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Taxing our way to prosperity ....here comes the business tax

Original post made by Chris, Palo Alto Hills, on Mar 10, 2007

Having showed themselves to be completely feckless when dealing with the budgetary issues facing Palo Alto, and unable to cut from spending anything that might offend the usual interest groups and city employees, some council members apparently think we can escape our situation by taxing businesses in town. (Web Link).

Nevermind that, as the linked piece shows, there is a fairness issue since businesses already pay a majority of the taxes in town. The real issue is that Palo Alto, which already has a reputation of being an expensive and unfriendly place to operate, is adding one more reason for businesses to stay away.

This tax might give the Council a year or so reprieve from the fiscal hanging that's coming to them, but in the long run it can only make the problem worse.

There's plenty of commercial vacancy in the south bay and peninsula real estate market right now. If you were a company looking to expand or relocate, how much more likely is it that you'd choose Palo Alto, which if Bern Beecham has his way, will be the only local city with this kind of levy?

If our companies start putting their employees in Sunnyvale or Mountain View, they'll not only take the illusory $50 per head Beecham covets, they'll take their property, sales and utility tax revenues with them - actually costing the city revenue.

Then we'll see more posts on this forum asking why Mountain View has a surplus, while Palo Alto struggles. (See here:Web Link)

Oh well, at least Beecham can claim he's doing something about the jobs/housing imbalance.

Comments (6)

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Posted by Winslow Arbenaugh
a resident of Barron Park
on Mar 10, 2007 at 8:58 pm

Chris, spreading more fear, uncertainty and doubt again? You've got to stop crashing Palo Alto's growth party, Chris. :)

How is a mere $50 a head, added to tens-of-thousands of other salary and benefit dollars required to maintain an employee, going to make a difference. Beecham's plan is intriguing, and deserves a closer look.


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Posted by Someone
a resident of Palo Verde
on Mar 11, 2007 at 1:07 am


$50 per yer per employee isn't much, I agree with Winslow.

Furthermore, what are the alternatives? Tax residents even more than they are being taxed currently, or more bonds (ie more taxes on residents). A lot of us can barely pay our current property taxes, whether we are long-time or newer residents.... Please no more bonds, no more parcel taxes!

Yes on the $50 per year per employee for businesses.


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Posted by Kate
a resident of Crescent Park
on Mar 11, 2007 at 9:37 am

City Council must stop looking to the business community to bail them out of the budget problems they seem to continually create for themselves. The police do not need a new building, the libraries are fine and the city should stop providing services that attract the homeless to Palo Alto. That should save enough money to balance the budget. Now if only City Council had the courage to actually do it.


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Posted by Donnie
a resident of Duveneck/St. Francis
on Mar 11, 2007 at 10:00 am

Kate is right. Why look to the business community all the time? Maybe this tax isn't going to be the straw that breaks the camel's back, but eventually we'll get there. We compete with other much more friendly cities for jobs than we did a decade or two ago.

Let's look also to the cost side. We could save the same amount by not giving the average 3 to 4% raises our generously compensated workers receive each year. Or we could save the same amount by laying off 25 or 30 of them (maybe those holding "manager" positions that have no one under them to manage).

If we only look to the revenue side, we'll constantly be chasing our tails since the "needs" of the interest groups, and the demands of the unions are limitless.


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Posted by Someone
a resident of Palo Verde
on Mar 11, 2007 at 12:48 pm

Actually, I do agree with Kate that we do not need a new police station and that Mitchell Park library is fine as is - and that if we want to ENLARGE it, rather than rebuild it, we ought to look at closing the branch libraries.

However I am under the impression that the current budget deficit is here regardless of what we'll do about the police station and the library buildings.

Finally, if we don't want to tax business, why I we so eager to tax residents with all those bond measures? Regardless of how long we have lived here, many of us just scrape by to afford living in this community... and each new bond or parcel tax is a new added burden. So, let's no throw bonds and parcel tax measures every which way as we have in the last 12 years or so...


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Posted by pat
a resident of Midtown
on Mar 11, 2007 at 10:34 pm

Recalling my corporate budgeting exercises, every dollar counted. Will a company with 5,000 employees paying $250,000 as an "employee tax" think that's a small price to pay for having a Palo Alto address? HP is one of our biggest employers and it's been downsizing for quite a while. I think Stanford Hospital has about 7,000 employees.

What happens when we need more income to balance the city budget? Do we up the employee tax to $75 or $100/head?

Given that one of the city's priorities is a "sustainable" budget, this doesn't seem like a very sustainable idea.


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