Palo Alto approves tax ballot measure

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June 25, 2009

PALO ALTO, California: On June 22nd, 2009, the city council of Palo Alto voted 6-2 to put on the November ballot a business license tax that would raise an estimated $3 million a year. If passed to be voted on in November, firms would pay a minimum of 75% per year, plus an extra $35 to $75 per year for each new additional employee. Additionally, certain businesses would be exempt: residential landlords renting fewer than three units, and non-profit organizations with fewer than 100 employees.[1]

The controversy and delays surrounding the passage of the measure was largely due to disagreements concerning the information used to determine the actual tax increase. The eventual decision ruled to calculate the tax rates based on a firm's number of employees, a suggestion made by working groups who met with city officials in May. City staff had pushed for a revenue-based tax because, they argued, such a way would be more fair to small businesses that have thin profit margins. Business owners and workers, however, made it clear that they didn't want the city poring through their balance sheets. A begrudging compromise was reached, though; Paul Sandas, president of the Palo Alto Chamber of Commerce, said "the employee model was the lesser of two evils." Council member John Barton and Jack Morton both admittedly backed the employee-based tax to avoid a deadlock.[2]