Nancy Pyle Pushes for Tax Change

As city staff studies a number of proposals on how to fix San Jose’s budget crisis, one idea in particular is likely to have some local business owners up in arms. Councilmember Nancy Pyle submitted a memo at Tuesday’s council meeting that recommends modifying the business tax for establishments that offer services. These businesses are taxed by the number of employees they have rather than sales.

In her memo, Pyle asks City Manager Debra Figone to conduct polling to see if there would be public support for changing the business tax to a percentage of gross receipts rather than the number of employees. Any change would require voter approval, and Pyle wants to have a measure on the November ballot.

Pyle writes that a 1 percent business tax would be “the equivalent to the amount the City would have received if normal sales taxes were collected” from a business. She is also asking Figone’s office to conduct polling to see if there is support for making the tax rates higher at 1.5 or 2 percent. Businesses that would be affected by a change in taxation include beauty salons, educational services and daycare.

“I think it’s one more thing to look at as a component to help us to have an array of choices,” Pyle said Thursday. “We have to find a way to bridge the gap with reduced sales tax, reduced property tax.”

Figone’s office projects the city is $115 million in the red for the upcoming fiscal year.

Much of the debate in dealing with San Jose’s current budget crisis, as well as deficits expected in future years, has focused on pay cuts and pension reform. Pyle’s proposal is one of only a few ideas to create revenue.

Figone’s fiscal reforms plan includes a sales tax increase of a quarter-cent, a municipal water system tax on gross receipts, a disposal facility tax increase and a business tax increase.

Mayor Chuck Reed asked city staff to explore possible taxes in his proposal for fiscal reforms, but there were no specifics. Councilmember Rose Herrrera said including that language was pivotal in her support of Reed’s proposal.

Pyle said she would not have been part of the 8-3 majority that directed city staff to study Reed’s proposal—which wants to declare a fiscal and public safety emergency—as well as others if her memo had not also been included. In fact, the councilmember said she has no intention of supporting the mayor’s ideas to alter employee pensions in a June 21 council session.

“I certainly won’t vote for it in the end, mainly because we would be doing some illegal activity,” Pyle said. “The legal department needs to rein in big time some of the mayor’s proposals, i.e. you can’t change vested rights.”

The mayor is contending that the city charter allows for retirement benefits to be lowered to a minimum level, but some measures would need to be put on the ballot to achieve all of the changes desired.

Click here to read Councilmember Nancy Pyle’s proposal for a change in business tax.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.

26 Comments

  1. Wow!  just pile more taxes and fees on small businesses and working class people.  These businesses can’t survive more taxes and fees.  So the over all amount of jobs and tax revenues will just drop even more.

    Unreal and really sad

  2. The Pyle Proposal is interesting as a proposal and as an example of cleverly worded proposals like Measures I (new city hall), and last year’s V and W.  And it is important that we give the text of the Pyle Proposal a close reading to avoid claims of not having understood it later on.

    As an example of misdirection, it indicates at first that only businesses operating in spaces that used to be sales tax-paying enterprises will be paying this new tax.

    She says she only wants to “modernize a small portion of the City’s Business Tax structure to reflect the conversion of traditionally used retail space to space for businesses offering personal services which are not subject to sales tax.”

    But in fact such a new tax, while replacing the existing business license tax on businesses (based on number of employees) will adopt a gross receipts tax on all personal services businesses.

    She indicates that this would apply to “manicures and pedicures, tattooing, hair styling, spa services, pet daycare, educational tutoring and education enrichment services” on the theory that these businesses “currently occupy space traditionally occupied by retail establishments selling goods subject to sales tax, not space for businesses offering tax exempt personal services.” 

    When she says “tax exempt personal services,” she is not claiming they pay no business license tax, but probably that they do not collect or pay sales taxes.  This is typical of city hall in its memos and legal opinions…to point in one direction, and to draft legislation that goes in another direction.

    She closes with: “The proposed gross receipts tax would operate the same way and will apply to all
    personal service providers regardless of the amount of services they provide.”

    So we see that Pyle memo’s misdirections come to an end at last.  It’s not about her concern for the changing nature of small businesses, nor is it her claim that the Internet is pulling taxes out of the system.

    It’s a straight-up new tax on all businesses in San Jose including law firms, private doctors, medical services like ultrasound labs, architects, and every business in town that pays the business license tax at this time.

    ==================

    See what fun it is to analyze these city hall memos? Whoever drafted the Pyle Proposal didn’t think we were smart enough to read it carefully.

    I kind of like the idea of seeing the fat cat attorneys around town paying their fair share for once to support our roads and infrastructure.  So I would probably support it, perhaps to alert the upper income service providers that they, too, can be put up for auction on the city’s behalf. 

    They need slapping around to let them know that spending (not that on public safety personnel) is vastly out of line, and that they will have to dig deep to complete major new documentation on their gross receipts and pony up a fair contribution to the city.

    The only drawback is that the city would seize on this new tax and it would be 3% in no time, then 5%, and can you say 9%? Just because that’s close to the sales tax rate.  That’s how it goes beneath the big dome in San Jose.

