Plan would have imposed 1.5% payroll tax on companies such as Uber, Google and Airbnb, which generate more than $1m in revenues yearly

Nicky Woolf in San Francisco

Tuesday 2 August 2016 15.51 EDTLast modified on Tuesday 2 August 2016 16.20 EDT

San Francisco has voted against a proposal known as the “tech tax” which would have forced the area’s biggest technology firms to fund initiatives to provide affordable housing and tackle the city’s homeless problem.

The tax, which would have been on the ballot in the city in November, would have imposed a 1.5% payroll levy on technology companies that generate more than $1m in revenues a year, including Uber, Google, Twitter and Airbnb. 

Big tech asked to pay their 'fair share' in taxes to help San Francisco's homeless

 

Read more

It was proposed in June by supervisors Eric Mar, Aaron Peskin and David Campos. Supporters said the measure would have raised an estimated $140m every year, which would have been used to build affordable housing and shelters for homeless people. But it failed on Monday after it was rejected by the budget committee of the board of San Francisco’s supervisors.

“As a city, I don’t think we should subscribe to the politics of Donald Trump and the Republicans that they are saying certain people are not welcome here in San Francisco,” said Mark Farrell, one of two who voted to block the measure in the three-person committee, the San Francisco Chroniclereported.

Partly because of the technology boom, San Francisco has become one of the most unequal cities in the US, with its share of homes worth more than $1m growing from 19.6% in 2012 to 57.4% in 2016.

Big tech asked to pay their 'fair share' in taxes to help San Francisco's homeless

 

Read more

That has caused friction between the city’s richest residents and its poorest, as the city which is the locus of America’s most booming industry struggles to cope with the hundreds of people living in tented encampments on its streets. 

One tech entrepreneur, Justin Keller, published an open letter to San Francisco mayor Ed Lee in February voicing his “concern and outrage over the increasing homeless and drug problem that the city is faced with”, in which he called homeless people “riff raff”.

When the levy was first proposed, Feng Kung, an organizer with the campaign group Jobs for Justice, said: “They spend $25,000 per employee per year on perks like free beer and pool tables and massages ... That’s great, but can they spend $1,000 to help the rest of San Francisco survive?”

As it turned out, they could not. Representatives of tech organizations reacted fiercely against the tax, saying that it would suppress growth in the industry that has made the city – parts of it, at least – wealthy beyond the dreams of avarice.

“Our technology industry has been a big part of job growth here in San Francisco,” Farrell, who represents District 2, which includes the wealthy neighborhoods of Pacific Heights and Sea Cliff, told the Guardian last month.

“Targeting our technology sector and making them out to be villains, simply because they’re trying to create jobs and [build] our local economy, is just a backwards approach,” he added.