The San Francisco Board of Supervisors gave initial approval today to legislation that would exclude stock options from payroll taxes paid by companies in the city.
The ordinance, proposed in March by Supervisor Ross Mirkarimi, is the latest legislation passed by the board to address its 1.5 percent payroll tax, the only one of its kind in the state.
Some supervisors are worried that the policy could cause businesses to consider leaving San Francisco or reject the idea of starting them in the city.
The ordinance approved in a 7-3 vote today would provide a six-year stock options exemption for companies in the city.
Companies often use stock options as a form of compensation because they become lucrative once a company goes public and sells stock.
The proposal would put a cap of $750,000 on the amount of taxes a company would have to pay from stock options.
Mirkarimi said the legislation allows the board to see “with our toe in the water, what it might look like to overhaul our business tax structure.”
Supervisor Mark Farrell had proposed dueling legislation that sought a permanent ban on the tax on stock options, and he asked for a four-week delay on a vote on Mirkarimi’s ordinance.
“I don’t think we should be dealing in half-measures here,” Farrell said.
Farrell’s proposal to delay the vote was denied by the board, and he, Sean Elsbernd and Carmen Chu were the three supervisors to vote against Mirkarimi’s proposal. Supervisor David Campos was absent from today’s meeting.
The legislation, which will come in front of the board again next week for final approval, comes after another piece of legislation targeting the city’s payroll tax was passed by supervisors last month.
The board approved a six-year payroll tax exemption for the microblogging company Twitter and other businesses that move to certain parts of the city’s Mid-Market and Tenderloin neighborhoods.
The company announced days later that it had signed a lease to move into a building on Market Street between Ninth and 10th streets.
Dan McMenamin, Bay City News