From the byzantine alcoves of Chinatown to the crest of Mission Street, where vagrancy is as prevalent as the cloying stench of human waste, San Francisco has a tremendous housing problem.
Rents are high, entry-level jobs are disappearing thanks to the city imposing its counterproductive minimum wage mandates, the city recently slapped a “real estate transfer tax” onto big properties to subsidize “free" tuition to residents who attend city college, and now, voters just had a choice to raise taxes on commercial rental properties, or to…raise taxes on commercial rental properties.
You read that right. As Christian Britschgi reports for Reason, voters going to the polls in San Fran yesterday had two options: one was called Proposition D, placed on the ballot by the city’s brilliant Board of Supervisors, and it would hike the tax on gross receipts for commercial properties from .3 percent to -- get this -- 1.7 percent. That's a whopping 460% increase that could cost property owners and renters $70 million per year.
The other was called Proposition C – easy enough to remember, because it reminds a reader of Hepatitis C – and it would cause even more damage to rental property owners by increasing the gross receipts tax on commercial properties by 1,000 percent, (from .3 to to 3.5 percent), robbing owners of an estimated $146 million annual smackaroos.
And how did a hearty clan of leftists respond when they heard the news of Prop D?
They hated it. Not because it snatched money away from people and placed into the hands of politicians and bureaucrats contrary to any semblance of ethics or morality, but because it wasn’t high enough.
As Britschgi notes:
The San Francisco chapter of the Democratic Socialists also opposes it, dismissing the measure as ‘a crass attempt to break working class solidarity.’
And remember: both of those taxes are levied on the gross, not the net.
This is kind of like forcing a .38 revolver into a person’s left hand, and a .45 into the right, and telling him he has to use one on a foot. Either way, it’s damaging and counter-productive.
Yet the hard-left in San Francisco backed the bigger gun. And guess which tax hike won?
Results from last night are in, and Proposition C, which was a ballot initiative and only required a simple majority, got 51 percent of the vote. In fact, Prop D didn’t even make its two-thirds majority to get put on the ballot, and was only there because it was added by the kindly Board of Supervisors.
So gross commercial property taxes will rise 1,000 percent -- higher than a hippie on Haight Street in 1967.
The city is already hemorrhaging jobs like an economic hemophiliac, lacking in residential housing, and shoveling money into its tarnished City College system. Now, as Britschgi observes:
‘While buildings cannot leave San Francisco, tenants can. To the extent that this tax would be passed on to tenants, some business tenants might move to other cities, impacting the strength and diversity of San Francisco's economy,’ observed the San Francisco-area think tank SPUR in its June voter guide.
So perhaps there is a solution to the San Francisco homeless problem.
With the prospect of more commercial buildings going empty, the folks recently priced out of their jobs can see the opportunity to take over some prime real estate, setting up house inside office space once reserved for the productive work they used to provide! Goodness knows, the bureaucrats of the city can’t keep up with the ever-increasing tide of souls who can’t afford to live in their leftist urban wasteland. In fact, they keep pushing that tide higher. So why not see the put-upon turn the tables?
Sadly, this is not a case of imagining a silver lining in dark tax clouds. There is no winning scenario to be derived from making it more expensive to conduct profitable business. The only winners are the politicians and commissars who get the tax cash, and, like contemporary highwaymen, they will see more and more people fleeing them for other locales, trying everything they can to circumvent their acquisitive collectivist hands.
To think that the Democratic Socialists of San Francisco claimed that the lower of the two poisonous tax options was a “crass attempt to break working class solidarity” is stunning.
Collectivists don’t understand that solidarity can only be voluntary. It was popularized when people in Poland fought collectivist soviet government control over business. They don’t understand that in the US there is no definable “class” because the United States never had a feudal peerage system.
Most of all, they are ignorant of the fact that the very commercial buildings they want to tax at 1,000 percent higher rates only rose because of marginal profits that were available to be invested in new ventures.
Those edifices represent something:
Profits. Yes, profits from those “greedy, nasty, callous” business people who can only make profits by serving consumers good stuff at lower and lower prices. Only with those profits -- from higher productivity and lower business costs -- was extra money left for ventures such as commercial properties to be built.
Both Props D and C run completely counter to the very process that helped raise those buildings peppering the San Francisco landscape. Witless leftist statements about “solidarity” and the “working class” will never create more -- and neither will higher taxes imposed by their collectivist political pals.