San Francisco Tech Companies Win a Proposition to Save on Taxes

Technology companies in San Francisco could soon reap a windfall. A ballot proposition for which the industry lobbied will save them millions in payroll taxes. Proposition E, backed by the venture capitalist Ron Conway, passed with a resounding 70 percent of votes. It was among the most prominent examples of the tech sector flexing its political muscle in city affairs. The proposition replaces a payroll tax with a tax on gross earnings. It is particularly attractive for venture-funded companies that hire well-paid staff, but are slow to bring in revenue. The business tax represents the city’s second largest source of revenue, after property tax, but tends to fluctuate dramatically, says the nonprofit San Francisco Planning and Urban Research Association. Proposition E replaces it with a gross receipts tax, which the nonprofit body estimates will bring more stability to city coffers.