Commercial rent tax for housing and homelessness services

Propositions C and D are competing to increase the tax on commercial rents, currently set at around 0.3 percent for most businesses with gross receipts of at least $1 million. Prop D would levy an additional tax of 1.7 percent tax; the estimated $70 million would fund general city services ($1.5 to 3 million per year), subsidized housing (55 percent of the remainder), and homelessness (45 percent of the remainder).

I favor D over C for two reasons: it’s more measured in its tax increase; and housing and homelessness are more dire needs which can’t easily be addressed by other policies.

San Francisco’s housing shortage is a crisis. Prop D’s $67 million for affordable housing and homelessness could also fund a cash transfer, say of $670 for each household with income below $50,000. We even have a mechanism for this: San Francisco is one of two cities to have a local version of the Earned Income Tax Credit, one of the country’s most effective antipoverty tools. Ours is called the Working Families Credit, and its funding has dried up to about $150,000 per year.

If we’re going to spend money on in-kind benefits, there’s a good case for housing over something like childcare. For one, subsidized housing projects can infuse socioeconomic diversity into areas in a way that normal market forces might not. In some cases, subsidized housing can also get approved more quickly and easily than market-rate housing (though this can go the other way, too), increasing the total housing stock and reducing rents. And since homelessness programs are often partially about healthcare (mental health and addiction), their funding cannot be replaced by cash transfers.

While Prop C’s tax is unnecessarily aggressive and funds services already provided by a functioning market, Prop D provides badly needed funding for housing-related projects, and does so with a responsible revenue stream. It deserves the sole “yes” vote of the two.