The Agenda, March 20-26: Breed’s oddly conservative attack on income taxes

Supes will start to look at Trump's budget after board prez makes surprisingly conservative speech against progressive taxes

So now we know for sure what Donald Trump and the Republicans have in mind for their first budget:  Cut everything that is good for cities, for the environment, and for poor and working-class people, and give more money to the rich and the military. (Oh, and to his weekends in Florida, which will cost the government more than the cuts to senior services and the arts.)

Why is Sup. London Breed talking like a conservative against income taxes?
Why is Sup. London Breed talking like a conservative against income taxes?

We don’t know exactly yet how much this will cost San Francisco, but it’s going to be a big number. And equally important, San Francisco will need to spend more money, not less, on protecting vulnerable ; just think about health care, and how many more people will be lining up at SF General if the Affordable Care Act is repealed.

So far, the mayor hasn’t said much about how he’s going to address the problem, but we will hear from his office, and from the controller, Thursday/23 at a special Budget and Finance Subcommittee hearing. It starts at 1pm in the Board chambers.

The members of that special committee are Malia Cohen, Jeff Sheehy, and Sandra Lee Fewer. I hope they ask the mayor’s people what they plan to do if the city loses a few hundred million dollars this year – and has to pay for health care for thousands more people.

I hope somebody asks whether the mayor is prepared to look at substantial new sources of revenue – and how that burden should be spread.

 

The mayor appears before the Board Tuesday/21, which ought to be a perfect time for this discussion. But under the ridiculous rules that then-Board President David Chiu worked out with Lee’s Office, the supes have to submit questions in advance, and the mayor just reads prepared answers – and this time around, no supervisor from an even-numbered district bothered to submit a question.

 

At the same meeting, a measure by Sup. Aaron Peskin that seeks the city’s support for state legislation authorizing local income taxes comes up for a vote. Typically these things are pretty routine – the city takes stands on state legislation all the time.

But in the case, Sup. London Breed voted against the measure in committee, and appears ready to oppose it at the full board.  It will be interesting to see what new Sup. Jeff Sheehy does.

I listened to Breed’s comments at the committee hearing, and I have to say I was a bit startled. Her comments were … well, conservative. I get criticized for describing board members that way – hey, in San Francisco we are all Democrats and supposed to be liberal, and Breed describes herself as progressives. But I have no other way to describe what happened at that meeting.

I encourage everyone to go to sfgovtv and listen to the Government Audit and Oversight Committee meeting of March 15. The item in question comes up at about 40 minutes in.

A little background: Most people who study this sort of thing agree that sales taxes are the most regressive, because they hit poor people harder than the rich. Property taxes and parcel taxes are a little better, because most property owners are better off than most renters (although some of these taxes get passed on to renters). The city’s business taxes are based on payroll and gross receipts, which are decent approximations of the size of a company but don’t reflect whether a company is profitable or not.

I don’t think there’s a single credible economist or policy analyst who would disagree with the concept that income taxes are the most progressive way to raise money. In fact, income taxes in the US (as Sup. Jane Kim pointed out at the meeting) were originally seen not only as a way to fairly raise revenue, but as a way to fight economic inequality. The rich pay more; the poor get more. It makes society, over time, less likely to become on oligarchy.

Today, San Francisco has some of the worst economic inequality in history, and is up there with countries like Rwanda for radical gaps between the rich and the poor. It’s an embarrassment – and one reason for the high housing costs and huge numbers of homeless people on the streets.

The numbers for this city alone are staggering. According to the Controller’s Office, there are 4,954 San Francisco residents who earn more than $1 million a year. Their combined annual income is $17 billion.

That’s fewer than 5,000 people who combined earn more than twice the entire city budget.

If we taxed them at just one half of one percent – which would not cause a single one to miss a single meal, or a single new Maserati, or a single new fancy house – the city would bring in $62 million.

The numbers just go up from there.

As Peskin noted, “this is a great way to address economic inequality.” It’s hardly radical, either – 170 municipalities have some form of income tax.

So here’s what Breed said:

“I don’t think it’s ever going to happen.” (A city income tax requires state legislation, so maybe not for a while, but times are changing very fast and the state is going to have to do some radical stuff to respond to Trump. A lot of people said not so long ago that same-sex marriage was never going to happen. So we don’t try? Then nothing ever happens.)

More:

“We have a $9 billion budget for a city of less than a million people. There is a lack of accountability on so many levels on how we are spending those dollars and departments that waste money.

“I am not a fan of local income taxes and not a fan of a lot of decisions on people and their incomes.”

Wow, let’s take those one at a time.

