By Robert Haugh

The Bay Area Council (BAC) is weighing in on a proposed head tax in Santa Clara.

The business-friendly organization is raising major concerns about the tax and its impact on Santa Clara businesses.

“We understand your desire to seek more revenue from local businesses, particularly through some type of employee head tax,” wrote Jim Wunderman, BAC’s President & CEO in a June 6 letter to the Mayor and City Council.

“However, we have major concerns and would like to caution you about the impact of such an approach and potential  consequences.”  

According to the organization’s website, more than 330 of the largest employers in the region are members of the BAC.

The head tax proposal has been championed by Councilman Raj Chahal. He said he’s wanted to create one since he took office in 2019.

Last year, Chahal singled out three companies that he wants to pay millions more with an employee head tax. Those companies are Nvidia, Intel and AMD. He said they have a combined market cap of nearly a trillion dollars.

“They can easily afford a few million dollars here and there,” said Chahal. “It’s nothing. It’s peanuts.”

At the Council’s February 8th Priority Setting Meeting, Chahal expanded his list to include other major companies that should also pay a lot more:

• Agilent
• Arista Networks
• Analog Devices
• Applied Materials
• Citrix
• Marvell
• Palo Alto Networks
• Service Now

Chahal also shared a spreadsheet listing their market caps. But the BAC disagrees with Chahal.

“We are in a time of great uncertainty in our region, particularly in our region’s business community. Just about every large employer is reevaluating their long-term strategic growth plans, where they should locate employees and their subsequent need for office space, and should they even need any physical space at all in this era of remote work,” Wunderman wrote.

“Policy decisions made today by local governments are having more influence than ever on where companies chose to call home and we have unfortunately witnessed a great many iconic Bay Area companies choose to relocate people and/or headquarters in just the last two years because of the costs and challenges of operating in this region.” 

Wunderman cites Oakland as a case study.

“In recent weeks the City of Oakland, faced with similar fiscal challenges proposed tax increases on their business community that would undoubtedly have caused an exodus of employers and tax revenues from that City.”

“We were able to work with the City, provide an economic analysis of the flawed proposal and ultimately helped broker a compromise solution that met the city’s needs without adversely impacting economic growth. A ‘win win’ for all concerned.”

It’ll be interesting to see in the coming weeks if Chahal convinces his Council colleagues to put the head tax on the ballot.  

Then it’ll be interesting to see if the BAC and major employers oppose it.

Stay tuned. This is a developing story.