Labor unions have expressed strong discontent with the actions of big tech companies and the leadership of Mayor Daniel Lurie, arguing that they are not contributing adequately to the city’s financial health.
Despite the unions’ claims, these companies have already paid significant amounts in taxes, with Mayor Lurie not taking a direct role in the matter, which some argue is not his responsibility.
Adding fuel to the fire, City Treasurer José Cisneros has quietly proposed a plan to decrease tax rates for certain big companies, including telecommunications giant AT&T, further inciting union anger amidst worries about recent city layoffs.
This complex situation underscores the often tedious aspect of taxation policies, yet it points to a critical movement for San Francisco as it strives to create a more business-friendly environment.
In this context, Cisneros’ tax cut proposal should be seen as part of a larger initiative initiated under former Mayor London Breed, who collaborated with both small and large business leaders, along with labor representatives, to streamline the business tax code.
The culmination of this effort was Proposition M, a ballot initiative that was approved by voters last November.
On May 21, Cisneros’ office introduced an ordinance to the Board of Supervisors, aimed at adjusting the tax structure for telecommunications companies, noting that they had been subjected to higher rates compared to other utilities.
This fact was already recognized during the discussions surrounding Proposition M, and the proposed tax reform may help mitigate potential legal disputes similar to those faced by major tech firms.
The plan also reflects a belief in trickle-down economics, theorizing that by lowering taxes for large corporations and sacrificing immediate tax revenues, the city can maintain these businesses and their workforce, eventually generating higher tax revenues in the future.
San Francisco’s historical approach to taxing businesses has been fraught with challenges, originally relying on a payroll tax that dissuaded companies from establishing themselves in the city.
The transition to a sales-based tax system, although intended to resolve the issue, resulted in numerous lawsuits, as many companies contended that their tax assessments were flawed.
Currently, several significant corporations, including Airbnb, Lyft, Uber, General Motors, and Microsoft, are embroiled in lawsuits against the city, collectively seeking around $550 million in refunds.
These legal struggles are not exclusive, as IBM has recently pursued the city for tax overpayments during prior fiscal years and, in a recent case, settled for $2.7 million plus interest.
In an effort to mitigate potential business tax disputes, Proposition M introduced a reform called the Advance Written Determinations program, allowing companies to engage in dialogue with tax authorities before escalating to litigation.
As of the latest report from the Controller’s Office, the city estimates a litigation liability of $415 million related to these tax suits, illustrating the ongoing tensions between the city’s financial management and corporate entities.
Despite these litigation concerns, the city appears to be taking a strategic approach to managing its financial resources by reallocating funds into the general fund, which many in organized labor viewing as a positive step since it may secure their members’ jobs.
However, this tactic does not alter the actual legal risks faced by the city, merely how these liabilities will be recorded in the budget.
Navigating these complex and contentious fiscal issues reflects San Francisco’s broader challenges over how to balance the interests of labor, large corporations, and its own economic health.
The current situation is indicative of the unpredictable nature of policymaking in San Francisco, as local officials attempt to make decisions that can appease various stakeholders.
Yet, there is a growing narrative that emphasizes progress through simplified business tax codes and a welcoming atmosphere for corporations, signifying a notable shift in the city’s governance that recalls the pro-business climate from earlier under Willie Brown’s administration.
As the conflict between labor unions and major corporations escalates over tax responsibilities, questions about the fairness of these tax adjustments and their timing for companies like AT&T remain at the forefront of the city’s ongoing economic discussions.
image source from：https://sfstandard.com/opinion/2025/06/16/san-francisco-business-tax-prop-m-cisneros-labor/
