blog

Latest from the Quantamize Blog

Golden State to Tax Golden Goose? "IPO Tax" to Address Income Inequality and Affordable Housing Shortfall floated in San Francisco

Apr 24, 2019

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

 

  • Ahead of its expected Initial Public Offering (IPO) in May, Uber (UBER) may face headwinds from a proposed bill in its home city of San Francisco, dubbed the “IPO Tax”, according to Bloomberg. San Francisco city officials are fearful that the upcoming Uber IPO will worsen the income gap that already impacts so many in the city.  
     
  • Gordon Mar, the Supervisor for the city of San Francisco, introduced a motion on Monday that would introduce a new tax, “for the privilege of engaging in business in the city,” on companies that issue equity to their employees.
     
  • Mar explained on Monday that he intends to formally announce the proposal at a subcommittee meeting on Wednesday and to introduce the proposals within the next couple of weeks. If the proposal is passed by a majority of the country board, a payroll tax covering employee stock-based compensation would be placed on the upcoming November election ballot.  
     
  • At the upcoming meeting on Wednesday where Mar plans to announce the proposals, the agenda lists among the topics for discussion, “impacts on business tax revenue, housing costs, and gentrification.”
     
  • IPOs from companies based in the city of San Francisco are not hard to come by. In this year alone, San Francisco-based Lyft Inc. (LYFT) and Pinterest Inc. (PINS) launched their IPOs for a combined market value of $31 billion. 
     
  • It’s common knowledge that San Francisco and the surrounding area, dubbed Silicon Valley, has been a hotbed for tech startups and giants alike. However, the high volume of successful tech companies in the area has led to massive income inequality and a shortage of affordable housing. City officials in support of the IPO Tax proposal see it as a way to narrow the income gap by requiring tech companies to share their wealth.
     
  • Specifically, the money generated from the proposed IPO tax would be allocated towards low-income workers, education, the expansion of affordable housing, and other benefits.
     
  • According to Kung Feng, the executive director of Jobs With Justice San Francisco, a coalition of labor and community groups, the IPOs from San Francisco-based companies are, “going to create vast inequality and displacement,” in the city of San Francisco. He added that, “we as a city need corporations to pay their fair share and be good neighbors. The IPO tax is one step toward that.”

 

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS