A proposal to eliminate payroll taxes on stock options is changing dramatically following a report that estimates that San Francisco would lose between $500,000 and $750,000 a year if the tax is eliminated.
The newest version of Supervisor Ross Mirkarimi’s legislation would still tax companies on stock options, but it would cap any of those taxes at $750,000. The idea is to keep companies such as Zynga in The City while still maintaining the current tax revenue.
Zynga, a social gaming company, and micro-blogging service Twitter are expected to go public for billions of dollars, meaning an initial tax on those stock options would be enough to cause those companies, and the jobs they create, to leave The City. A capped tax of $750,000 might be a more palatable deal for such businesses to stay.
Amendments also include extending the tax exclusion from three to six years and applying the break to businesses in all industries, not just in technology.
With those amendments, Mirkarimi’s legislation now has the support of Board of Supervisors President David Chiu.
And even Supervisor Mark Farrell is being recognized for his dueling legislation that would permanently abolish the stock option tax. Farrell’s plan has more comprehensive definitions of what a stock options actually are – trust us, it’s complicated – and those definitions will be included in the new Mirkarimi and Chiu ordinance.
All of this is in an effort to keep companies, and jobs, in San Francisco so that people will keep spending their hard-earned money on clothes, food and at the Apple Store.
A vote on both Mirkarimi’s and Farrell’s legislation was continued to next week.
This blog has been updated to include information on the tax cap.