Dive Brief:

Silicon Valley-area and Bay Area cities, including San Francisco, Palo Alto, Mountain View and Cupertino, are considering possible measures to impose a "head tax" on businesses, according to reports from Bloomberg and The Wall Street Journal.

Like Seattle, these regions are home to some of the world's most successful tech companies, which has resulted in inequality and overcrowding, leading to congestion, homelessness and other crises.

The proposed or rumored tax plans in each city are as follows: Mountain View , home to Alphabet and LinkedIn, would tax businesses between $250 and $300 per employee, with a goal of generating $10 million in revenue annually. The tax, which faces a city council vote next month, would improve transit. Cupertino , home to Apple, would consider a similar tax as Mountain View to improve housing and transportation, Vice Mayor Rod Sinks told Bloomberg. The measure, still being fleshed out, may land on the ballot in November. Palo Alto will send a tax measure to the ballot in November to raise levies on hotel rooms and commercial real estate transactions. Its neighbor East Palo Alto, which suffers from a housing affordability crisis, is also considering a tax on the ballot in November. Both cities border Facebook's headquarters campus. San Francisco , home to Twitter, Salesforce, Airbnb and Uber, may impose a 0.5% tax on businesses with earnings of more than $50 million. The tax is being spearheaded by the Coalition on Homeless, which hopes to generate $300 million annually from the tax to curb the area's homelessness problem. If successful in collecting enough signatures, the measure will appear on the ballot in November.



Dive Insight:

Consideration of taxes on the tech industry is not a new move by local city councils and coalitions, though success has been uneven. For example, Palo Alto considered a direct business tax nearly a decade ago, which failed to pass, according to Bloomberg. The pushback on such taxes from the affected businesses can be daunting for cities, but Seattle's recent decision to approve a head tax of $275-per-employee, with the aim of grossing $20 million annually, has become a new motivator for California cities.

The tax in Seattle was put forth to combat a growing homelessness crisis across the city, which some attribute to Amazon, a company that has consistently brought thousands of new jobs to the area that the city says it "can't keep up with." The head tax approval, which will affect 585 local employers, has sparked opposition from the "No Tax on Jobs" coalition, hoping to get a referendum on the ballot to overturn the tax.

Amazon officials, like many in the "No Tax on Jobs" coalition, argue Seattle's tax approval is "anti-business" — a likely argument that California's tech-industry cities will face if similar measures pass. The Wall Street Journal reports many of these companies have already engaged in corporate social responsibility (CSR). For instance, Google has issued a $1.5 million grant to construct affordable housing and has helped fund electric public shuttle buses, while Apple has put $70 million toward traffic improvements and affordable housing.

Though some say this is not enough, and as these tech giants continue to spread, more cities will look to reverse the damaging side effects of rapid growth brought forward by their footprint. In a letter signed by more than 50 U.S. councilmembers and city leaders — including representatives from Chicago, Dallas, Denver, Miami, New York, Austin, TX, who are all vying for the coveted Amazon HQ2 — it is hinted that these cities will also seek a head tax if inequity occurs as a result to Amazon or other tech giants landing in the area.