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Tuesday, August 23, 2011

Council Treachery On Business Tax Cap

Councilman Kurt Brinkman on business tax 
council double-cross:

The city council promised to let the people decide on the November ballot about our big business friendly tax cap but then reneged after they killed a grassroots citizen drive to rescind the unfair tax cap.  The council has taken away the people's right to decide for themselves about this corporate give-a-way tax scheme.

Kurt Brinkman:
Emeryville citizens
must not be allowed
to vote on this.
On July 19th, Council members Kurt Brinkman and Nora Davis convinced their colleagues to reverse a unanimous council vote made in May, to allow Emeryville citizens to decide for themselves about the infamous business tax cap.  The cap, a codified limit that means the most companies pay in tax annually to the city is $117,000 or .08% on the maximum gross receipts of $146 million, is unprecedented in the Bay Area and leaves the smaller businesses in town on the hook for a much higher rate.
The previous unanimous council vote on May 17th, stopped an incipient citizen's petition drive to get the issue before Emeryville voters in November lead by Emeryville resident Scott Donahue and others.  Mr Donahue noted after the unanimous council vote, that because the council had agreed to take up the cause and place the issue on the ballot by fiat, there was no need to continue with the citizen's petition and he withdrew the petition drive.  However, two months later when it was too late to restart the petition drive, Mr Brinkman and Ms Davis moved to reverse the previous council decision and disenfranchise the citizens in November.

Nora Davis (undated photo):
Glad to have derailed
the citizen's drive to 
rescind the tax cap.
Council members Brinkman and Davis never explained publicly why they reversed themselves and why they took away the citizens right to decide for themselves.  Councilman Kurt Brinkman sat down with the Tattler recently to tell his side:

Tattler:  Why do you think it's important for Emeryville to keep the business tax cap?
Brinkman: "Like it or not, businesses shift revenue to avoid taxes.  It happens all the time.  From a revenue standpoint, if we were to get rid of the cap entirely, we might lose everything".

Tattler:  Meaning these corporations might be incensed by such a move and seek their revenge by ordering their accountants to show no taxable Emeryville income?
Brinkman:  "It could happen".

Tattler:  Nevertheless, Emeryville is the only city in the Bay Area with a tax cap on business.  Additionally, the tax rate for receipts under the cap and subject to levy is lower than its neighbors.  If you're concerned about scaring away business, why can't we raise revenue like every other city by getting rid of the cap and then simply keep the tax rate (now at .08%) lower than our neighbors?  Can't we have a low flat rate for everybody and attract and retain business?
Brinkman:  "It's important to separate from other cities.  We need to make sure Emeryville remains a marketable, viable city"

Tattler:  Right now the business tax cap only effects two or three businesses, Pixar especially.  Aren't you concerned that Pixar pays such a pittance with the cap, essentially a much lower tax rate than other businesses in town?
Brinkman:  "Well, if we got rid of the cap it would really have no effect on Pixar, they only paid $8000 last year to Emeryville".

Tattler:  So to protect $8000 from Pixar, you're going to keep this regressive cap in effect?  We're going to get even less from them if we get rid of the cap?  What about other large corporations in town that reap huge benefits from the cap like Novartis?
Brinkman:  "Look, the cap is necessary"

Tattler:  Previously you voted to let the people decide about this.  So why now reverse yourself? Why not let the people decide?  Why did you and your colleague Nora Davis lead a move to disenfranchise the people?
Brinkman:  "No comment".

Scott Donahue, the initiator of the withdrawn citizen's petition on the business tax cap agreed with Mr Brinkman that Pixar, for one, has gotten very creative with sheltering their money from City Hall's grasp.  Hinting that an audit of Pixar's books might be in order, Mr Donahue said, "Multi-national corporations are always going to find a way to realize their revenue where ever it is most beneficial to them. So a cap on Pixar will probably not have much effect on them, as they demonstrated with their $108,000 tax refund they recently got from the city".
However, Mr Donahue said that the city shouldn't allow itself to be so manipulated and any creative fiscal legerdemain by Pixar should not be held up as a reason to give up on tax fairness; to wit he noted, "We ought not have a special law to the benefit of only one or two corporations in town, it's essentially a handout to multi-billion dollar corporations that's totally unnecessary.  The rest of Emeryville's businesses are in effect subsidizing these few large corporations".


  1. Boy, Brinkman's got Pixar's back, hasn't he?
    His "no comment" line here about stopping the residents from voting will go down as another quotable quote from Emeryville's "leaders".

  2. Ok, just two brief comments:

    1. Is our business permit tax ordinance SO poorly written that large companies can "shift" their revenue nexus to another location? Is there NO protective clause in our ordinance to "apportion" a fair share of that revenue back to Emeryville, even though "fictiously" (but legally?) booked by the business elsewhere?

    If so, SHAME on the City Council for not closing this loophole.

    2. Here is the elephant in the room. If corporations are going to duck their fare share of a business tax, while letting little Clif Bar pay full tab, WHY DON'T WE HAVE A PAYROLL TAX? San Francisco does. Maybe for the sake of fairness a business should get a credit for one against the other, so they don't double pay.

    Finally, why is the City Council so scared to get business, resident, and other "stakeholder" inputs on issues like these?

    If Pixar got a $108,000 refund on their business tax, something is rotten in Denmark. I bet they (or their landlord, who is probably lease-bound to pass the savings back to Pixar) are also getting a reduction on property taxes due to the depressed economy. Yet their revenues are booming! Where is their sense of civic responsibility towards Emeryville?

  3. This interview is an embarrassment. This Brinkman isn't capable of reasoning, obviously. How did he get elected? He must have had some corporate backing. The City Council are sycophants for Pixar. It would look much different if they had the residents backs as the first guy says.

  4. Yeah, thats Brinkman all over.
    He's really good at NOT answering questions.