First: San Francisco has a large budget in part because it does lots of things that other cities and counties don’t. As Breed well knows, because her chief aide likes to write about it, a huge part of that money has nothing to do with discretionary spending by the supes and the mayor. The airport accounts for $1 billion. None of that is taxpayer money – the airlines and concessions pay for it – and none of it comes back to . But it’s in the budget. San Francisco runs a county hospital, and a transit system, and a lot of other things that cost money. I analyzed this at great length a few years ago; please read.

Yes: there is waste at . There is no way to have a $9 billion budget in either the public or the private sector without some waste. But compared to the needs that we have, it’s relatively small.

And once Trump drops the axe, there will not be enough waste to avoid serious service cuts. And Breed knows that. I’m a bit shocked that she even went in this direction.

So why is she “not a fan of local income taxes” and wants to cut the budget first? I am boggled. Sorry: That can only be called a very conservative position. Oh, and by the way: We could replace some sales taxes and taxes on small business with a much-more progressive income tax.

So we shall see how the full board votes Tuesday.

 

  • 4th Gen SF

    The problem is no one actually raises taxes on the rich, ever. Who was hit by the Obamacare debacle the hardest? The middle classes. While just 9.2m this last year signed up & were auto-re-signed, 20+ went without health insurance & are getting penalties. For instance, my health ins went up from $299 a month to the year before Obamacare started, $399 a month – two adults. Then it went up to $850+ per month & we were thrown off & were not able to afford health insurance. We are the middle class. We are not heard by the left.

    There’s so many taxes by the left too. How about the nasty “underpayment” on estimated taxes penalty? So, essentially, you can’t afford est taxes but you have to pay an underpayment penalty.

    And the health insurance penalty. So, you can’t afford the outrageous amount for health ins so here several thousand dollars in penalties that we’ll harm you with.

    These are all regressive taxes. Don’t even get me started on the 42% hike in gas taxes proposed by the state of CA.

    • Do Something Nice

      “And the health insurance penalty. So, you can’t afford the outrageous
      amount for health ins so here several thousand dollars in penalties that
      we’ll harm you with.”

      The penalty for 2016 was $695 per adult, $347.50 per child, to a maximum of $2,085, which is a lot, but is hardly “several thousand dollars.”

    • Tak

      Wait just a hot second. The “left,” such as it is, uniformly wants some form of a single payer health care system, just like every other industrial democracy on the planet has. Obamacare is slightly reworked Romneycare, which was a slightly reworked American Heritage (conservative Republican) plan. You might recall that when Obama addressed Congress on the issue, he specifically identified his plan as Republican in origin. So if you don’t like it, blame the Republicans who came up with the idea, not the left, who were conspicuously omitted from the entire freakin’ discussion.

      • 4th Gen SF

        Nancy Pelosi is a rw person? Really. That’s some cereal you’re ingesting.

        • Tak

          The correct term would be neoliberal. She is in no sense part of the left, and opposes single payer.

          • 4th Gen SF

            More like she’s got dementia these days actually. Real. She keeps referring to the Bush admin….

  • Do Something Nice

    May I suggest an edit for clarity? “I don’t think there’s a single credible economist or policy analyst who would disagree with the concept that income taxes are the most progressive least regressive way to raise money.”

  • Don Sebastopol

    Cut spending. Eliminate NAP and the environment department to start.

  • 4th Gen SF

    Jerry Brown has just asked Trump for money. Again. This is the 4th time since Trump’s inauguration.
    http://www.breitbart.com/california/2017/03/20/calexit-jerry-brown-asks-trump-aid-4th-time/

    • No_Diggity

      Let’s see how the rest of the USA likes it when we stop selling them our agricultural products and send much more of them overseas. They might want to rethink helping CA with it’s infrastructure when the avocados, oranges, clementines, kale, almonds, spinach, grapes, strawberries, walnuts, apricots, dates, figs, kiwi, nectarines, olives and prunes disappear.

      • 4th Gen SF

        You know nothing about farmers. Farmers are Trump supporters.

        • No_Diggity

          Say that in Salinas.

          • 4th Gen SF

            IK farmers in Salinas & they are pro-Trump. You’re mistaking the tiny backyard growing farmers from the Farmers Market farmers with other farmers who provide food for CA & the nation.

          • Rosh HoshHosh

            He is more likely referring to the field workers of Salinas who are obviously terrified of the threats proposed against them.

            What does Jerry Brown asking for the federal aid money have to do with anything?

          • 4th Gen SF

            The point of the article is that Trump is going to cut SF off of Fed funds. Fed funds are what Brown is asking for, for the 4th time, Trump has okayed Brown’s requests on the 3 other occasions but I’m not sure Brown is using this $ wisely or propping up our infrastructure as he said. SF also wants tons of Fed $ but is also screaming at Trump, I just don’t think either is a good situation to take with this or any President.

