Business Taxes in San Francisco

SPUR Report

Today San Francisco faces the dual curse of budget woes and economic stagnation. An unfortunate result of the combined impact of national recession, the dot-com crash, and increased public spending, San Francisco 's budget trouble will not be easily solved.

Raising business taxes may be one way to close the gap. But raising business taxes is also risky: raising them too high, or in the wrong way, can potentially drive jobs from the city and hurt the already shriveled tax base

Calibrating the business tax in the right way — balancing the goal of revenue generation with the goal of not discouraging job creation — is of critical importance for the fiscal well-being of the city. This report aims to inform the debate on this critical issue by answering three basic questions:

1. What does the academic literature say on the impact of business taxes on firm location?

2. What kinds of business taxes are the "best" taxes?

3. How do San Francisco 's business taxes compare to those levied in comparable cities?

This report is a literature review, meaning it is not original research. Instead it digests, summarizes, and analyzes a wide range of academic work. 

Brian Klinksiek is a senior in the Urban Studies Program at Stanford University and was a SPUR intern in 2003. After graduation, he will begin as a research associate at Heitman Financial, a Chicago-based real estate investment firm.