Is It Right to Force Big Taxes on Big Tech?

Written by Kayla Matthews

Places like Silicon Valley, San Francisco and Seattle are often lauded for their tech-driven job markets.

These three locations, as well as a few others, are responsible for much of the innovation seen from the IT sector throughout recent years — and they’re often in the spotlight because of it.

But they’re also attracting the attention of local lawmakers and politicians who want to increase taxes on these tech giants.

Does it make sense?

On the one hand, it makes sense to bill these companies at a higher tax rate than other, smaller companies in the area. The extra funds are critical when it comes to performing community beautification, installing next-gen infrastructure and achieving regional growth.

It’s also a direct response to the residents, many of whom feel the increased amount of job growth is resulting in overcrowding and other problems within the city.

In response, officials with the city of Seattle recently levied an annual tax of approximately $50 million on their largest companies, which includes the likes of Microsoft and Amazon. It’s money that was earmarked specifically to help the city’s homeless population, but money that Amazon was adamantly against paying.

While the tax increase was unanimously approved, it was ultimately repealed as a result of severe fallout amongst the area’s most prominent companies. Amazon even threatened to cease a planned expansion and halt construction of a brand new, 405,000-square-foot office space.

It also comes just after a significant series of tax breaks — ushered in by the Trump presidency — lowered taxes on behalf of some of the largest corporations. As a result, many of Seattle’s residents — including the homeless population — are even more embittered with the region’s most prominent brands.

Why other cities are following suit

But other cities are still considering increased taxes for the largest tech companies. Google, Apple and Twitter — headquartered in the California cities of Mountain View, Cupertino and San Francisco, respectively — are still facing an uphill battle.

Mountain View, home to both Google, LinkedIn and many others, is facing a tax increase of $150 per employee. Citizens will vote on the rise in November, but many residents — including the city’s mayor, Lenny Siegel — are confident it will pass.

The city of Cupertino, home to Apple, is considering a similar head tax. It isn’t the first time they’ve brought the idea to the table — corporate interests quickly put an end to a 2016 proposal for increased taxes in the city.

Residents of San Francisco are also voting on a potential tax increase with the upcoming November ballot. Like the planned initiative in Seattle, these funds are meant to help address the increased homeless population in the area.

Although much of the increased tax income is set to benefit the community, these tech giants seem more interested in self-growth and profitability rather than helping the surrounding regions with their needs. It’s not necessarily a good look, but they’re willing to go to great lengths to avoid paying these increased taxes.

The risky business of increasing taxes

Large corporations are almost always at odds with local citizens, lawmakers and politicians. Although most of these tax increases will directly benefit their local communities, some of the largest and most profitable companies will do whatever it takes to avoid paying — even if it means relocating their businesses altogether.

In cases like this, there’s no way for the city to win. Either they miss out on the extra tax revenue, or they lose the business entirely — which is a gamble that many aren’t willing to take.