          • Rosh HoshHosh

            Proposing to slash federal programs across the board is not equivalent to cutting off San Francisco. All four of Brown”s disaster relief requests were for the flooding, and the last was for repairs directly to the Oroville dam.

            Nobody here is talking of CalExit, and municipalities asking for federal dollars is SOP. You’re inferring that to resist Trump’s budget cuts and simultaneously ask for federal dollars is a double standard. It’s not.

          • 4th Gen SF

            You’re misunderstanding. Trump is cutting off Fed funds to sanctuary cities, period, like SF. That is coming. SF is in lala land about it.

          • Rosh HoshHosh

            Legislation talks, bullshit walks.

        • sebra leaves

          Not for long. If Trump doesn’t turn on the water the farmers will turn on him. He just cut funds for the agency that produces accurate weather reports. His support with farmers will not last if he screws up the weather forecasting system.

          • 4th Gen SF

            It’s California that refuses to put the water on. Not Trump. He’s been trying to get the water on btw, our one state party REFUSES. It’s the CA WATER BOARD.

  • Termie

    9 billion.. Let;s hope we expedite the open source election system – That will save us many more millions.. and we’ll get a proper vote count !!

  • 真是时光荏苒!

  • voltairesmistress

    Kind of a lot of effort — changing a well established law in the state legislature to allow San Francisco to increase its its revenue by .62%. But I guess it would allow supervisors, columnists, and charlatans to distinguish themselves as the people’s champions. Meanwhile we can all pat ourselves on the back for progressivism whilst the affordable housing and transit solutions go on substantially unaddressed.

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  • sebra leaves

    Voters had no stomach for raising sales tax last time they faced that choice. So far they seem to favor taxing the rich. Of course a lot of these options depend on changes in Sacramento. We anticipate a lot of public debate before this is settled. Outrageously high public servant salaries (over 100K plus 50K in benefits) do not help City Hall’s argument that it needs more money. The high salaries add to the pension problem that we know is looming large. These are issues that should be addressed before City Hall asks for more taxes.

  • Tak

    Smaller towns and more right-wing dominated cities have few or no social
    services, so their taxes and fees also tend to be very low. San
    Francisco has chosen fairly consistently over the decades to have not
    only many amenities such as libraries and large public parks, but also
    many social services, all of which are generally small or missing
    entirely elsewhere. We really need to find a way to pay for it all
    that’s consistent with the values we express by voting for those
    services in the first place.

    Local taxes are notoriously regressive, being largely sales taxes and property taxes (which as far as I know are almost always passed on to tenants by landlords). We need to find a way out of that particular trap, and replacing them with a strongly progressive income tax seems to be the fairest way to go, especially considering the large number of wealthy residents.

    • Buzz Kilt

      SF has a business tax system based on gross receipts, which is one of the more progressive taxes available and is fairly easy to calculate and administer, important aspects of any tax system. Moreover, SF’s business tax system uses various categories with different tax rates for each, and wisely adopted a graduated rate system. For example, the city (voters) can choose to increase taxes on high rent incomes, say a 2-5 percentage point increase, without necessarily increasing taxes on retailers, manufacturers or other business categories.

      A city income tax is not particularly smart since very wealthy people can easily move their residence and money outside city limits, not to mention the huge admin costs trying to manage and enforce a city income tax. The fact 48 Hills continues to shill for a city income tax is either a bone to the unions who expect 1000’s of new workers to administer an income tax – with worker dues boosting union coffers – or more likely, a misunderstanding of what a “progressive tax” really is, and not understanding the difficulty of administering a tax system where the city is a tiny piece of real estate in much larger political jurisdictions (region, state & country).

      As to your comment about taxes on landlords, I’d strongly disagree. For the most part, the landlord class charges as much rent as possible based on local tenant incomes. Taxes on landlord rent incomes ARE NOT passed onto tenants since if the landlords could have charged tenants more rent at the time the lease was signed, they would have (absent any rent control rules). Landlords are not in the charity business. Their business goal is to charge tenants as much money as possible. Costs are irrelevant to the amount landlords charge for rent; rents are based solely on the amount local tenants are willing to pay, along with local supply and demand factors.

    • Government Shrinkage

      “We really need to find a way to pay for it all that’s consistent with the values we express by voting for those services in the first place.” Or, we need to vote for consistently low taxes across the board, for a lively economy that creates jobs and gives people opportunities, instead of taxing them to death to maintain giant bureaucracies and social services that cost absurd amounts of money and achieve very little.