Now Is Not the Time

The last two years have been tough on all of us — especially our local small businesses. That’s why this is not the time for another tax increase. Under the City’s current proposal, Palo Alto businesses would be paying an additional $1.20 to $1.44 per square foot per year, giving the City a big $19 to $25 million blank check — that will automatically increase annually — to spend with no oversight or accountability.

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A Business License Tax
Is Bad for Palo Alto

The Palo Alto Community & Business Alliance is a coalition of concerned citizens and local businesses representing a cross-section of Palo Alto. Our group consists of the Palo Alto Chamber of Commerce, the Silicon Valley Leadership Group, NAIOP and many of our member organizations.

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The Details

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No tax expiration date
= a forever tax

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No spending commitments = $19 to $25 million  annual blank check to City Council

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Up to $1.44 per
square foot, annually

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Automatic escalator would increase the cost every year

Why We’re Fighting It

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Hurts Small Business

A business tax wouldn’t just affect corporate giants — it will also affect all of the small businesses that support those companies and workers. Our local small businesses — who already have a tough time making ends meet at current tax rates — would be devasted if big businesses leave. Small businesses simply can’t afford another large tax increase after nearly two years of a crippling pandemic, meaning they will inevitably have to pass this cost onto the consumer in order to stay afloat.

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The City Has Not Done Its Homework on the True Economic Impact

The City has not performed any economic analysis to truly understand the impacts this business tax could have on Palo Alto and they have no plans to do so. We have questions that warrant further discussion. How can we be sure that big businesses won’t lay off workers or re-locate to recoup the cost? Are we certain that this won’t force small businesses to close? Wouldn’t this reduce the City’s real estate tax revenue that supports our schools, fire department and annual budget?

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Threatens the Strength of the Local Economy and Job Market

Big companies are leaving for other states in record numbers due to high taxes. Businesses already pay millions in property tax and seventy percent of the City’s revenue from the utility tax is paid by businesses. If the City pursues both measures, businesses will be exponentially affected. If we continue to increase taxes on job-creating businesses, they will avoid Palo Alto, or worse, it could be the final straw that pushes them to leave.

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Lack of Accountability Means No Guaranteed Funding for Homelessness or Affordable Housing

How can we be certain that the money will be used as intended when there are absolutely zero guarantees for how the money will be spent? As a general tax, there are no legal guarantees that the money will be spent as promised. The City has openly admitted in City Council meetings that they are unsure how they would spend the funds and that they would highlight the funding priorities that sound best to voters. We agree that homelessness and affordable housing need to be addressed, but we have significant concerns that there will be no accountability built into the proposed business tax.

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We Can’t Afford A Forever Tax

The City’s current business tax proposal does not include a sunset. Are businesses expected to pay for this tax forever, even if there comes a point where there is no longer a need for it? The City has also considered including an escalator in the business tax. If this tax were to never expire and automatically increase every year, how will businesses in 20 years ever be able to keep up? A business tax with no expiration date, no accountability and automatic cost increases is a huge overreach.

 

Testimonials

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"Even though there have been glimmers of recovery, travel is still a volatile market, with each variant drastically hurting corporate travel. While the City is considering exempting hotels from this new tax, hotels in all of Silicon Valley rely on corporate travel. Adding a new tax onto companies that do business in the area, particularly larger ones that could be paying hefty amounts under this, will further slow recovery as businesses downsize offices, move out of the area or cut travel budgets to offset the rising costs of doing business. This in turn, will impact both our business and the TOT revenues, which could in the end, offset the benefits of adding this new revenue stream for the City."

 Brayton Gosling
General Manager, el Prado Hotel

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“As a small business owner, it’s hard to make ends meet here in Palo Alto. Our rents and taxes are already among the highest in the Bay Area and nation ­— our community simply can’t afford another business tax of this magnitude. My cafés rely on the community, office workers and residents, including the patronage of larger companies. A new business tax may lead to a reduction in new businesses to fill all the vacancies we currently have and eventually fewer customers to serve. Why come to Palo Alto if it is less expensive to go to a neighboring town?”

Nancy Coupal
Owner, Coupa Café

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“The City wants you to think that this business tax will only affect corporate giants, but that couldn’t be farther from the truth. Small, family-run businesses like mine will suffer as well. Higher taxes will affect businesses of all sizes — when large property owners have their taxes increased, they increase the rent, and they charge small businesses like mine.”

Georgie Gleim
President, Gleim the Jeweler

How You Can Help

We are rallying residents, small businesses and local organizations to tell the City Council that this business tax is an overreach and a bad idea, and we need your help.

 

Can we count on you to join our coalition?

 
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Here’s How I Will Help:

Thank you! We’ll be in touch.