City of Santa Clara Voted to Raise Taxes at a Reduced Rate

The City of Santa Clara voted to place a head count tax measure on the November ballot. After more than 3 hours of discussions, on July 12 Council voted 5-2 (Mayor Gillmor and CM Watanabe dissenting) to place a flat $45 per employee head tax on the ballot. In this proposal, all businesses would be charged a flat fee of $45 to ease administration and compliance. This proposal will include a cap of $350,000, CPI with 5% increase, and every business paying the same per employee. This means larger businesses would not have the burden of paying higher head count tax as was proposed by staff. The original proposed revenues were estimated at $9.8 million, but the proposal passed will generate roughly $6.0 million.

Implementation start date will be in July 2023 with a rolling implementation and the rental unit will be a flat $15 per unit. Businesses that will be eligible for a subsidy are:

Employee Range Subsidy Per Business

0-4: $30

5-9: $75

10-19: $100

20-49: $200

Staff originally presented a progressive tax that would have raised over $9 million. I was requested by the City Council to attend the subcommittee managed by Councilmembers Chahal, Park and Hardy. The working task force also included Santa Clara Chamber of Commerce, SVLG, and members of the community. After several meetings, the Council Subcommittee reduced the total dollar amount generated to $6 million from $9 million and reduced the impact to larger companies by creating a flat $45 rate to each employee.

About NAIOP Silicon Valley:

Edesa Bitbadal, Chief Public Policy Strategist for NAIOPSV, prepares the Public Policy Update, like the one above, for our members and partners.  To learn more about the various taxes and public policy perspective, please contact Edesa Bitbadal.