“So what if Palo Alto imposed a business tax on every retail business in this city? I’m fine with it if they pay money to run Palo Alto – as long as I don’t have to. And it also means that my chances of paying more taxes in the future will be reduced.
That’s how some residents — maybe you — feel about the proposed new business tax for Palo Alto, which will be voted on in the November election.
Are you sure you are not paying more? Well, you are wrong.
Why? Because once businesses get their new tax bills, some of which are in the five- and six-figure range, they will inevitably pass those additional costs onto consumers – us. They will raise the prices of their goods and services, because if they don’t, they will lose money – and could be forced to close or leave Palo Alto.
I came across a report from the city council’s finance committee on the likely amounts of taxes that will be levied on businesses, if approved by voters. While the amounts are still fluid, depending on whether the city charges a fee of 10 or 12 cents per square foot, the proposed tax would make the first 5,000 square feet of each business largely exempt, subject only to a $50 annual fee. $. . But businesses over 5,000 square feet would be a different animal, subject to a large payout year after year.
And how much will this tax cost various businesses? A projected levy of $165,600 for Nieman Marcus and a levy of $313,920 for Macy’s – both in the Stanford Mall, located in Palo Alto. Macy’s has closed several of its stores across the country in recent years.
While start-up grocery stores would be exempt, established grocery stores are currently on the taxable list. Estimated annual taxes: Country Sun, $7,200; Grocery Store, $15,624; Whole Foods, $17,971; Safeway, $33,574; Edgewood Market, $30,672, and Mollie Stones, $88,645.
Need I mention that grocery store prices across the country have been rising over the past couple of months, which is of great concern to consumers and grocery store owners alike, as grocery store profit levels range from 1-3%.
Of course, your grocery bills will increase more and more if the business tax is approved.
City Manager Ed Shikada estimates the business tax will return between $22 million and $26 million to city coffers each year, depending on square footage. Keep in mind that this city has an annual budget of almost a billion dollars.
Shikada also announced last week that the city’s five largest companies would pay 20% of total business tax revenue, creating a heavier burden for medium-sized businesses. Maybe it’s because the city manager is worried about bigger companies moving out. Although its report did not name the top five, Hewlett-Packard and VMware are included. However, for comparison, in Mountain View the top five companies pay 77% in business taxes, while in East Palo Alto they pay 79%, according to the Daily Post.
Mountain View has a commercial license, based on the number of employees. Bug companies pay the most annually — Google, $3,528,095; Microsoft, $160,445; Smart, $222,320. Clearly, Mountain View’s philosophy of relying on big business to pay the most differs from what Shikada offers. Mountain View raises about $5 million a year through business taxes. Like I said, Palo Alto would raise around $22-26 million.
Menlo Park has a business license tax, based on gross receipts, and the maximum amount for a business with up to $30 million in gross receipts is $8,000 per year.
The Palo Alto City Council will discuss its business tax proposal next Monday, June 13, and a final vote on whether it will be put on the ballot will take place at the June 20 council meeting.
Six of the council members have continuously – and quite strongly – supported the imposition of a business tax, with City Manager Shikada likely because the tax means they will have more to spend on whatever they want. Only council member Greg Tanaka objected outright.
At first, the city council did not know how the money collected would be spent. After locals demanded to know how the money was going to be used, the council came up with a long wish list. This has now been refined into six categories – grade separation and rail safety; affordable housing and homelessness; public safety; improvements to University and California Avenues; public safety and downtown improvement. No details on how the money will be spent to achieve these goals, but it’s a great list of sales pitches to convince people that somehow a new tax will provide solutions to all these problems. Don’t be fooled.
Remember that this tax will not be earmarked and the revenue will go into the general fund, so in future it can be spent as the city manager and council wish – including more money for employees of the city and an increase in their fine pensions.
I hope that many of you will present your views on this business tax proposal to the board at the meeting next Monday, June 13. You can participate via zoom. (Check the city’s website for details.) If passed, it will affect how much you spend on groceries and retail goods for years to come, as this tax has no end date. , no sleeping. It will be a tax forever in our beautiful city,
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