Six days before the San Jose City Council was set to vote on a sale of downtown land to Google, a cheerful headline tops the local section of the Mercury News: “Tech leaders donate $20M for housing.” The subhead names our heroes: “Cisco, LinkedIn and Pure Storage are the latest companies to help ease the crisis.”
Hailing this donation as “a step forward for activists who have long been urging Silicon Valley, and its money, to take a more active role in solving the region’s drastic housing shortage,” the Mercury News does not mention that with over 7,000 homeless residents in Santa Clara County, and growing, and a cost of over $600,000 to build a single unit of affordable housing in the Bay Area, the cost to eradicate local homelessness is several billion dollars.
Seldom does the Mercury News provide context for corporate donations. The cost of solving the housing crisis dwarfs the relative pittance the tech behemoths are willing to give, and the behemoths’ profits dwarf the cost of housing every homeless person many, many times over. Until last year’s corporate tax cuts, Silicon Valley’s tech behemoths stashed immense piles of idle profits in offshore accounts, waiting for a tax holiday. Now, they dribble out tiny donations as exercises in public relations.
Consider Cisco’s PR strategy. After stashing $67 billion (with a B) in offshore profits from last year’s corporate tax cuts, Cisco pledged to donate $50 million (with an M) towards local homelessness over five years—less than 0.1 percent of its offshore profit repatriation—spinning it as “ending homelessness.”
Cisco is perhaps our most generous tech behemoth. The most miserly is the largest—Apple, which stashed a quarter of a trillion dollars (yes, reader, with a T) offshore before the tax cuts. In July, Apple pushed back against a very modest employee tax before the Cupertino City Council, supported by over 70 percent of Cupertino residents, that would have cost Apple only $10 million annually, or 0.004 percent of its overseas pre-repatriation offshore profit stash, or about 0.2 percent of its annual profits. A unanimous city council voted against it. Apple is notoriously aggressive in fighting any and all forms of taxation, with nearly 500 property tax appeals pending in Santa Clara County challenging $5.4 billion in value.
After the vote, Cupertino Mayor Darcy Paul played pretend with his constituents, claiming that instead of the tax, Apple had “promised” to maybe possibly thinking about paying for a “hyper-loop” for Cupertino at some unspecified later date. Raise your hand if you’ve ever ridden a hyperloop!
Apple’s heavy-handed approach to Cupertino’s diminutive tax proposal—the size of an unnoticeable rounding error on Apple’s balance sheets—only makes sense if Apple foresees a slippery slope to an egalitarian future where corporate taxes finance housing and transportation infrastructure.
The Prop. C Revolution
Last month, over 60 percent of San Franciscan voters approved Prop. C, a local measure to tax tech behemoths—it only applies to businesses with over $50 million in gross receipts—that will raise over $300 million annually to fight homelessness. Voters ignored the fretting from Mayor London Breed, most San Franciscan politicians, most of the business community and the San Francisco Chronicle about the impact a tiny tax might have on enormous corporations.
Let’s do the math: given that Cisco’s $50 million donation to “end homelessness” is a $10 million donation per year for five years, Prop. C is the size of about 30 Cisco donations annually.
Traditionally, politicians in the mold of Mayor Breed, or Mayor Liccardo, and their power brokers, have united to support sales tax increases, the cost of which is spread out among corporations, the wealthy, the underpaid and overworked, the rent-burdened and the homeless. Prop. C, in stark contrast, only touches money from businesses with $50 million or more in revenue. You can imagine which one our corporate leviathans prefer.
In Santa Clara County, Carl Guardino, CEO of the Silicon Valley Leadership Group (SVLG), spearheads these sales tax initiatives, enjoying much success on these challenging campaigns that require a two-thirds vote. He has managed or co-managed at least six campaigns, resulting in roughly $20 billion for local infrastructure projects.
In recent years, the contradiction of Silicon Valley has become obscene: very large tech profits juxtaposed with the homeless people and an underpaid working class. As a corporate functionary, the purpose of Guardino and the SVLG is to muddy the waters as to who should be taxed and for what so that corporate leviathans can continue taking advantage of a broken system while the homeless languish in the streets in one of the richest cities in the history of the world.
