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Let's Consider Taxing Legal Sevices in Palo Alto.

Original post made by Solutions, Downtown North, on Nov 1, 2007

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Above is just a partial listing of private law firms extant within Palo Alto. Collectively, these firms bring in BILLIONS in untaxed revenue.

Why not include private legal services in the local sales tax? Just this tax alone would help towards keeping our city fiscally sustainable.

More communities should consider this.

Comments (7)

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Posted by No More Taxes
a resident of Another Palo Alto neighborhood
on Nov 1, 2007 at 1:45 pm

Do other Cities tax law firms? If not all the law firms with offices in PA will move out and go to Cities that don't charge a law firm tax.

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Posted by John M.
a resident of College Terrace
on Nov 1, 2007 at 1:53 pm

Most cities don't tax legal services, but there is a groundswell of activity in this area, to change that.

Why should legal services not be taxed? If we loose legal services companies - so what? What are they doing to help generate local revenue? Why shouldn't they be taxed?

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Posted by Solutions
a resident of Downtown North
on Nov 1, 2007 at 3:18 pm

Here are some interesting numbers:


Revenue per lawyer: $790,000

Profits per partner: $1.275 million

WSGR has 168 partners

WSGR this generates a *profit* (not revenue) of $214M. That's just ONE law firm.

Why aren't we taxing some of this *revenue*, which is a far higher number?

Add up all the law firms we house in Palo Alto - how important are they to the local economy? They pay no taxes, other than property taxes, if they own their own facilities. Why?

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Posted by resident
a resident of College Terrace
on Nov 1, 2007 at 6:41 pm

You do that. Then you'll see every restaurant in your city buckle after the business lunches and recruiting lunches go elsewhere -- same goes for copy vendors and every other shop the evil local lawyers support.

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Posted by No More Taxes
a resident of Another Palo Alto neighborhood
on Nov 2, 2007 at 8:38 am

If you tax the law firms around Palo Alto Square and these law firms move out to other Cities; watch the retail and restaurant businesses on California Avenue collapse.

The law firm I worked for on Hansen Way has already left and moved to Santa Clara to be closer to the high tech businesses further south. I bet other law firms would love an excuse to make the same move.

Contrary to what many Palo Altans may think, PA is no longer the center of the high tech industry.

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Posted by Solutions
a resident of Downtown North
on Nov 2, 2007 at 11:41 am

California Avenue will be fine, and companies like WSGR will not move; they'll simply pass the increases on to their clients, the very wealthy corporations whose own lawyers are living on the edge of the current legal feeding frenzy in Silicon Valley.

I would like to see somem good arguments for not taxing legal services - especially legal services provided to corporations. Much of the "legal action" we see today is comingn from deal making and lawsuits over intellectual property disputes. The law firms are raking it in, and corporations are winning massively profitable legal battles. (btw, this ends up costing consumers more - that's me, and you).

So, why aren't we taxing these services? And how is it that one almost NEVER sees any suggestion to do so? Could it be that the primary reason for this is that probably a majority of our legislators are afiliated with the legal profession?

We are passing up an opportunity to open this conversation at the policy level. Why not?

If we lose a few firms, others will replace them. There is ino end to the opporunity to sue, and make money. the most prominent firms will continue to stay

Conservatively, assuming one billion in revenues for corporate legal services here - apply the local sales tax to that. It;s a pretty significant number. Everyone should pull their weight, including the cash rich legal sector.

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Posted by Ethan
a resident of South of Midtown
on Nov 2, 2007 at 12:39 pm

My wife works for a major corporate law firm (not in Palo Alto). Those of you who think you can just tax law firms without repercussion are not being realistic.

Law firms are run any other businesses. They make decisions about the cost of doing business in any given local just like other profit-making enterprises. Moreover, within the local area, their operations are highly mobile. My wife's firm expanded their office in Menlo Park instead of San Francisco explicitly in part because the cost of doing business is lower in MP.

I don't know how much overflow business that the existence of law firms provides for other PA businesses like restaurants, but I do know that if you tax lawyers you'll have fewer of them in town. (Of course maybe a lot of you think that's a good thing!)

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