  3. > Pyle’s proposal is one of only a few ideas to create revenue.

    Looking for new revenue in the land of ten thousand tax-and-spend Democrat politicians is like looking for a green blade of grass after a plague of locusts.

    What was she thinking?

    • Visualize,

      C’mon, she wasn’t thinking anything.  Do you actually believe that Pyle can think her way out of paper bag, much less write this proposal?  More likely, Chuck-O told our crack City Attorney to write it.

  4. A little off topic:  The Mercury News posted Mr. Kalra’s drunk driving police report.  The report lists two passengers in the car when Mr. Kalra was arrested.  The passengers are Kathy Kim Duong and Hoa Thai Nguyen.  Searching Google I found Congressman Mike Honda has a staff member named Hoa Thai Nguyen (known as Mike).  Are they the same person?

    Mr. Kalra has received much praise for taking responsibility for his actions. Why have San Jose residents not been told the full story about these passengers? Mr. Kalra was endangering more than himself that night.

  5. First, we should begin by cracking down on the businesses in Madison’s district, particularly in the Century Asian Mall on McLaughlin and Story who do not ring up their purchases, and therefore do not pay the proper taxes.

    As a frequent diner at the food court, typically you order, and they press a button for the register to open, and put the money in.  The sale is not rung up, and therefore, no taxes are paid.  I did a simple survey and watched each business.  75% of them did not ring sales, but just opened the cash drawer.

    This needs to stop.

      • Or how many restaurants are paying their staff less then minimum wage.  I believe the going rate for an illegal immigrant Asian food service employee is $3 an hour plus tips.  Makes you wonder about the price of rice. When I was still living in the states I stopped eating at Asian restaurants unless they were too popular to go unnoticed. If you don’t think there are sweatshops in America think again.  Pretty much any SE Asian Restaurant abuses their employees one way or another by preying on their fear of deportation.  The owners take full advantage of the fear, and tell them the usual crap about not trusting Americans (actually they refer to us as foreigners even in the U.S.) and to stick with their own kind we’ll take care of you, we are like family etc. etc. etc.  But these people don’t vote either so who cares.

    • It’s what you call the underground economy. In Asia, there’s the government GDP and the underground economy – taxes not recorded and collected. That’s is why cash is king in these Asian dominated districts.

      Btw, I like them V sandwiches. They are good ! I wish they have them in UCLA.

      Just Youtube my name Alexandra Wallace. You see lots of asians in UCLA by the way (thus UCLA).

  6. I’m amazed on how the government loves to raise taxes on the people or companies, they tax, tax, tax and then they spend spend spend after they realized what they have done, then it’s our fault because they are over budget.
    Here is an idea why don’t we sell the naming right’s:
    For example HP Pavilion: 
    The Sharks and the city of San Jose share $3.13 million annual payment, through 2015
    How about the
    Convention center maybe ???? Apple Convention Center
    Cesar Chavez Park maybe ??? San Jose Shark Park remove the turd and replace it with a shark.
    San Jose Airport…. Rename it, I wonder how much one would spend to name the airport after them
    Her are some other examples
    Royal Philips Electronics paid $180 million over 20 years, or $9 million annually, to stamp Philips Arena on the Atlanta Hawks’ home. And American Airlines paid $195 million over 30 years, or $6.5 million annually for Dallas’ hockey and basketball palace center.
    It’s a drop in the bucket for this bleeding city, yea right

    • > San Jose Airport…. Rename it, I wonder how much one would spend to name the airport after them

      Maybe we could call it Generic Mediocre Democrat Politician International Airport and collect money from several campaign funds at the same time.

      They could go in together and make it sort of a “group buy”.

  7. Nancy Pyle pushes for tax change?

    Don’t you mean diaper change.

    “Fire-d up” needs a diaper change.

    “Officer X” needs a diaper change.

    “Tom” needs a diaper change.

    “Ernest Beginner” needs a diaper change.

    “Anon 4 now” needs a diaper.

    Public employee unions made a mess in their diapers, they need the taxpayers to change their diapers.

  8. Nancy where is your common business sense – really disappointed – really dumb or desperate idea – raising taxes is never solution to overspending while wasting millions tax dollars on non essential spending and wasteful political payback ego projects

    San Jose’s ” Spent and Then Tax ” City Councils have grossly mismanaged city government for years by spending money they don’t have, providing little services with less service to come while wasting 100’s millions on unnecessary ego projects, tax money losing downtown and culture of political paybacks

    Now the ” Bedroom Capital of Silicon Valley” with
    ss
    – with highest tax cost of doing business
    – less jobs per resident
    – 1000’s businesses left SJ for other SV cities
    – most difficult, costly and time consuming city approval process

    now wants to ” modernize” business taxes by raising tax higher because they will not control spending and have not been able to attract sufficient jobs ( $ 30-60 mil ) or adequate retail stores ( $20 – 40 mil ) for residents so loses $50-100 million year in tax revenues to other local cities  

    San Jose will add a few words to it’s revised city motto

    ” Mismanaged Business Unfriendly and Bedroom Capital of Silicon Valley”

    Recall entire City Council and City Manager for gross incompetence and mismanagement  

    A New City Council unless they are professional politicians from outside of Sanu Jose passing through selling out San Jose to get higher office ( like Ron Gonzales was ) couldn’t do worst

  9. Councilmember Nancy Pyle’s idea to implement a gross receipts tax will certainly send companies big and small heading to Milpitas and Santa Clara…

    http://bit.ly/igOyuh

    Where’s the Chamber of Commerce when you need it?

