San Francisco voters approve taxes on highly paid CEOs, big businesses • Hacker News Board

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#321

Post by momokoko » Thu, Nov 05, 2020, 10:41 PM UTC

throwaway0a5e wrote: post #2

Sounds like business will be booming for temp agencies as well as janitorial and facilities maintenance contractors. Whatever the net positive here is wholly negated by the number of stable long term jobs that are going to go away and be replaced by whoever the body shop chooses to send that day. Working for these middle men really sucks compared to working for whoever the service is being provided for (and I say tha…

Sounds like you don’t live in the Bay Area. Almost every tech job that isn’t salary, and plenty of salary jobs, already are.

It is standard practice in the Bay Area to use staffing agencies for everything but executives and core talent with all signs pointing to the practice becoming even more common well before this.

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#322

Post by titzer » Thu, Nov 05, 2020, 10:41 PM UTC

whakim wrote: post #249

ciarannolan wrote: post #218

Brings to mind the last paragraph here (see my comment below for the ending): > By the time of Plato’s death (347 B.C.) his hostile analysis of Athenian democracy was approaching apparent confirmation by history. Athens recovered wealth, but this was now commercial rather than landed wealth; industrialists, merchants, and bankers were at the top of the reshuffled heap. The change produced a feverish struggle for mone…

One thing to keep in mind is that most of our primary sources are incredibly hostile towards the merchant class. (For much of history, the merchant class had an incredible stigma attached to them.)

Maybe there's a good reason for that? (and not anti-semitism)

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#323

Post by clhodapp » Thu, Nov 05, 2020, 10:43 PM UTC

umeshunni wrote: post #100

clhodapp wrote: post #47

Earlier quoted context omitted.

Contra Costa is full of open space and I believe that many of the cities from Walnut Creek out would bend over backwards to pull in these types of jobs.

There's a mini-silicon valley shaping up in the East Bay along the 580/680 corridor - towns like Dublin, Pleasanton etc are growing rapidly with existing companies and new ones - Oracle, Workday, Snowflake etc are all there. It helps that they are also much more new housing friendly than SF and SV.

Right! I wasn't thinking about stuff like Bishop Ranch being down there. Yeah, it really does seem like most of the freeway/transit-connected East Bay towns beyond the hills would be very amendable to this type of growth. It really seems like the only exception would be the arc from Orinda to Danville.

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#324

Post by cody3222 » Thu, Nov 05, 2020, 10:45 PM UTC

throwaway2245 wrote: post #207

cody3222 wrote: post #121

This raises some interesting questions / side effects: 1) Companies may now have a direct incentive to have their lowest income earners be outsourced/contracted out to boost the median pay amount. 2) It was smart of them to include compensation such as stock options. However if a city starts to expect this income, it will all go away in recessions when CEO's stock options are not valuable. ie more money to the city i…

> Companies may now have a direct incentive to have their lowest income earners be outsourced/contracted The median was presumably chosen because it's relatively harder to shift in this way. Although this depends on the exact pay distribution of your company, you'd expect getting rid of people from the bottom to change the median person but not typically change the median value. (This is also a mature enough problem…

I bet it's actually easier to change the median. Often you'll scale a sales or support team (much lower cost than engineer) and these teams can often balloon especially if the company has a direct positive margin on their work (generally the case in sales). Now, 30% of the company is sales/support and there are quite a few options for outsourcing your sales team to a "professional sales company."

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#325

Post by dpoochieni » Thu, Nov 05, 2020, 10:45 PM UTC

kinkrtyavimoodh wrote: post #188

It will work out well fiscally because giant companies will suck it up and pay, but it looks like a bad strategy from a forward-looking point of view. You want to incentivize future growth too, and you want to make sure that 20 years down the line, you have the new FAANGs of the world giving you millions in tax dollars, because history has shown that the largest of companies can eventually die out, and tech is full o…

Could this work as a loophole, pay the CEO something nominally sane. Give them the rest in stocks held in a trust they are beneficiaries of?

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#326

Post by filoleg » Thu, Nov 05, 2020, 10:47 PM UTC

joshribakoff wrote: post #306

rattray wrote: post #278

Earlier quoted context omitted.

It's based on CEO pay, which doesn't apply to CEOs who are founders and get most of their "pay" in the form of appreciation of stock (rather than stock options/grants).

Would it be different if they liquidated and exchanged for an index fund or publicly traded ETF? On the other hand, the law does cover gross receipts, so the act of “paying” the CEO in stocks is subject to taxation at the point in time the CEO receives it as part of their income.