Earlier this year, the Mercury News presented Guardino’s bad metaphors about the public’s reaction to Google’s desire to purchase land in downtown San Jose: “Some see private enterprise as a tiger to be shot. Some see it as a cow to be milked. Some see private enterprise for what it is, a strong horse pulling a steady wagon.”
A fall edition of Content magazine featured a profile of Guardino, whose salary is just shy of $800,000, in smarmy splendor, touting his “nonprofit advocacy group” where “people are mission driven rather than monetarily driven.” For Guardino, it isn’t the money that matters, it’s the fact that he’s saved billions for large corporations from the rapacious fingers of a public hungry for things like shelter.
Mission accomplished, Carl! But not for long. San Francisco’s Prop C has provided a template for San Jose or any city beset by leviathan corporations: ignore the power brokers and the big money boys, ignore the local paper gutted by its private equity owners, ignore the bought and paid for politicians crying that the big bad public wolf might kill the goose that lays the golden egg. Tax the corporate behemoths.
The Google Campus in Downtown San Jose
What will happen to San Jose now that it sold downtown land for Google to build a campus for 25,000 employees? Santa Clara County already has a housing shortage due to anemic housing construction and tech’s prolific job creation. Between 2010 and 2015, Silicon Valley created ten new jobs for every new unit of housing. Predictably, well-compensated corporate employees are driving out lower-income residents.
Google’s campus proposal illustrates the disconnect between San Jose’s political establishment and its residents, best demonstrated last night when the City Council unanimously voted to sell the land to Google after evicting the public from council chambers, the first of many evictions to come from this land sale. The establishment’s vision, inscribed in the City’s “Envision 2040” General Plan, prioritizes job growth. With its goal for 382,000 new jobs but just 125,000 new housing units over the next two decades, San Jose’s nonsensical General Plan is deaf to the plight of San Jose’s current tenant population, nearly half of whom are rent-burdened. Google’s downtown campus, and Envision 2040 generally, will further squeeze renters and further enrich landlords.
Liccardo’s main priority as mayor has been to spur job growth in San Jose. Improving the city’s fiscal health means adding more jobs than homes, but since we’re in a housing crisis, he must at least pretend to care about housing costs. In October 2017, Mayor Liccardo stood on a dais in Japantown and announced a goal to build 5,000 residential units per year, including at least 10,000 affordable units over the next five years.
A year later, Liccardo has just 64 new affordable units to show for it.
The charitable view of Liccardo’s housing record as mayor is that he’s ineffective, constrained by the city’s fiscal health that necessitates bringing in more jobs. The more perceptive view is that Liccardo, Guardino’s cyling pal, simply does not care about the plight of San Jose’s renters and homeless. He has opposed stronger rent control and rezoning land from commercial to residential, except when requested by his donors.
The simple fact of the matter is that the land is too expensive for private developers to build a sufficient amount of affordable housing. By now it’s obvious: there is no way to build 10,000 affordable units absent a significant amount of new public revenue dedicated for housing. Since Liccardo does not support taxing businesses, he will never offer a credible affordable housing plan. When a San Jose State University professor proposed a ballot initiative to raise $40 million (just an M) by updating the city business tax in 2016, Liccardo kept it off the ballot by agreeing to a smaller tax increase instead.
And now, Liccardo has ushered in a sale of prime downtown land to Google for $110 million (M)—for context, Google’s offshore stash last year was $100 billion (B)—without any requirement for the company to pay for affordable housing.
The people of Santa Clara County have arrived at a fork in the road: we can either tax tech to build desperately needed housing and transportation infrastructure, or we can recommit to a broken status quo, a two-tiered society affordable for corporate employees and Prop. 13 beneficiaries that consigns blue-collar employees to commute hours each day to and from their homes in the Central Valley, wasting away days of their lives.
In a more egalitarian Silicon Valley, corporate taxation replaces sales tax initiatives and corporate philanthropy, and the SVLG would cease to exist, a relic of a bygone era when we financed infrastructure according to preferences of our corporate leviathans.
Until then, which city council member will be the first to propose a gross receipts tax on San Jose businesses with over $50 million in annual revenue?
Tom Skinner is a nonprofit housing attorney, yoga instructor and a renter who lives in downtown San Jose. Opinions are the author’s own and do not necessarily reflect those of San Jose Inside. Send op-ed pitches to [email protected].