  10. There are several items that should be on the November ballot.

    First amongst them is a way to streamline and or to quicken the removal of Members of the San Jose Council, including the Mayor.

    The current Members of Council, all of them, are some of the most incompetent administrators on the planet.

    The only act these bafoons complete with any regularity is to “pander to the uniformed public” via city hall televison and the San Jose Mercury News.

    The “uniformed public”, who do not participate in their own democracy, by not keeping informed, go to Council and especially Council committee meetings; do not speak and write their opinions, deserve whole heartily to get the government they so aptly deserve.

    Yet, these same morons, our beloved citizens, these patron saints of “know it all” politics,then sit in abject bewilderment and then rush to judgement as if they understand what is going on at city hall and give commentary as to the reason or reasons why the City of San Jose is falling apart.

    The reason why the City of San Jose is becoming a fourth world latrine is due to the idiots on the City Council and the lack of a mechanisme to swiftly remove these clowns and clownettes from office; with reference to obeying protocol and the law.

    Uniformed, non participating goofball citizens not withstanding.

    David S. Wall

    • > The “uniformed public”, who do not participate in their own democracy, by not keeping informed, go to Council and especially Council committee meetings; do not speak and write their opinions, deserve whole heartily to get the government they so aptly deserve.

      > Yet, these same morons, our beloved citizens, these patron saints of “know it all” politics,then sit in abject bewilderment and then rush to judgement as if they understand what is going on at city hall and give commentary as to the reason or reasons why the City of San Jose is falling apart.

      You talkin’ about me?

      What’s the point of going to a city council meeting when the SBLC and the POA go behind closed doors and make the city “an offer they can’t refuse”?

      As far as I’m concerned, any supposedly democratically elected government that “negotiates” SEPARATELY with a special interest like a public employees labor union defeats the whole purpose of democracy and completely undermines confidence in government.

      It’s not that the public is “uninformed”.  It’s that the public is powereless. We have been pushed aside and screwed over by the insider special interests.

      • “You talkin’ about me?”

        He could have been “talkin’” about ANEEE-BODY”, but evidently you are seeing your own self in what he has stated, so if the shoe fits….

  11. It looks like Nancy Pyle is showing the kind of leadership that makes her a great candidate to go to Washington or Sacramento.  Her hands on approach to fixing structural deficits and unsustainable entitlement (pension) systems rightfully puts the burden on the greedy and wealthy folks of our society who have been cheating us public goods consumers out of our fair share of their gross revenue.

    Please…send Nancy to Sacramento or Washington quick, they need her there more than we need her here.

  12. Take Nancy Plyle and put her on the street outside that fancy city hall with a cardboard sign and cup.  Collect money for the Capital of Silicon Valley.  That will put this city on the map.

    Then in November we vote that all the politicians and managers are assigned such street duty.  It will make worldwide news and attract tourist and income.

    But we also put on the ballot a politician tax.  Up to 10 percent of their gross income, including all benefits.  The money of course would be used to fix pot holes.

  13. I own my own company and operate in downtown San Jose.  I have 2 more years on my lease.  If this passes I’ll move my business to another city such as Santa Clara, Campbell, Sunnyvale, Los Gatos, etc.  Drive business away … not smart.

    Now, I’ll rant a little more.  Let’s look at the logic of payroll taxes with this example of myself:

    In 2004 I quit a job that paid well.  I had saved about $200k after 8 years and another $100k in a 401K program.  I took that life savings, started a business.  It failed.  I risked $250k in two years at a shot at being my own boss.  Not asking for pity … just stating a fact at this point.  I had $50k left.  I started another business.  Well it worked.  I was able to feed myself.  I fed myself for two years.  Then after many months of working crazy long hours I had saved up enough money to hire someone.  Guess what happens now.  I get taxed for putting someone to work.  You see … payroll taxes are absolutely ridiculous. After almost losing everything, and after working long hours for years, having the stress of not knowing if I be able to keep the business alive, and after all of this I finally make it good enough to put someone to work.  The gov’t comes and says, “you hired someone, you owe us money”.  How is it productive to tax employers 15% of the employees wages?  We are the ones that risked everything to be our own boss.  we are the ones who have sleepless nights wondering how we are going to keep the business open. 

    Now in closing, the council member wants to tax 1% of gross receipts.  That’s very unwise.  How can someone even make a statement like that? For instance, some businesses actually make a loss.  Duh.  Now a company which makes a loss in a certain year and does, let’ say $10M in services, will have to pay $100k in taxes and they didn’t even make a profit.  Where is that money going to come from?  That means layoff employees.  Yeah … that will help.

    Mike C.