Another High-Profile Company Driven Out of San Francisco By High Taxes

Less than a year after losing by far its biggest-grossing company to Texas – the pharmaceutical giant McKesson Corp. – San Francisco is losing another high-profile firm. Stripe, a financial software company that is the second-highest valued start-up in the U.S., is moving to South San Francisco.

Both McKesson and Stripe were unhappy with Measure C, the “homeless tax” approved by San Francisco voters last November that requires companies based in the city, which have more than $50 million in annual revenue, to pay a levy based on their gross receipts. McKesson moved to Irving, a suburb of Dallas, which has no such tax and much lower overall corporate taxes. While South San Francisco is not as cheap as Irving, it doesn’t have anything akin to San Francisco’s tax, which has helped the city attract many tech firms, in particular biotech giant Genentech.

“Unfortunately, Stripe choosing to leave town is not an anomaly,” Alex Tourk, spokesman for the sf.citi tech trade group, told the San Francisco Chronicle. He said the business community needed to “work together [to] … establish a fair and equitable tax system that we can all rely on.”

But as the fight over Measure C reflected, there is a huge split among San Francisco tech firms. Marc Benioff – the billionaire chief executive of Salesforce, the city’s largest employer – and company employees provided millions in funding to the pro-C campaign. Benioff has disparaged tech firms which balked at the measure and appears open to even more tax measures to deal with San Francisco’s homeless crisis.

“This is a humanitarian emergency and it demands an emergency response,” Benioff wrote last year in an op-ed in The New York Times.

Uber moving entire departments to Dallas

But will more tax hikes be accepted by Uber, one of the city’s most prominent and famous start-ups? Uber was neutral on Measure C. And in a move with parallels to the actions of McKesson before it moved out, Uber announced in August that it was setting up a “second headquarters” with 3,000 employees in Dallas after being wooed for years by city leaders, who provided $36 million in incentives and tax credits.

“Dallas became the first city in Texas where the Uber app was available in 2012, and since then Texas has been a hub of innovation for our platform,” Dara Khosrowshahi, CEO of Uber, said in the company’s announcement. “Uber is excited to bring this major investment to Texas and to increase our commitment to the city of Dallas.”

Yet Uber officials said that too much should not be read into its decision and that San Francisco would remain its headquarters. Uber said there was no change in its plan to move into 500,000 square feet of new office space at the huge, high-tech new Chase Center next year.

Nevertheless, the Dallas Business Times reported that Uber was moving entire departments to Dallas, including the Uber Eats team, and its legal, human resources, recruiting, finance and business development units.

That’s similar to what McKesson did before it confirmed it was leaving San Francisco permanently.

Uber has an even stronger motive to leave than McKesson or Stripe, which are considered healthy companies. Uber lost $5.2 billion in the second quarter of 2019, the company announced in August. Its stock price is down about one-third since then, and analysts are mixed about its future.

This article was originally published by CalWatchdog.com

Comments

  1. Mike Leipski says

    Please educate your employees that are moving with you the reason you are leaving. Voting Democrat is the reason everything is screwed up. Libs could not pour piss out of a boot if the directions were written on the bottom of the boot.

  2. Moving out of the state is a story. Moving next door not so much.
    I have wondered when silicon valley will move out of California. They pay high salaries, but homes are still going up in price. Won’t be long before silicon valley will either have to relocate their campuses to another less expensive state or start subsidizing housing for its employees.
    Seems relocating would be the smartest idea, at least, if housing rises in the new area it will be somewhat relative to the general population cost of living.

    Be sure to sign the recall Newsom petition.

    • John McDonnell says

      JIm, you missed it (because it was never reported). Silicon Valley has already moved out of California. Intel and National Semi were two foundations of SV. National got bought by Texas Instruments. Intel, the largest chip-maker is still here–BUT THEY NO LONGER MAKE CHIPS IN CALIFORNIA. They closed their last Santa Clara fab in 2010, at the same time they were building four more–two in Texas, one in Arizona, and one in Oregon. Yes, even our green neighbors to the North are much better hosts to businesses.

    • If SF voters passed Measure C, nothing stops them on any other tx the rich money grab. If SF high tech is so woke to support its vagrants, what is stopping them from doing private handouts right now? Surely they don’t think the government is going to do a better job than handing all of them a pre-paid ticket and the deed to a one dollar house in Detroit do you. Or even bus tickets to Lake County which is even cheaper than Detroit to buy homes and lots where they can park their RV’s and cook their meth.

      The entire town of Trona, California is for sale at bargain basement rates with some seriously good housing no longer needed after their mining industry dried up. Health clinic, liquour store, peace and quiet and well away from the urban scene that has no use for slacker bums on their sidewalks.

      Creative solutions are right under their woke noses and they have the pocket book to pull this off. Private philanthropy has always been the hallmark of the uber-wealthy. Why not now? Open your wallets, buy up Trona, ship them all there, and make it a model solution the rest of this can learn from. Looks like Austin Texas is also looking for a safe port in the vagrancy storm now too.

      Pool your resources and get woke, until you go broke.

  3. Long suspected the uber-Libs in the Bay Area supported Dems and every half off “progressive” agenda, just to keep the big Democrat unions away from their high tech Silicon Valley employees.

    Are any of these big new tech economies in the Bay Area unionized? If not, why not. Why have the unions kept their hands off Silicon Valley?

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