The big front-page headline on today’s Examiner: “Workers we can’t afford.” It’s a classic story of the Ex genre, a look at how much labor costs are increasing and eating a hole in the city budget. But what gets me is thal it’s not just the Ex; the Chron takes this line, too, and so do news outlets all over the state (and all over the country). The problem is always labor.
You never see a big headline telling the other side of the story: “Tax breaks we can’t afford.”
The thing is, tax cuts and tax breaks are expenses, just like labor costs. The impact the budget in the same way. And at least city workers DO something; a lot of the tax cuts don’t.
I was watching the City Channel last night (yes, Mr. Mayor, I was one of the “ten people” you joked about who were actually watching) and Newsom was giving a speech out at Mission Bay, welcoming a new biotech outfit to the city. And he went on and on about how his administration has attracted all these companies by giving them tax breaks.
He said that, unlike South San Francisco, this city “taxes jobs.” (That’s just silly; we have a payroll tax because you have to have some form of business tax, and the state won’t let us tax corporate income, and a gross receipts tax also has problems, and a payroll tax is at least an approximation of the size of a company. If we taxed gross receipts instead he’d complain that we were “taxing success.”)
And then when he was done with his prattle, the guy from UC who sets up the Mission Bay incubator space for biotech businesses spoke, and talked about all the reasons busineses want to move into the area, mainly the direct connection with UC researchers and experts in business development and the quality of the workforce. He didn’t say a word about taxes.
Because taxes, particularly the very modest payroll tax the city charges, are such a minor factor in business location decisions that tax breaks like Newsom’s don’t do much good in attracting employers. But they do cost the city money.
And those are expenses — yes, expenses — that we can’t afford.