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Committee backs resolution urging state to let cities consider local income taxes; vote splits 2-1
Summary
The committee voted to forward a resolution urging state lawmakers to repeal a prohibition on local income taxes so jurisdictions could craft progressive local options; the Controller's Office estimated a 0.5% tax on incomes over $1 million could yield about $62 million. The motion passed the committee with two ayes and one no.
The Government Audit and Oversight Committee voted March 15 to send a resolution to the full Board urging the California Legislature to amend Revenue and Taxation Code section 170.041.5, which currently prohibits local jurisdictions from collecting personal or corporate income taxes.
Supervisor Paskin, the resolution's author, framed the measure as creating "a menu of options" for future local consideration and thanked Assemblymember Phil Ting for introducing a parallel Assembly bill (AB 1007). "This is a resolution urging the state legislature to amend the California Revenue and Taxation Code," Paskin said, noting the item had previously fallen one vote short at the full Board.
The Controller's Office's Carol Lou provided a preliminary revenue estimate: a 0.5% tax on incomes above $1,000,000 would generate roughly $62,000,000 based on Franchise Tax Board data for tax year 2014. Lou emphasized the estimate is preliminary and scalable depending on the rate and thresholds chosen.
Public comment included support from Peter Strauss of San Francisco Transit Riders, who said the resolution does not endorse a specific proposal but creates a progressive option for the city. Dave Marin urged that if local income taxation is enabled, the state should help administer it (adding local brackets to state returns) and suggested local negative tax brackets for low-income households to offset regressivity elsewhere.
Roll call: President London Breed recorded a "no"; Supervisor Peskin and Chair Jane Kim recorded "aye." The clerk reported two ayes and one no; the committee forwarded the resolution to the full Board with a positive recommendation.
Why it matters: If the state amends its code, San Francisco could consider progressive local income taxes to fund transportation, homelessness services and other programs, subject to voter approval and state law constraints. The committee asked for future substantive analysis and public debate as policy options are refined.
Ending: The committee forwarded the resolution to the full Board with a positive recommendation and requested further study and public engagement on potential tax designs and administration.
