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Editorial: Measure A tax plan needs more work

Original post made on Oct 16, 2009

The debate over whether Palo Alto should have a business license tax has popped up periodically for at least four decades, beginning back when few other cities had one. Inertia and mild opposition from the business community kept a tax from ever being adopted.

Read the full Palo Alto Weekly editorial here Web Link posted Friday, October 16, 2009, 12:00 AM

Comments (26)

Posted by Carroll Harrington, a resident of Community Center
on Oct 16, 2009 at 12:13 am

Thank you for this excellent editorial!

In comments to the city council and in letters to the editor, I have urged the Palo Alto City Council and staff to model a task force or advisory group to vet the the business license tax subject based on my experience with two similar groups that dealt with complex issues facing the city:

1) The Future of Single Family Neighborhoods Advisory Group in 2001, which developed the Individual Review Guidelines for two-story rebuild and remodeled homes. We included a "sunset" clause in our recommendations and consequently, these Guidelines are reviewed periodically and have been quite successful.

2) The Reusable Bag Task Force, which met from April to September 2008 with representatives from Palo Alto grocery stores and drugstores, plus the California Grocery Store Association, American Chemical Council, Chamber of Commerce and private citizens. Phil Bobel, Manager Environmental Compliance Division, fairly and thoroughly facilitated the almost biweekly meetings of this diverse group as they dealt with this multifaceted issue.

Along these lines, the City Council appointed the Compost Task Force, and it, too, is handling a complicated topic.

I had hoped that the city and the Chamber of Commerce could reach an accord on the proposed Business License Tax by working together with this similar "citizen/staff model." However, there were only three meetings—clearly not enough time to reach any kind of consensus.

The City Council has civic engagement as one of its top four is another opportunity to do just that!

I urge a No on Measure A vote!

Posted by Dave, a resident of Downtown North
on Oct 16, 2009 at 10:48 am

No on A. No on any business tax. Palo Alto will never get its fiscal house in order if new taxes are imposed. Palo Alto is the new GM. Fat pay and perks are changing the city from a municipality into a works program and pension fund.

Posted by Eric, a resident of Green Acres
on Oct 16, 2009 at 10:52 am

Why hasn't Measure A the Business Tax got a sunset date? Remember how the first Storm Drain fee increase failed because there was no sunset clause. It only passed after the sunset clause was included. Measure A needs a sunset date.

Posted by Marvin, a resident of Charleston Gardens
on Oct 16, 2009 at 10:56 am

That is reason number 15 for not voting for this measure, as per the editorial in today's Daily Post. Rather than looking to cut expenditures and take care of our infrastructure needs, the council is looking for ways ti generate more money for them to squander--if they are not raiding the utility fund, they are proposing new taxes. I mean how else will they fund The Color of Palo Alto, destination Palo Alto, a new green coordinator, a PA history museum, the Children's theatre, the zoo and the list goes on and on.
I mean how can we seriously consider a tax that is championed by a person who has never had to earn a living in his life?

Posted by Paula Sandas, PA Chamber CEO, a resident of Another Palo Alto neighborhood
on Oct 16, 2009 at 10:58 am

Kudos to the Palo Alto Weekly for taking a bold position in opposition to Measure A. Palo Alto is a city that chose decades ago to maintain a small business (as opposed to big box store) retail environment and it's clear that the remaining small businesses can't support the increasing cost of doing business, much less the increasing cost of running a city.

Vote No on Measure A and insist that the next sitting City Council appoint a Blue Ribbon Task Force of both business and residential folks to study how to increase city revenues in a fair way.

Thank you.

Posted by Wayne Martin, a resident of Fairmeadow
on Oct 16, 2009 at 11:18 am

> Vote No on Measure A and insist that the next sitting
> City Council appoint a Blue Ribbon Task Force of both
> business and residential folks to study how to increase
> city revenues in a fair way.

Sorry .. but a full performance analysis with the goal of reorganizing the City government from the top to the bottom is more important than having a Blue Ribbon committee to devise ways to increase City revenue.

It's not at all clear that their are valid ten-year plans in place for expenditures with the current organization. We've seen with the collapse of GM that a total reorganization, including the dismantling of this badly managed behemoth, was required to provide even the slimmest hope that this "jewel" of the American economic machine will survive just a few years. The same should be obvious about Palo Alto City Government.

With the coming of Broadband--we see fundamental change in the way information is delivered. e-Government can make services available from the City Hall 7/24/365 with out having to have employees on-premise.

We're seeing examples of that every day in the book, magazine and newspaper industries:

Barnes and Noble says Yes:
Web Link

Welcoming The E-Reader:
Web Link

Rethinking City Hall is not a job for another "hand picked" group of "insiders", but a job that City Manager Keene needs to shoulder starting today!

Vote NO on Measure A!

