Palo Alto: business tax foes step up campaign

Foes of a business tax ballot measure in Palo Alto are stepping up their campaign with a new "fact sheet" calling the proposal unfair.

"Measure A will create a business license tax in Palo Alto written by the city to benefit large corporations and will unfairly burden our city's small businesses," says the document, paid for by the committee Small Business Against Taxes.

The measure would charge multi-billion-dollar corporations a lower rate per employee than small businesses, it goes on. For instance, manufacturing firms would pay $34 per employee while professional service businesses would pay $95 per employee. And the city's largest corporations will pay lower rates than medium-sized businesses, it says, because of a cap on the size of the tax.

The line of attack is in keeping with the official ballot argument against the tax, which also focuses on the disparity in tax rates between large and small businesses. Both documents have the endorsement of the Palo Alto Chamber of Commerce.

The Palo Alto City Council put the tax on the Nov. 3 ballot in hopes of raising $3 million annually for the city's general fund. If approved, businesses would pay between $75 and $30,000 per year based on their line of work and number of employees, with the majority paying $200 or less. The first payments would be due in 2011.

The official ballot argument in favor of the tax says it would benefit the city's libraries, parks and schools and help
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pay for new infrastructure. It notes that Palo Alto is one of only two cities that do not have a business license tax.

A rebuttal to the argument against the tax combats the claim that the tax rates are skewed. "The tax is more than fair. It will reach lawyers, accountants, venture capitalists and other service providers who don't pay sales tax. They will pay $95 per employee, as compared to restaurants and retail outlets that will pay only $40 per employee."

Many California cities have flat fees for business licenses, while some have employee-based taxes like the one proposed in Palo Alto. Of the two models, Palo Alto's actually charges big corporations far more while charging the smallest companies less.

The tax will go into effect if more than half of the city's voters support it.
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Palo Alto: business tax foes step up campaign
Palo Alto:  business tax foes step up campaign
Reviewed by Merlyn Rosell
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