Proposition C, which was supported by Salesforce CEO Marc Benioff, has become law in San Francisco and will apply to companies with an annual revenue of more than US$50 million.

By Daniel Herborn

Posted on November 8, 2018

Proposition C passed on election day and will increase gross receipts taxes for the companies it applies to by an average of 0.5%.

It is expected to raise up to US$300 million annually for affordable housing, homeless shelters and mental health services.

San Francisco has long been associated with a high level of homelessness

While the proposition passed into law, it is believed that opponents will challenge the law’s validity. Their argument is that the proposition involves a tax increase and as such must be supported by a two-thirds majority rather than the simple majority that voted for it.

Homelessness has been a high-profile issue in San Francisco for years. A recent report in The San Francisco Chronicle found that the homeless population was actually shrinking, having fallen from 8,640 in 2004 to 7,499 in 2017 after the city increased spending on shelter systems and housing infrastructure.

Despite this apparent progress, many in the city felt the homeless population was negatively impacting tourism and business investment, however, and debate over how to address the issue has dominated local media.

Benioff had been one of the most high-profile advocates of the proposition. Twitter CEO Jack Dorsey and Zynga founder Mark Pincus were among those on the other side of the debate.

“Prop C’s victory means the homeless will have a home & the help they truly need!,” Benioff wrote on Twitter. Let the city come together in Love for those who need it most! There is no finish line when it come (sic) to helping the homeless.”

Before the vote on 6 November, Pincus had written that “Prop c is the dumbest, least thought out prop ever.”

Benioff argued big business had a moral responsibility to help the homeless

Benioff and Pincus had argued over the proposition’s worth on Twitter. Benioff had written “Unfortunately, some C.E.O.s still are myopic & believe that they have a fiduciary duty to shareholders alone, with little or no responsibility to the communities in which they do business. I see Business as the greatest platform for change.”

Benioff later challenged Pincus, the Executive Chairman of Zynga, to outline his plan and personal contribution towards helping the homeless.

Sir Michael Moritz, a prominent venture capitalist and philanthropist, was another high-profile member of the tech industry to oppose the measure. Mortiz and ride-hailing app Lyft have both donated US$100,000 each to opposing the proposition.

Benioff, meanwhile, poured almost US$8 million of his own funds into the campaign supporting the proposition. He argued companies were shirking their moral obligation to improve the cities where they are headquartered.

Critics of Proposition C have said it lacks accountability and that the government could assist homeless people in other ways.

“I want to help fix the homeless problem in SF and California. I don’t believe this (Proposition C) is the best way to do it,” Jack Dorsey said.

Mark Muro, a Senior Fellow at the Metropolitan Policy Program at the Brookings Institution, said Benioff’s involvement in the campaign had been a savvy one, particularly given criticism that the tech industry was benefitting from generous tax incentives.

“There is an ongoing backlash over the special deal tech has been cut over a decade, and I think consumers may be looking for these companies to take a degree of real-world responsibility offline,” he explained. “It may be shrewd positioning for a major brand.”

Benioff was recently named the sixth best-performing CEO in the world by Harvard Business Review.