Posted by Civitas, a resident of Professorville
on Oct 16, 2009 at 11:37 am

Wayne Martin for City Council!

Posted by tj, a resident of Downtown North
on Oct 16, 2009 at 11:51 am

Curious that the Weekly waited until Oct. 16 to print this editorial, more than a week after people received their mail-in ballots. Many people have voted already.

The Weekly has never seen a tax it doesn't like. My guess is even the Weekly found it hard to recommend this one. So the Weekly compromised and held off printing it as a favor to its friends at City Hall. I'm sure this post will be deleted for objectionable comment, so read it now -- tell your friends before it disappears.

Posted by David Lieberman, a resident of Professorville
on Oct 16, 2009 at 12:44 pm

I never thought I would live to see the day!

The Weekly, the home of the fab 40 who have ruled Palo Alto for decades and run it into the ground, actually coming out against a City Council proposal.

Will miracles never cease.

Posted by Capbreton, a resident of Old Palo Alto
on Oct 16, 2009 at 8:13 pm

Alameda has a very similar law to Measure A and they wield it so aggressively that they even use collection agencies against their own citizens *and* against people -- such as myself -- who do any work for companies based in Alameda, even if those people never set foot there. They actually tried to force me to purchase an Alameda business license retroactively -- two years after the fact.

Protestations to the contrary, the current backers of Measure A have *no* idea how this law will be applied in the future, but it certainly smells like Alameda to me.

Time to step away from this piece of nastiness and vote Measure A down.

Posted by Kate, a resident of Duveneck/St. Francis
on Oct 16, 2009 at 8:28 pm

Oh, Puleezzzz Not a "Blue Ribbon Task Force" to sort out another "Measure A". Blue Ribbon Task forces gave us the plan for the new $$$$ Public Safety Building, a/k/a/ the Police Department Building, the Storm Drain measure (where some of the promised drains now can't go in because there is no money but residents are still paying for them), Measure A, the Baylands Composting to put the compost operation on airport land. and Edgewood Plaza probably Alma Plaza too. There were others. Blue Ribbon Committees are usually made up the same genre of residents - members of the "400" who march to the beat of City Hall. There has to be a better way.

Posted by Carroll Harrington, a resident of Community Center
on Oct 18, 2009 at 10:57 am

I really must answer this posting about Blue Ribbon Task Forces. When we formed The Future of Single Family Neighborhoods Group, we purposely chose people with very diverse backgrounds and interests. The Reusable Bag Task Force was made up of representatives from Palo Alto grocery stores and pharmacies, plus the California Grocers Association and American Chemical Council.

Posted by SteveU, a resident of Barron Park
on Oct 18, 2009 at 12:54 pm

SteveU is a registered user.

The worst argument given so far is "Palo Alto is the only city without a Business License Tax". That makes the Tax that other cities charge a good thing?
Taxpayers are not "marks" to flees for pocket change every time they pass you.

Get someone into office who knows how to manage with less income and make a budget that funds the basics FIRST. By "Basics", I do not mean "Perks" and "Junkets".

Posted by snore, a resident of Crescent Park
on Oct 19, 2009 at 9:32 am

The argument "Palo Alto is the only city without a Business License Tax" is a rebuttal to "Businesses will flee if Palo Alto introduces a Business License Tax". Where are they going to go to when everyone else already has a Business License Tax?

Posted by Midtown, a resident of Midtown
on Oct 19, 2009 at 11:40 am

Since the passing of the Library bond, adding more $s to a systems that circulates the same number of books as Mountain View at 1.7X the cost I cannot vote for any further measures that would again reward inefficiencies. I am all for services, but they have to be competitive to survive for our children to enjoy. Clean up PA operations, learn to work within a budget, make hard decisions and make us a benchmark of efficiency for other cities. Then if you still need to come to us for more money you will have better grounds to stand on.

Posted by Nod, a resident of Another Palo Alto neighborhood
on Oct 19, 2009 at 12:18 pm

Where will businesses go when everyone else has a business license tax? Well, I might go to Mountain View which has a flat tax less than half of what Measure A proposes, and whose business license tax imposes much less of an administrative burden to businesses.

Posted by Jeff, a resident of Downtown North
on Oct 19, 2009 at 12:25 pm

I'm an owner of a small technology/design consulting firm in Palo Alto and I favor Measure A.

- Clients love to visit our Palo Alto office, stroll the clean and safe downtown streets and make use of the many cafés/restaurants downtown.

- Businesses will reap benefits from this tax: the high level of municipal services support us recruiting employees to our "cool" downtown PA office. When I stop to think about it, I shouldn't get police, fire and paramedic services for free.

- I'm optimistic that a fiscally strong city will be able to support the business community by innovative programs and public private partnerships.

