CITY OF OAKLAND
AGENDA REPORT
DATE: March 17, 2022TO: City Council and Members of the PublicFROM: Council President Nikki Fortunato BasCouncilmember Carroll FifeSUBJECT: Progressive and Equitable Business Tax
RECOMMENDATION
We respectfully request that the City Council, in order to raise revenue for the City’s generalpurpose fund and create more equity and fairness in the City’s business tax structure, consider:
Adopting A Resolution: 1. Amending Resolution No. 88227 C.M.S., Which, Among OtherThings, Submitted To The Voters At The November 8, 2022 General Municipal Election,An Ordinance Repealing And Replacing Chapter 5.04 Of The Oakland Municipal Code,To Modify Said Ordinance To Incorporate Recommendations From The Blue RibbonEquitable Business Tax Task Force; And 2. Directing The City Clerk To Take All ActionsNecessary To Prepare For And Conduct A November 8, 2022 General Municipal Election.
The March 31, 2022 Rules and Legislation Committee Meeting will be an importantopportunity to share the business license tax proposal, hear questions and feedback, and have adiscussion.Note that we will not vote on the proposedlegislation at this meeting, and we willfocus on discussion and feedback.
EXECUTIVE SUMMARY
The City of Oakland has an outdated, regressive, and complicated business tax system thatdisproportionately burdens small businesses with gross receipts taxes. Gross receipts taxes aretaxes paid on a business’s gross revenue, or gross receipts. The City of Oakland BudgetAdvisory Commission formally recommended that the Council look into new revenue streamsin their Budget Advisory Memos in 2019, 2020 and 2021 as well as in previous budget cycles.On July 14, 2020, the City Council unanimously adoptedResolutionNo. 88227 C.M.S.to placean equitable business tax ballot measure on the November 8, 2022 ballot and to create anEquitable Business Tax Task Force to study the issues and make recommendations to Council.On January 18, 2022, the City Council received aninformational report from the EquitableBusiness Tax Task Force with recommended business tax rates(Attachment B).This proposedlegislation updates the July 14, 2020 resolution, which was unanimously adopted, andincorporates the Blue Ribbon Equitable Business Tax Task Force recommendations ontax rates.
Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax This proposal uses the Task Force recommendations as a foundation to provide structuralreform that would add resources to the General Purpose Fund while also supporting strugglingsmall businesses. Updating our local business taxes to an equitable and tiered gross receipts taxstructure, where smaller businesses pay less taxes, while larger businesses pay more, is animportant avenue for revenue in a system that is antiquated and was last substantively updatedin 2005.
In addition to generating tens of millions of dollars in additional revenue annually towards vitalCity services, the proposed structure is, at its core,an equity reform. It would provide smallbusinesses, which make up the vast majority in Oakland, with needed relief from gross receiptstaxes, especially as they are weathering the harsh challenges of this pandemic and its economicimpacts. It would invite larger corporations to make deeper investments in Oakland throughgross receipts taxes, in order to help rebuild and strengthen our city. It would modernize thegross receipts tax structure and close loopholes.
BACKGROUND / LEGISLATIVE HISTORY
A. The Current System
The City of Oakland’s current business tax system was last substantially updated in 2005, over15 years ago. In its current form, the City’s gross receipts tax structure is flat, meaning that abusiness with $10 million in revenue is taxed at the same rate as a business with $100,000 inrevenue.This does not reflect the City of Oakland’svalues of helping small, local businesses 1 to thrive. Small businesses with $1 million or less in gross receipts comprise 84% of totalbusinesses paying the license tax and pay 34% of tax revenue.The overwhelming majority of 2 businesses in Oakland are very small with 93% of businesses earning less than $1 million ingross receipts annually. While these 49,000 small businesses make up the vast majority ofbusinesses in Oakland, in fiscal year 2019-2020, they accounted for only 18% of taxable grossreceipts and payroll reported to the City. Whilethey account for a relatively small share of 3 total revenues earned by businesses in Oakland, they paid almost double their share, or 34% ofbusiness taxes. By contrast, the top 7% of the highest earning businesses account for 82% of allgross receipts and taxable payroll reported in Oakland – a total of over $20.6 billion in fiscalyear 2019-2020, but these businesses paid only 66% of the total business taxes collected in theCity. The top 0.1% of businesses in the city alone reported more gross receipts than the entirebottom 93% of businesses ($6.2 billion compared to $4.5 billion).It is not equitable that 4 Oakland’s smallest businesses earn less in revenues than these large corporations and arepaying a disproportionate share of taxes. 4 Data provided by Blue Sky Consulting Group to the Blue Ribbon Equitable Business Tax Taskforce. Note: totalgross receipts numbers include payroll data. 3 Some industries, such as Administrative Headquarters and Miscellaneous businesses are taxed based on grosspayroll. 2 Data provided by Blue Sky Consulting Group to the Blue Ribbon Equitable Business Tax Taskforce. 1 City of Oakland, Department of Finance Gross Receipts Tax Rates, available at:https://cao-94612.s3.amazonaws.com/documents/Business-Tax-Classification-and-Rate-Tables-2020.pdf Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page2 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page3
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax B. Progressive Corporate Taxation in Other Cities
An alternative to the flat gross receipts tax is a progressive gross receipts tax, in which largerbusinesses with higher gross receipts pay more than smaller businesses with less gross receipts.In a progressive system, every business pays their fair and proportional share into the city’sgeneral fund. Several other Bay Area cities have implemented various forms of progressivebusiness taxation, most notably San Francisco in 2012,as well as Richmond, Walnut Creek 5 and San Jose. Additionally, Riverside, CA and Seattle, WA have forms of progressive businesstaxes. In these cities, the smallest businesses are either exempt from the tax or pay a muchlower amount than the larger businesses.
