• 7 days Visa, Mastercard Slump Amid Covid Worries, Regulatory Outlook
  • 7 days 3 Biotech Stocks Wall Street Loves This Quarter
  • 12 days Fintech Goes “Green”, Joining $30T ESG Boom
  • 13 days U.S. Cargo Theft Spikes Amid Huge Supply Chain Snarl Ups
  • 14 days Buybacks Are Back, But New Taxes Could Dull the Party
  • 15 days Don’t Be Fooled By Musk’s Twitter Performance
  • 20 days 3 Healthcare Sector Stocks to Watch Right Now
  • 21 days More Trouble Ahead for Supply Chain as Hackers Descend
  • 23 days Saudi Arabia To Invest $64 Billion Into Becoming A New Global Cinema Hub
  • 26 days The Cryptic Squid Strikes, Netting Scammers Nearly $4M
  • 26 days October Jobs Impress but Inflation Threatens Recovery
  • 27 days Another Round of ‘Meme’ Stocks Coming Our Way?
  • 28 days 2021’s Black Friday Bummer
  • 30 days Buy-Now-Pay-Later Is A Huge Threat to Credit Cards
  • 33 days Microsoft Passes Apple As World’s Most Valuable Company Amid Stellar Earnings
  • 34 days 3 IPOs from Big to Small Coming Our Way
  • 34 days Robinhood Investors Balk at ‘Meme’ Growth
  • 36 days $12M Seized in Massive US-Dubai Money-Laundering Raid
  • 37 days China Launches Digital Yuan As U.S. Dallies
  • 39 days ‘Unicorns’ Are Now Small Fry in the Era of ‘Decacorns’
Michael Scott

Michael Scott

Writer, Safehaven.com

Michael Scott majored in International Business at San Francisco State University and University of Economics, Prague. He is now working as a news editor for…

Contact Author

  1. Home
  2. News
  3. Breaking News

Will The San Francisco Wealth Tax Spark An Exodus Of The Rich?

San Francisco Wealth Tax

In the shade of the US presidential elections, San Francisco residents also voted for and approved a measure for sweeping business tax changes of a Robinhood nature. 

Starting in 2022, San Francisco’s Measure L, also known as the “overpaid executive tax,” will levy an extra 0.1% to 0.6% on gross receipts made in San Francisco for companies whose executive makes 100 times or more the salary of its median worker. 

Voters also agreed to sweeping business tax changes that will lead to a higher tax rate for many tech companies, as well as a higher transfer tax on property sales valued between $10 million and $25 million.

California already has an 8.84% corporate tax rate, which is one of the highest in the U.S. By way of comparison, Colorado’s tax rate is 4.6% and North Carolina is at 3%. Seven states have no personal income tax at all.

New tax measures apply only to companies that earn over a million dollars in revenues. 

According to the city’s officials, tech is expected to account for 17% of the tax revenues with retail and financial firms each expected to account for 23% of the revenues.

Last month, former Wells Fargo CEO Dick Kovacevich said that a California wealth tax would spur an exodus out of state.

But an exodus was already underway before the new tax was approved. The high cost of living, the pandemic and a surge in remote work have accelerated that trend in recent months and years.

For the past few years, California (with an estimated $54.3 billion budget deficit) is steadily losing companies to more business-friendly states. Just in 2018 and 2019, some 650 California-based companies moved out of state.

With no state income tax or corporate income tax, Texas is ranked number one for attracting tech companies, followed by Arizona, Tennessee, Colorado and Nevada.

Late last year, financial services firm Charles Schwab announced it was relocating the company’s headquarters from San Francisco to Texas.

Private data analytics company Palantir likewise announced it was relocating its headquarters from Silicon Valley to Colorado.

Elon Musk recently said he may move Tesla’s HQ to Nevada or Texas. Other high profile tech companies like Facebook, Twitter, Amazon and Google already have offices outside California.

Yet, not all are moving out of Silicon Valley due to taxation. In 2018, Peter Thiel, co-founder of PayPal said he was leaving Silicon Valley and relocating to Los Angeles, ostensibly because of the liberal politics of the tech industry.

He relocated his home, personal funds, 50 personnel and Thiel Capital and his Thiel Foundation from Silicon Valley to Los Angeles.

Thiel, one of the tech industry’s rare Trump supporters, noted back in 2016 that ”Silicon Valley is a one-party state…That’s when you get in trouble politically in our society when you’re all on one side.”

However, he distanced from President Trump earlier this year due to the administration’s slow and ineffective response to the threat posed by COVID-19. But Silicon Valley isn’t luring him back, and now, with a new wealth tax in play, he might be getting company in LA. 

By Michael Scott for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment