How Much Should We Charge Business to Operate in Our Town?
Should There Be a Rational Basis?
Should There Be a Rational Basis?
The City Council has been looking into raising revenue from lots of different sources recently after Sacramento two years took away the Emeryville Redevelopment Agency, formerly City Hall's main funding source. Emeryville is left with drastically reduced revenue but the same old list of required maintenance expenditures and discretionary capital improvement projects. It's caused the Council to think outside the box as far as new revenue is concerned. What was formerly off limits for this Council majority; making businesses pay more including looking at raising developer impact fees the City charges, is now openly being bandied about.
These public investigations into our revenue streams has laid bare just how low taxes are for Emeryville business. When it comes to revenue, Emeryville stands alone; business here pays far less than in neighboring cities. It's the same story across the board: from the hotel occupancy tax to the business tax rate to the real estate transfer tax to impact fees and to outright give-a-ways like the business tax cap which allows the largest corporations in town to pay taxes at a much lower rate than smaller businesses do. It's sort of a Robbin Hood in reverse thing going on.
"We should charge what
the market will bare"
Make no mistake, this 'lower by orders of magnitude' taxation culture at City Hall is not an accident, it's not an oversight; it represents the will of this Council majority....at least up until now.
But besides being plain old bad public policy, this low tax thinking has no rational basis. For rationality to be at play, there needs to be some evidentiary demonstrability in effect. It needs to be measurable. But there seems only to be vague and unsubstantiated ideas of the ambiguous benefits of low taxation for business driving the three person majority. Republican Party folklore about Adam Smith's invisible hand seems to be the animate force guiding this. The only thing missing are the normally ubiquitous 'trickle down' and 'all boats rising' memes being trotted out.
There's simply no good reason to charge so little.
A rational basis argument for how we can set business taxes in Emeryville would take into account what the prevailing rates are plus the value specifically we represent for business. Value can be defined in numerous ways like location, access, crime, resident demographics, government services and the local neighborhood desirability in terms of restaurants and parks and the like. The knee-jerk 'we must keep business taxes low' mantra takes none of this into account. To set business taxes with these factors accounted for would be to levy taxes based on what the market will bare. It represents a rational basis that businesses understands. It's a basis we understand. To put it simply, we should charge what we can get. To charge any less is to give a gift of public money to business that's not warranted.
We charge far less than what Oakland charges. There's something obviously wrong with that.
Another rational basis would be to take into account our 'positives' but charge a little less than what the market will bare. This argument makes sense if we're trying to pump up the business sector in our town due to some previous deficit. But it's hard to make this argument in Emeryville, being so laser focused on attracting business as we have been for the last 25 years or so. The deficit we face can be found in livability, not attracting business. Among the many metrics, Emeryville is below our neighbors in acres of parkland per resident; far below. That's a manifestation of a livability deficit.
But what's impossible is to make a rational argument for what the Council majority has been doing until now: giving away the store. Just watch Council Members Nora Davis and Kurt Brinkman especially. They arrive at each Council meeting with a barely hidden agenda of 'how can I serve Emeryville business today?' At almost every turn they devalue the commons to the benefit of business, especially big business. But the loss of funds at City Hall is getting existentially hazardous. The new paradigm of post Redevelopment is something they're clearly struggling with. When the Council voted to look into raising the transfer tax on March 18, Mr Brinkman almost went out in a blaze of glory; voting NO to even consider allowing Emeryville residents to vote on the idea in November. But the specter of a 4-1 vote on the Council dais, with Kurt Brinkman standing alone against democracy with this vote as he faces the electorate this fall, brought him back. Councilwoman Davis to her credit seems to be taking the financial threat at City Hall more seriously; she's been a bit more pragmatic.
However, while we're busy comparing Emeryville's low business tax guiding principles to Adam Smith and what's going on in red states nation wide, we should consider how American worker's dramatic productivity gains over the last 30 years have not been matched in wage gains. Indeed, wages have been flat or even falling despite labor's prodigious productivity rises. We're still the wealthiest nation on Earth but the plutocrats have pocketed all the gains....done by design.
It's like what's happened to Emeryville during the same time period; as our desirability here dramatically increases, City Hall is stuck. We're not benefiting; we can't seem to enjoy anything that we've worked for. All the gains go to businesses...again, done by design.
It would appear a new majority on the Council is rising up and they're not willing to see the town sink. They're at least now talking about securing enough revenue to keep us afloat. So that's encouraging. But as far as employing a rational basis for determining how to set business taxes in Emeryville, that would require a leopard changing its spots. Rationality in business tax policy here is going to have to wait. It's going to have to be imposed by us...at the ballot box...this November. Kurt Brinkman will be seeking re-election and the idea of raising real estate transfer taxes will also be on the ballot. We're going to have to make the right decisions amid the coming flurry of propaganda from the Chamber of Commerce.