Brisbane doesn't count since it didn't actually happen.

Bear in mind that every big company attempts to squeeze concessions out of the cities they're located in when their leases expire. If you think the Twitter in SF situation is unique, you're profoundly naive about how big companies and city governments interact.

SF is attractive to startups in large part because it has an educated population. As the frenzy to roll back taxes continues to take its toll on education (both K-12 and the public universities), that attractiveness will diminish. Technology companies will do just fine in this environment; they'll simply move their operations to states and countries with better education systems. But when the education system in California utterly collapses, it's the employees of these companies who are going to be left wondering what happened.

The phrase "it will become literally impossible for fast-growing startups to stay in the city" is utter nonsense. If that were true, why is there is a single startup in the city today?

> If that were true, why is there is a single startup in the city today?

Because that section of the tax code is not enforced.

> If you think the Twitter in SF situation is unique

We're not talking about the Twitter situation. Twitter extracting concessions from the city for its normal payroll tax obligations. For the record, I'm against that.

We're talking about a completely different situation from Twitter, the issue with a company being taxed on employees' personal stock options gains. This has nothing to do with the Twitter tax break.

> You asserted that the tax is somehow driving public companies out of SF, so you get to back up your assertions first.

I currently run a startup that would not be able to stay in the city of SF if we went public. In a few years if we start going down that path, I really hope that this tax is no longer in place or I will be forced to move the company out of the city, which I don't want to do.

Not sure what else I can provide you to back me up on that one, besides a letter from our accountants saying the same.

The inclusion of stock options as part of the payroll tax is a fairly recent interpretation of the tax code in SF.

While I agree with your general feeling on tax cuts, this should be seen as a new tax that should never have been implemented in the first place.

The fact that city hall is specially treating some companies (Twitter) is even more odious and unfair to other startups in the city.

Calling this a tax cut is mis-leading because it's never been collected on IPO companies.

Just because it's not enforced doesn't mean it never will be.

Right, and if it's not really a tax, then there's really no point in repealing it, is there?

I object to the mindless drive to increase school hours! Hacker News is full of good advice about lean execution and using constraints to produce high quality work.

That said, repealing a law that is apparently standing in the way of a future IPO bubble sounds like a poor idea.

Wow! Downvoted because I think keeping schools open is more important than a 1% tax cut for the rich. Real classy.

If you want to have a discussion about school funding and tax cuts, submit a blog post or article about it. Please don't take a dump all over someone else's discussion. That's not something the HN community appreciates, which is why it tends to result in downvotes (for you and those arguing against you.)

Don't complain about downvotes; change your behavior.

You're acting as if there's no relationship between tax revenue and school funding. There quite obviously is.

I never denied the relationship between them. I just said that this isn't the place to have that discussion.

If you want to have the discussion, submit a blog post about it.

If there is a relationship between them, then this is certainly the place to have the discussion.

It sounds like you want to have a discussion about throwing eggs while conveniently ignoring the discussion about cleaning up the mess.

If I may torture your analogy a bit: if you're going to argue about cleaning up egg yolks splattered all over the place, talking to people who are holding plastic Easter eggs isn't going to be very productive.

Whatever you might say about tax revenue and public schools in SF, it's not relevant to a discussion this particular tax (which isn't enforced, doesn't generate revenue, was never contributing to public education budgets, and whose only effect seems to be to encourage startups to form contingency relocation plans if it ever does get to be enforced.)

We could be having a great discussion about tax revenue, public education, etc. But we're not, and neither is anyone else in this thread, because it's really a completely tangential topic. I would love to have the discussion, which is why I again request that you submit a blog post or article that's directly relevant rather than trying to wedge the discussion into a thread where it doesn't belong.

I don't believe that anyone's need is a valid claim on another's life. For two thousand years we've had it beaten into us that we are our brother's keeper, but this is simply false. Altruism is simply moral slavery - it is an ethical system where everyone is enslaved to everyone else. Like any other form of slavery, it's bad for the enslaved people because they are not left free to think and produce the material values needed for a flourishing life.

(I shouldn't have to spell this out, but I will so that there is no danger that I might be misunderstood: I think it's just as wrong to make someone sacrifice himself to others as it is to sacrifice others to him.)

If you want to educate your kids, earn your money honestly and pay out of your own pocket to educate them. If you like the idea of paying for other people's kids to go to school, no one is stopping you.

You can pay to educate kids or you can pay to police and incarcerate adults. And that's if you're otherwise willing to let them starve, and to deny them any of the myriad of other social services they'll claim.

Since we clearly do not live in a country guided by your principles, this is not a particularly valuable discussion to have in this thread. If it were a simple choice between kids not going to school and people paying extra taxes, people would overwhelmingly opt for higher taxes. Your argument thus represents Conway's opposition to stock option taxes... poorly.

I would pay to educate my own kids. What you do with yours is your own business, as long as you're not abusing them. Parents do have a legal and moral obligation to provide some education to their children, and that's it.

We have universal education. Why do some of these students still go on to adopt criminal lives at the risk of going to jail? With all the money that is spent on students? All this money that wasn't spent on students over a century ago?

It's simply not true that the choice is between paying for other people's kids and paying to jail them. People have free will, and basic moral facts (such as "don't steal, don't kill, don't cheat") are discoverable without any formal education, much less the awful force-fed government school kids must attend today. (Your thinking certainly reflects the mainstream. It is no accident that these schools bear striking similarities to American prisons.)

America was once the greatest country on earth when it was guided implicitly by the principle I have outlined above (late 19th century). Since then, things have gotten worse, and just about any honest person will admit this (although they might not agree with me as to the cause). Ultimately, avoiding collapse and starvation will take nothing less than the discovery and acceptance of this moral system.

Do you know any really poor people?

Yes.

But that doesn't matter. The only question that I need concern myself with is, "how do I make the most of my life?," not "what does my neighbor need today?" The more people do this simple (but difficult thing), the happier they will be.

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