Inside the battle over San Francisco's homeless tax

Three years ago, Jackie Evans was living in a van in San Francisco when she gave birth to her second child, ...

Posted: Nov 2, 2018 5:44 AM
Updated: Nov 2, 2018 5:44 AM

Three years ago, Jackie Evans was living in a van in San Francisco when she gave birth to her second child, a son, at Zuckerberg General Hospital.

She had applied to be on the waiting list for a shelter so she would have someplace to take her newborn. They didn't get to the top of the list until he was a year and a half.

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"They said they would help us," says Evans, now 31. "They didn't."

Homeless for the past 15 years, Evans is intimately familiar with the shortcomings of the city's approach to homelessness. Now she's working to promote Proposition C, a tax on the gross receipts of city's largest companies. The revenue from the tax would add $300 million a year to San Francisco's homeless budget, double what it is now. It would fund shelters, mental health services, addiction treatment, and prevention to keep people from becoming homeless.

The ballot measure has drawn an unusual amount of attention in recent weeks, thanks in part to billionaire CEOs Marc Benioff (Salesforce) and Jack Dorsey (Twitter, Square) arguing about it on Twitter.

Benioff has become the face of the fight for Prop C. His company is the largest employer in the city. He is a San Francisco native, responsible for the tallest skyscraper in the city, a major donor to its public schools, and the name on its biggest children's hospital.

For the past three weeks, he has promoted the initiative, investing $2 million of his own dollars and nearly $6 million from Salesforce into a Yes on C campaign that includes fliers, Facebook ads and posters around the city. He's given speeches and non-stop interviews and fought with opponents on social media.

"It's a crisis of homelessness. It's a crisis of cleanliness. But you can also see it's a crisis of inequality," Benioff told CNN Business. "This is a city with 70 billionaires. We have some of the most successful companies in the world. We need a lot more funding, and we need a lot of action now."

Few other tech leaders are vocally supporting the measure, but some have quietly donated to the No on C campaign. San Francisco mayor London Breed and companies including Square, Stripe, Lyft and Visa all oppose it. The main talking points against Prop C are that it lacks accountability, doesn't give the new mayor a chance to implement her own plan first, and throws more money at an issue when money doesn't appear to have made a difference in the past.

But at the heart of the debate for tech companies is a little known tax rule that would cause some to pay more money. Companies like Square and Stripe that handle payments are considered "financial services" companies by the city of San Francisco instead of technology companies. The city's treasurer is responsible for the classification, which predates the fight over Prop C.

A recent study by San Francisco's Office of Economic Analysis found that the impact on the job market and economy would be small. But Dorsey previously indicated the tax issue could eventually lead to his companies relocating.

"We're happy to pay our taxes," Dorsey said in a tweet earlier this month. "We just want to be treated fairly with respect to our peer companies, many of whom [sic] are 2-10x larger than us. Otherwise we don't know how to practically grow in the city. That's heartbreaking for us as we love SF and want to continue to help build it."

Benioff isn't interested in the nuance of tax codes. In tweets and numerous interviews, he has framed the issues in dramatic and stark terms. You are either for helping the homeless or you are against it. He's accused other CEOs of not giving enough back to the city or to charities, and said the mayor calls to ask him for money for homeless programs. Most of Benioff's opponents have gone quiet, realizing that trying to debate details about Prop C in public with its biggest supporter isn't effective.

"The people who give are always the people who give," said Benioff. "The people who take are always the people who take, and it's really turned into two buckets. Those who are willing to help and those who aren't. Anyone who does not want to give back, I will help pack their boxes."

The proposition was in the works long before Benioff joined the cause. It was created by the Coalition on Homelessness, a 31-year old organization that works on policy and directly with San Francisco's homeless population. Its office is only 1.3 miles from the gleaming new Salesforce tower, but it exists in a different world. A cluttered second floor space in the heart of the Tenderloin neighborhood, it looks out onto sidewalks frequented by the homeless people that it is trying to help.

Coalition of Homelessness executive director Jennifer Friedenbach says it saw an opening after the Trump tax cut lowered taxes for local companies. The group looked at previously unsuccessful measures in San Francisco and other cities while developing Prop C.

"What we were finding was we needed to go big and we needed to go bold, we needed to target the folks who would be most able to pay," said Friedenbach.

For example, a recently failed Seattle proposition included a "head tax" that would tax companies like Amazon based on their number of employees. Prop C is based on gross receipts of corporate revenue. To avoid hurting small businesses, it only affects companies with more than $50 million in revenue a year. The tax averages out to .05% a year — just big enough to make a difference, but supposedly not enough to hurt the companies or lead to layoffs.

"This is one half of one percent, it's immaterial ... these numbers are so small, they mean nothing to these companies," said Benioff. "For them to squawk over or to complain and say that they won't give $10 million or $20 million to the number one issue in the city, really calls into question their motives for being in business at all."

After years of bouncing between shelters, cars, and the street, Jackie Evans recently moved into her own home. She's hopeful Prop C will finally improve the city's homelessness issues because it was created by working with the people in the thick of the crisis, like herself.

"Having more money means helping more people," said Evans.

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