>the act of “paying” the CEO in stocks is subject to taxation at the point in time the CEO receives it as part of their income

That is technically true, but this is where it gets tricky.

If you joined a public company (this will work with private too, if you weren't the founder, but let's not thing about it for the sake of simplicity for now) as the CEO, this will work out perfectly just like you described. You got all those shares at joining, you pay tax on their value at the time. As you get more shares, you get taxed on their value as soon as you receive them. If you decide to sell those shares, you don't get taxed on the initial value of them (since you already got taxed on it when you received the shares), only on the profits you made at the moment of sale (or you get your taxable income reduced due to losses, in case the share price went down between the moment you received the shares and the moment you sold them). So far so good.

If you started your own company, you initially hold the shares that are worth nothing, so you aren't really taxed on them. If you don't continue receiving new shares, but instead just hold onto the initial ones, you only get taxed on them when you sell them (since when you "received" them originally, they were worth nothing). Does Zucc receive more shares over time? I don't think so, he is just holding onto his original shares (while, no doubt, selling some and getting taxed on them), so this law will not affect him one bit unless he receives more shares.

Not trying to discredit your theory, your overall point is correct, I just wanted to add more nuance.

P.S. I am not an expert on this by any means, so if someone can correct me (especially on the "starting your own company" scenario), please do so. I find this a fascinating topic, and I try to answer as accurately as I can. But since I didn't experience that scenario myself, I can definitely be wrong or missing some details.

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#327

Post by dragonwriter » Thu, Nov 05, 2020, 10:48 PM UTC

kmtrowbr wrote: post #70

umeshunni wrote: post #5

Earlier quoted context omitted.

More likely, this will just result in businesses continuing to leave San Francisco. The pandemic has given most companies a good reason to do so already and my bet is on most of them not returning to their overpriced San Francisco headquarters when this is eventually over.

I have lived in San Francisco since 2005. Over the time I've lived here, we've had the opposite problem: lots of highly paid tech firms moving into SF. This has changed the nature of San Francisco in a way that many dislike, including me. I was initially attracted to San Francisco because, it was chill, it was beautiful, and it had a lot of eccentric, really interesting people. Many of our good friends had to leave o…

> the tech firms are unlikely to leave, meanwhile SF can get more taxes from them (many of them were historically given tax breaks, like Twitter, to move into the mid-market area).

Twitter's highest paid executive looks like they make something in the $7M range (Dorsey's total comp is approximately zero for several years, as he is counting entirely on capital returns on his investment, not compensation from the firm); I'm doubting that their median SF pay is below ~$70K.

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#328

Post by rcpt » Thu, Nov 05, 2020, 10:48 PM UTC

cheriot wrote: post #262

rcpt wrote: post #234

Earlier quoted context omitted.

> Underlying _that_ problem is a lack of supply And underlying that problem is Prop 13 - the insane multi billion dollar tax break that Californians bestowed on all land speculators. Until it's gone nothing will change.

Prop 13 is fucking horrible. We can't blame it for everything, though. It doesn't stop SF from zoning for more residential units or allowing the existing ones to be subdivided. All of those new units pay full freight.

Zoning laws aren't laws of physics. People make those up to align with what works best for them. Prop 13 strongly incentivizes less housing (because it boosts voters asset values with no downside to homeowners) and more commercial (because cities now rely on sales taxes to stay functional).

Until the landowners start to feel some downside from the housing disaster don't expect anything to change.

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#329

Post by PopeDotNinja » Thu, Nov 05, 2020, 10:49 PM UTC

HenryKissinger wrote: post #258

bduerst wrote: post #239

Earlier quoted context omitted.

Yep. Founders would likely be on the board and just give themselves different titles from CEO if they really cared, so it shouldn't impact startups.

> just give themselves different titles from CEO "Lead executor" "Company Chief" "Dear Leader" "Head Director" "Paramount Leader" "Viceroy" "Corporate Emperor"

More like “Advanced Master Individual Contributor LOL”

Re: San Francisco voters approve taxes on highly paid CEOs, big businesses

#330

Post by gnicholas » Thu, Nov 05, 2020, 10:50 PM UTC

Remote work wasn't as big of a thing when this was drafted, but it will be interesting to see how it plays out as SF-based tech workers relocate to lower cost of living parts of the country/world.

Some companies have already said that they will reduce pay of employees who relocate, which affect the way that the average pay vs CEO pay shakes out.