Corporate Governance

A smaller story, however, one that will have large impact in one of our biggest cities is happening in San Francisco now. The issue focuses on an impending tax levied on the cities most profitable companies to combat the homeless problem. There’s a few layers to dissect on this issue. Let’s take a look.

The first issue to understand is why the city has a homelessness problem. It has to do with an incredible rise in property values because of the success in Silicon Valley, coupled with the small geography of San Francisco proper, which has spiked the cost of living. The cost of living in San Francisco is double that of its closest competitor, New York City. The heads of these companies originally denied they were the culprits, however, they have since relaxed their disagreements, and now accept responsibility.

First, the micro level is a feud that’s developed between the CEO of Salesforce and the CEO of Twitter. Oddly enough, the feud has moved to Twitter for the world to watch. Why? The CEO of Salesforce is in favor of the initiative, and has publicly decided to use Twitter’s CEO Jack Dorsey’s vehicle to call him out on his inaction. He also slipped in that Twitter has been a benefactor of another tax loophole helping shield the company from large levels of taxation. Dorsey has stated that his decision for not rallying behind the tax is simply due to a lack of government oversight on allocation of the funds. He feels there isn’t enough put in place to make sure the government will handle the money properly

That leads us to our next layer. Jack Dorsey, as well as our friend at Salesforce are Ok with the San Francisco government taxing them more, however, government has a poor track record of handling funds appropriately. Jack wants to make sure that there are guidelines set up to divide the new resources efficiently. This is noble, and warranted. It does beg to question, why can the city and the companies work out agreements and avoid the tax all together. Removal of the official oversight will make for fewer people touching the money, and you’d expect increased efficiency getting it to those in need.

That takes us to our last argument. The developed world has become increasingly efficient in the recent decade after the Financial Crisis. Most major companies have drastically transformed into well-run, efficient machines. They learned a lot of lessons from the original Tech Bubble in 99’/00′, accounting scandals with Enron and others, geopolitical conflicts like 9/11, and economic disasters, such as the Housing Crisis, and Energy Bubbles. They’ve also been able to navigate through two incredibly different Federal level administrations. It’s quite impressive.

In saying that, why doesn’t government work out agreements and expectations with companies instead of full on taxation? There are enough ways to offer transparency, and keep the companies honest, while monitoring their behaviors. In doing this, it will lessen the time spent actually delivering benefits to those in need, take out much of the middle layers involved, remove potential internal fraud and embezzlement , and increase the overall efficiency. It’s worth a thought.

Government should act more as police doing good to serve the community they represent, while allowing and trusting the companies they regulate to do it responsibly. The homeless issue in San Francisco, as well as many other issues across the USA would be solved faster, and easier if agreements could be established, and methods created to offer the public checks and balances, versus lazy taxation without representation.

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