SINGAPORE (Apr 29): Uber Technologies’ IPO, expected next month, will mean a massive payoff for many employees. In the company’s hometown of San Francisco, it will also deepen fears that a wave of technology IPOs threatens to displace other residents who are being left behind. One city lawmaker plans to propose that tech companies share the wealth.
San Francisco supervisor Gordon Mar is circulating a motion that, if approved by a majority of the county board, would place a payroll tax covering stock-based compensation on the November ballot. The proposal, a draft of which was obtained by Bloomberg, would impose a new cost, “for the privilege of engaging in business in the city”, on companies that dole out equity to employees.
Mar told local labour and community activists at a meeting on April 22 that he planned to announce the proposal on April 24 during a subcommittee hearing and to introduce it in the next couple of weeks, says Kung Feng, executive director of Jobs With Justice San Francisco, a coalition of labour and community groups. A public agenda for that meeting lists “impacts on business tax revenue, housing costs and gentrification” among the topics for discussion.
Tech IPOs this year could mint thousands of new millionaires. Two San Francisco companies, Lyft and Pinterest, went public recently, achieving a combined market value of US$31 billion ($42 billion). Redfin, the real estate brokerage, found that the wealth created from Lyft’s offering alone would be more than enough for current and former employees to buy every home listed on the market in San Francisco, in cash.
The potential law, which some are calling an “IPO tax”, reflects uneasiness in a city with constant reminders of the income gap. A forthcoming analysis from San Francisco’s budget office indicates that IPO riches under the current tax system will provide little benefit to the city while driving up housing prices. But there is a long road to making a new law. For it to take effect, the motion would need to secure majority support from the board of supervisors, win approval from voters in November and survive any potential legal challenges from affected companies.
The money from the tax would support affordable housing, lower-income workers, education and other benefits, according to Feng, one of several people briefed on the plans who spoke to Bloomberg. This year’s IPOs are “going to create vast inequality and displacement, and we as a city need corporations to pay their fair share and be good neighbours”, says Feng. “The IPO tax is one step towards that.”
