Finally, some talk about local taxes—but not in a progressive direction

As San Francisco enters an ugly budget season, and the state scrambles to find money to fund transit, and Oakland is desperate to close a crisis-level budget deficit, there’s finally some talk about taxes.

But the only tax that’s under serious discussion is the sales tax.

Here’s what state Sen. Scott Wiener has proposed:

The funding measure authorized by SB 63 will appear as a sales tax in San Francisco, Contra Costa, and Alameda Counties, with an opportunity for San Mateo and Santa Clara Counties to opt in by July 31, 2025. The default rate is set at ½-cent, with the exception that San Francisco may have up to 1 cent to provide additional support for MUNI. The exact rates must be negotiated and finalized by July 31, 2025, by which time the transit agencies and local governments must also submit a spending plan to allocate revenue generated by the measure.

Sales taxes are an easy fix: They don’t bother the rich, since they are wildly regressive. They don’t seem that big a deal—what’s an additional half cent? Buy something that costs $100, and it’s an extra 50 cents. Who’s counting?

But it adds up, over time, and it hits the most vulnerable people the hardest. And it does nothing to address economic inequality; in fact, it does the opposite. It increases inequality.

Two major unions representing city workers in San Francisco are taking a different approach, saying that the city’s deficit would be much lower if big companies like Airbnb were paying their fair share. Airbnb, which was founded in SF and exists as a multibillion-dollar corporation largely because the late Mayor Ed Lee allowed it to violate city law, repeatedly, is now suing the city, demanding a tax refund of $120 million.

Joe Gebbia, the billionaire who helped found the company, is now working with Elon Musk and Trump. These are the folks who want to undermine services in San Francisco.

From SEIU Local 1021 and IFPTE Local 21:

“San Francisco can balance its budget without major cuts to core services, but only if wealthy tech companies pay their fair share,” said Sarah Perez, San Francisco city employee and SF Vice President for IFPTE Local 21. “We’re asking Mayor Lurie to join us in calling for accountability. It’s time to pick up the phone.”

“While Airbnb co-founder and board member Joe Gebbia is busy with Elon Musk stealing our healthcare and Social Security, his company is shaking down our city too,” said Kristin Hardy, San Francisco regional vice president for SEIU 1021 and SF General Hospital employee. “Airbnb is cheating on their taxes and screwing over our Muni lines, public hospitals, and libraries. San Franciscans are overwhelmingly demanding more mental health, substance abuse, and homeless services, as well as street cleaning, to address the conditions on our streets. Yet that’s not happening because of corporations like Airbnb that don’t want to pay their fair share of taxes.”

In its lawsuit, Airbnb says the city misclassified the company, which calls itself a platform for others to use. The city calls it “Administrative and Support Services.” Airbnb wants to be “Information,” which has a lower gross receipts tax. The giant corporation also wants a refund on its past payroll taxes, since “Many of Plaintiff’s employees who are assigned to the San Francisco office perform significant portions of their work outside of San Francisco.”

This is all legalese aimed at reducing the tax burden on a company that already pays only a fraction of the corporate income taxes that it should (thanks to Trump tax cuts) run by billionaires who pay only a fraction of the income taxes they should pay (thanks to Trump tax cuts).

Now they want to make SF’s budget deficit worse.

The city can, of course, fight this, and since it’s a California lawsuit, it would be tried in a San Francisco courtroom. It’s entirely possible, even likely, that a San Francisco jury would be dubious about giving the billionaires who made their fortune breaking local laws and displacing tenants $120 million that could go for city services.

It’s also possible, even likely, that Chiu, who is now the city attorney, will look for a way to settle this, damaging the city’s budget. Chiu was Airbnb’s person at City Hall, the author of the bill that retroactively legalized the company’s actions in turning rental apartments into hotel rooms (at the expense of thousands of tenants).

Airbnb has already used a peremptory challenge to take the case away from Judge Ethan Schulman, who Airbnb claims is “prejudiced against the party or the interest of the party.”

Schulman was the judge who ruled that rideshare drivers are employees and must be given the rights of employees. I can’t find anything else in his record that would suggest he is biased against Airbnb.

But each side gets one challenge in civil court, so the case has been reassigned to Jeffrey Ross.

Back to taxes.

Oakland voters will decide on a half-cent sales tax increase April 15, and right now, the polls are not encouraging. The tax is particularly unpopular in the lower income areas. If it fails, that won’t be good news for Wiener’s measure. There’s also a major regional housing bond headed for the 2026 ballot, which would be funded by property taxes.

Insiders tell me that the regional sales tax is not polling well, either. The tax would require a two-thirds vote, so Wiener is aiming to organize an effort to put it on the ballot by voter signatures, which would reduce the margin to 50+1; even that margin, apparently, is tough.

And if the nation plunges deeper into a recession under Trump, getting voters excited about paying higher sales taxes will not get any easier.

On the other hand, every time voters in San Francisco have been asked to approve higher taxes on the rich, they’ve agreed. Ballot measure to raise the transfer tax on very-high-end real estate sales and the gross receipts tax on the biggest companies in town won, even against big-business campaigns (and the opposition of the mayor).

Maybe there’s a message here. And maybe it will get even more obvious as Trump’s policies continue to devastate public services while giving trillions to the top 1 percent.

Maybe the approach should be not to ask for a sales tax, but to suggest a regional tax on incomes of more than $500,000, or a regional transfer tax on real-estate deals of more than $5 million, or an increase in the state’s corporate income tax rate to fund regional transit.

Maybe the state should let local government establish local income taxes, which would solve a lot of these budget crises without hurting poor and working-class people and small businesses (about half of the sales tax in SF is paid on business-to-business transactions).

Oakland will also elect a new mayor April 15, and former Rep. Barbara Lee, who is the front-runner, has a long history of supporting taxes on the rich. Maybe she will lead an effort to shift the discussion away from sales taxes and toward other forms of taxation that are less regressive.

Maybe that will send a message to San Francisco and Sacramento: Taxing the rich seems like a popular idea. Taxing the poor doesn’t.