Marc Benioff, billionaire cofounder of Salesforce, was the top political contributor in San Francisco elections this year. He gave a total of $8.1 million, most of which went to supporting Prop C, a new corporate tax to create a homeless fund.GettyA San Francisco ballot measure addressing homelessness that turned into a national “Battle of the Big-Tech Titans” passed with 60% of votes, bringing to an end (for now) a very public squabble between some of the richest billionaires on Earth.
Known as Prop C, it will raise an additional $250 million to $300 million in corporate taxes annually—the largest tax increase in city history—for a fund dedicated to solving the homeless crisis in San Francisco. Only companies whose gross annual receipts surpass $50 million—around 400 companies, or 3.1% of all companies headquartered in San Francisco—will be taxed at rates of 0.175% to 0.69% on gross receipts. Businesses with more than $1 billion in gross receipts would pay another 1.4% in payroll expense taxes; the tax applies only to business generated in San Francisco.
Over a year in the making, the proposed tax is the result of a collaboration between various local organizations that focus on helping the homeless, including GLIDE Foundation, the Coalition on Homelessness, the Mental Health Association of San Francisco and the Affordable Housing Alliance. However, what started as a grassroots voter initiative became a tech elite political battleground as billionaires like Marc Benioff of Salesforce and Jack Dorsey of Twitter and Square took to debating the measure 280 characters at a time on Twitter.
At 10:40 p.m. PST on Tuesday night, when it seemed likely that Prop C would pass, Benioff—the lone billionaire who supported the new tax—fired off a victorious tweet: “Let the city come together in Love for those who need it most! There is no finish line when it come to helping the homeless. Thank you amazing supporters of Prop C!”
An hour later, the No on Prop. C campaign released a statement stating the tax ballot had failed to earn the two-thirds voter support necessary “for San Francisco to ever see a penny that Proposition C promised.” Since it was not elected officials but voters who put the proposed tax on the ballot, the ballot measure needed two thirds of the vote to prevent further debate. The “No” campaign alluded to future litigation that would stop money from ever being allocated to a homeless fund.
In early October Benioff came out in staunch support of the proposed tax for a homeless fund, which would nearly double the amount of funding that the city currently uses toward services for the homeless. His $13 billion (revenues) company would pay an additional $10 million in taxes as a result. The Salesforce cofounder treated Prop C as if it were a national campaign, giving interviews on CNN, writing an op-ed for the New York Times and gathering support from high-profile celebrities who were sometimes local (rapper G-Eazy from Oakland) and sometimes not (singer Jewel, hailing from Alaska).
A gaggle of billionaire opponents of Prop C arose in response. The first was Jack Dorsey, cofounder of Twitter and mobile payments app Square, who responded to one of Benioff’s Prop C tweets with his own tweet: “I want to help fix the homeless problem in SF and California. I don’t believe this (Prop C) is the best way to do it.”
This set off public sparring between Benioff and Dorsey, with Benioff asking Dorsey what he’s done to help alleviate homelessness in San Francisco. Other billionaires opposed to Prop C soon also joined the debate, including Patrick Collison, the CEO and cofounder of online payment processor Stripe; Mark Pincus, cofounder of social game maker Zynga; and Michael Moritz, a venture capitalist at Sequoia. Those on the opposition said the proposition lacks accountability and a clear roadmap for where the tax dollars would go. Benioff now calls the much-publicized debate “a gift from god.”
The billionaires against Prop C contributed a total of $325,000 to fight the ballot measure, and their companies spent just under $500,000, according to data compiled by the city government’s Ethics Commission agency. These figures are dwarfed by the spending by Benioff and Salesforce, who are the top two political contributors in San Francisco elections this year. Salesforce contributed $6 million, all of which went to a committee supporting Prop C. Benioff contributed another $2.1 million to support the passage of the new tax.
Benioff, who could practically be mistaken for San Francisco’s homeless czar, continued to argue with both Dorsey and Pincus on Twitter over the ballot measure in the days leading up to the election.
The only Bay Area native among the billionaires weighing in, Benioff decided to support Prop C after reading a local government analysis put forth by the Office of Controller on the proposed tax in late September that showed that the economic impact of the tax would be minimal while the potential social benefit would be high, according to a source close to Benioff.
The issue got more complicated when San Francisco mayor London Breed came out in opposition against Prop C on October 5. The mayor gave a slew of reasons as to why she opposed Prop C, including a need for an audit of the $300 million that the city already spends on homeless programs, fears that businesses would leave San Francisco as a result of the tax, and that the influx of tax dollars would prevent state and federal money from helping to solve homelessness.
Jennifer Friedenbach, executive director of the Coalition on Homelessness, who helped put Prop C on the ballot, says Mayor Breed’s arguments are moot. She says audits have been made in the past and points to the support of officials like Representative Nancy Pelosi and Senator Dianne Feinstein for Prop C as a sign that it would not get in the way of state and federal funding if it came their way. “We can continue to wait around for the state or federal government to step in, but we’ve already been waiting a long, long time,” Friedenbach says.
Friedenbach adds that Mayor Breed’s reasons seem to contradict the platform she ran on, which included fighting homelessness. Asked whether Breed, who faces reelection in two years and who Stripe’s Collison called the “likely next California governor” in his statement against Prop C, is opposed to the proposition because of potential future campaign dollars, Friedenbach demurred. “She needs to answer those questions for herself,” she says. “But she’s making a lot of decisions and hearing from a lot of her financial contributors whose bottom line will be hit from this.”
A representative for Mayor Breed did not reply to a request for comment.
Based on the Controller’s report, San Francisco’s homeless population rose approximately 20% from 2007 to 2017. Prop C requires that 50% of the new funds be applied to secure permanent housing for homeless people and 25% of funds be used for mental health services designed for homeless people. While the proposed ballot was on track to pass as of Tuesday night, supporters hoped for a two-thirds majority to avoid potential lawsuits down the line that may prevent the city from implementing the new tax.
Dorsey and Collison, the billionaires with fintech companies that would face a higher tax bill under Prop C, have been at the forefront of the opposition, based on dollars contributed against the proposed tax. Many of the other tech companies that would be affected by the new tax, have mostly kept quiet. A spokesperson for Lyft, which gave $100,000 to a committee that opposes Prop C, according to public filings, offered the following statement: “We support Mayor Breed, Senator [Scott] Wiener, and Assemblymember [David] Chiu in implementing approaches that most effectively address homelessness.” A spokesperson for Uber declined to comment for the story and the company neither gave money for nor against the proposed tax. Airbnb could not be reached for comment.
“For CEOs who are supposed to protect the bottom line, them staying out of it and staying neutral is a big deal,” Friedenbach says. “It says they’re not interested in trying to stifle this movement that’s caught fire.”