By Hope Johnson
March 3, 2011
Silence of the Lams?
President Obama recently hit the West Coast to first fraternize with wealthy Silicon Valley tech execs from Apple, Cisco, Facebook, Genentech, Google, Netflix, Oracle, Twitter and Yahoo and to size up Intel’s semiconductor computer chip plant in Oregon.
Most speculated his agenda was economic stimulus and re-election support, but that powerful techie networking list should leave us middle-class proletariat curious if the White House really just wants “best practice” tips on shutting down the internet and social media at the same time.
When we know Congress willingly extends the Patriot Act and the military’s psychological operations unit targets senators, there’s no reason to doubt our government might resort to limiting communication among its growing number of dissenters, especially with the threat of more worker protests like those in Wisconsin and Indiana.
Social media let Egyptians share their demands for democracy even when the internet was turned off by their government. President Obama’s West Coast whirl provided him undisclosed access to the top communication gatekeepers, capable of preventing that same kind of sharing here if more of the nation’s working class “go Cairo” to protest record unemployment, rising taxes, shrinking benefits and mass housing foreclosures despite last quarter’s highest ever corporate profits.
Speaking of exploiting the middle class to cater to the wealthy. . .
Nickel and Dimed to the Twitter End
Governor Jerry Brown wants to tax you more, Senator Mark Leno wants to increase your vehicle license fee, and the President wants taxes from your unemployment check. But district Supervisors Jane Kim and David Chiu are pushing for a corporate tax break. Their divisive proposal to amend San Francisco’s Payroll Expense Tax offers a tax reduction for businesses located in the mid-Market Street area by freezing their payroll expense tax for six years.
Supporters claim the proposal is intended to encourage job creation and revitalize a blighted area. However, Supervisors Kim and Chiu, along with appointed Mayor Ed Lee, openly acknowledge the tax break was created specifically to entice social media giant Twitter to move to a building owned by a politically well-connected developer. The move would likely increase the developer’s property value.
Many oppose Kim and Chiu advocating yet another tax break for yet another super wealthy company perfectly capable of meeting its tax obligations while San Francisco struggles to maintain even basic services. The proposal decreases the city’s expected revenue over the next eight years (when the tax break expires) while intentionally increasing revenue for Twitter, a company that recently closed a $200 million deal raising its value to $3.7 billion.
Losses to the city are difficult to estimate since the proposal leaves to chance future public benefit in exchange for guaranteed private gain. The tax freeze would allow mid-Market businesses to avoid tax not only on new jobs but also on pay raises, including the now common extravagant executive salaries and bonuses. No provision requires corporations actually hire workers to be eligible for the tax break or guarantees the creation of permanent, average salary jobs instead of temporary jobs, or just one high salary executive job.
The tax break would also counteract Prop Q passed by San Francisco voters in 2008. Prop Q eliminated loopholes in the payroll expense tax, finally requiring partnerships (think large law firms) to pay the tax. Public revenue gained when voters required the taxes from these partnerships would be offset for private business benefit.
No hard evidence supports the claim corporate tax breaks create jobs. Corporations are earning record profits, plus President Obama gave them $51 billion while record unemployment continues. Supervisors Kim and Chiu are offering Twitter this tax break (introduced Feb. 8th) on jobs it was going to create anyway (announced in early January). Twitter’s need for additional worker space is the reason the company needs to relocate in the first place.
Surprisingly, the proposal could increase hardships for small business despite Chiu’s mayoral campaign statement to help small businesses. Increasing property values would force small businesses to compete under high rents. While the proposed tax break provides extra revenue for wealthy businesses to compete, small businesses were offered only low-interest loans, requiring them to go into debt if financial assistance is needed to compete. Unfortunate since small businesses are more likely to create a wider variety of working class jobs than a social media company.
Twitter’s response to the generous tax break offer was an ungrateful complaint that the payroll tax still includes a 1.5 percent tax on stock options, even though San Francisco has never enforced that tax. Plus, Twitter is complaining about a tax impossible for it to owe for six years under the proposal since Twitter’s taxes would freeze at current levels which do not include tax on stock.
Gung Hay Fat Choy, taxpayers! It’s another year for the corporate raider!
Politicians must stop compromising middle-class taxpayers. This corporate tax break should be rejected outright or, for the faint of heart, revised to include guaranteed public benefits in exchange for the public revenue loss. A good start is requiring the creation of a minimum number of permanent jobs to be eligible for the tax freeze, exempting executive pay and bonuses from the proposal, and financial assistance for small businesses without loan interest debt.
Clearly, more substantive action is needed to fulfill the promise of liberty and justice for all than simply refusing to recite the pledge of allegiance.