It's not fair to expect residents to shoulder the entire burden of the current fiscal crisis -- businesses also must step up to the plate. And yes, the city must be fiscally responsible as well. Businesses in Palo Alto have escaped business tax in the past, but it's time for businesses to be treated like they are in other cities and to pay the reasonable tax proposed in Measure A.

Posted by snore, a resident of Crescent Park
on Oct 19, 2009 at 2:15 pm

"Well, I might go to Mountain View which has a flat tax less than half of what Measure A proposes, and whose business license tax imposes much less of an administrative burden to businesses."

Perfectly reasonable response. At least we're no longer in the realms of "Palo Alto shouldn't impose a Businesss License tax!" and now into discussing how it should be implemented.
See, the argument "Palo Alto is the only city without a Business License Tax" did work!

Posted by Nancy, a resident of Palo Verde
on Oct 19, 2009 at 3:59 pm

I am a Palo Alto small business owner. I support a YES vote on Measure A.

Businesses benefit from city services, and will benefit from this tax. We use the City of Palo Alto's excellent reputation for recruiting top-notch employees. Our clients enjoy coming to meet in our Palo Alto office, and walk through the downtown streets which are clean and safe. I trust that the City will be able to continue and even improve its support of the business community as it becomes fiscally stronger.

As a small business owner, I don't expect to receive services for free. I expect to pay a fair tax.

Vote YES on Measure A.

Posted by Downtowner, a resident of Downtown North
on Oct 19, 2009 at 4:32 pm

Our leaders keep telling us that every other city has a tax and, therefore, so should we. What they don't tell us is that a company as large as Google pays only $100 in Mountain View but our businesses will pay far, far more. A moderate hundred-person company in Palo Alto will pay nearly $10,000, a hundred TIMES more than Google in Mountain View. This Palo Alto tax is a loser.

Posted by Retired Staffer, a resident of another community
on Oct 22, 2009 at 1:27 pm

When I was working in City Hall I offered to help a lady who was looking at the building directory. She wanted to know where to buy a business license. When I told her that Palo Alto didn't have one, she reacted in disbelief. Just then Judy Kleinberg walked by. I said' "This is the Mayor. She'll tell you there's no business license." The Mayor responded, "Not yet!" Well she was more than right. Still, "Not yet!"

Posted by Midtowner, a resident of Midtown
on Oct 24, 2009 at 8:27 pm

Why is it that when it comes to taxing individuals there is not a tax that the city and its inhabitants won't like (library bond tax, then all the school bond taxes and parcel taxes to name a few), but then we can't ever ask to tax businesses?

As a resident of Palo Alto I feel that I have paid and pay my fair share of taxes. It's time to have businesses chip in a bit more.

Posted by Sam, a resident of Midtown
on Oct 25, 2009 at 10:47 am

If Measure A passes it will go to funding union demands. It will NOT close the budget gap. The second oldest profession in recorded world history is the spending of available money by government officials. Happily, for our Palo Alto government officials, we have the happy cow of the utility department.

We have been through these things before. Don't worry, be happy.

Posted by Taxation 101, a resident of Crescent Park
on Oct 26, 2009 at 9:29 am

Basic taxation 101 will teach you that businesses do not pay taxes. Let me repeat. Business does not pay taxes.

Think about it. If you tax business, how do they remain operable? Well, they have two options:

1) Raise prices to customers. Thereby making the customers pay the tax.
2) Lower operating costs (ie. lower employee salaries, thereby making the employees pay the tax).

Following this logic, if you tax a business, you ultimately tax either the customer or the employee. The business does not pay. It would not be feasible for the business to stay operational if they just sucked up that added expense. If expenses go up, either other expenses must come down to offset the other expenses, or revenues must come up in the form of price increases to offset the added expense. Think about it.

The argument that businesses should pay their share is completely null and void if you look at who will pay actually pay the tax: the people.


Posted by PA Resident, a resident of Duveneck/St. Francis
on Oct 31, 2009 at 3:10 pm

According to the city website, suppose a "business located in Palo Alto has one employee working 40% of their time within the City limits. The ... firm would need to pay $30 (personal business category, first employee is $75 x 40%)." The city's cost of collection will likely exceed the tax revenue for such businesses, which are fairly common. Such small businesses should be exempted.

Posted by PA resident, a resident of Community Center
on Nov 2, 2009 at 9:30 am

The City needs to focus on positive revenue generation by attracting more high tax paying business to PA vs increasing taxes. I hear so many complaints by business owners that PA is unfriendly to businesses both large and small. Its reflected in city staff attitudes that could care less about constructively working with busnesses to follow regulations without undue expense. The staff feels there is a bottomless pit of money from firms wanting to do business in PA. We need to vote down measure A so the city gets more grounded on these issues. Other citys bordering PA (MV, RWC, EPA) have been much more sucessful in this respect at PA's expense.

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