For example, San Francisco implemented a progressive gross receipts tax structure, passed bythe voters in 2012, as well as additional taxes on very large corporations (Proposition C in June2018 and Proposition C in November 2018). Until recently, San Francisco levied both a payrolltax and a progressively structured gross receipts tax on most businesses in the city. InNovember of 2020, San Francisco voters approved Proposition F, a comprehensive overhaul ofthe business tax system that fully phased out the city’s payroll tax for all businesses exceptadministrative headquarters and increased gross receipts tax rates and payroll taxes for largerbusinesses while providing tax relief to more small businesses. This full overhaul willsignificantly grow San Francisco’s general fund.
By reforming the gross receipts tax in Oakland, we can support the small businesses thatneed it most through tax relief and improved city services to address homelessness, illegaldumping and trash clean up, street and sidewalk maintenance, small business assistance,fire safety, and community solutions that keep us safe.
C. Keeping Oakland Competitive
San Francisco’s progressive gross receipts tax system means that the cost of doing businessvaries widely between Oakland and San Francisco. This gap will continue to grow as SanFrancisco’s system becomes more progressive with the implementation of Prop F. Many largecompanies pay half the gross receipts taxes in Oakland than they would in San Francisco.These large, multi-million dollar corporations pay more in gross receipts taxes in SanFrancisco, than in Oakland, infusing the San Francisco general purpose fund with neededresources to provide services to the community.
For example, in fiscal year 2019-2020, five construction contractors reported over $100 millionin annual gross receipts in Oakland.In San Francisco,these companies will pay over $1.1 6 million annually in business taxes with the implementation of Proposition F. In the City ofOakland, they would pay $180,000. 6 Data provided to the Blue Ribbon Equitable BusinessTax Taskforce 5 City and County of San Francisco, Office of the Treasurer and Tax Collector:https://sftreasurer.org/business/taxes-fees/gross-receipts-tax-gr Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page5 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax The tax equity gap is most significant when it comes to the administrative headquarters oflarge, highly successful companies. In San Francisco, the administrative offices of firms withover 1,000 U.S. employees that report over $1 billion in gross receipts for purposes of theirfederal tax returns are subject to a combined payroll tax rate of 3.12%, including Proposition Ctax rates and those included in Proposition F. By comparison, these firms pay a payroll tax of0.12% on payroll in excess of $50,000 in Oakland. For an administrative headquarters with$200 million in local payroll, they would pay $6.2 million in San Francisco to support cityservices for residents and businesses, while in Oakland they pay $239,940.
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax Meanwhile, many small businesses are paying more than double in Oakland than they would inSan Francisco. By comparison, a retailer with $500,000 in gross receipts will pay $230annually in San Francisco while in Oakland they would pay $600. A grocer with $1 million inannual gross receipts will pay $475 in San Francisco, while in Oakland they pay $600.
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax The progressive rate structure in San Francisco has successfully shifted the business tax burdenacross industries and businesses of different sizes. It raises important revenue to help fund cityservices, including those services that are crucial for businesses’ operations.
Small businesses are paying more to operate in Oakland than they would in other Bay Areacities, including San Francisco and Richmond. A progressive update to the gross receipts taxsystem would bring Oakland up to date with how other cities structure their gross receiptstaxes, and would create more equity in the City’s taxation of its businesses, shifting the taxburden from smaller businesses to larger ones.
ANALYSIS AND POLICY ALTERNATIVES
A. Equitable, Tiered Gross Receipts Tax Structure, Investments in City Services Our proposal provides a structural reform that would protect and add resources for vital cityservices, including homelessness services and housing, street and sidewalk maintenance, trashcollection, small business assistance, fire safety, and community safety, as well as supportstruggling small businesses by making our local business tax structure fairer to everyone. Aprogressive, tiered tax system where smaller businesses pay less taxes, while larger businessespay more, is an important avenue for revenue in a system that is antiquated and was lastupdated in 2005. By modernizing our tax system, we can give needed tax relief to smallbusinesses and generate the revenue we need to protect and enhance city services that we alldepend on — that have been constantly at risk of being cut back, even before this globalpandemic.
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax B. Policy Goals: Support Small Businesses, Invite Large Corporations to Invest inStrengthening Our City, Raise Revenue, and Close Loopholes There are four main goals of the equitable business tax proposal, which are based onrecommendations from theBlue Ribbon Equitable BusinessTax Task Force:
1. Provide small businesses, which make up the vast majority in Oakland, with neededrelief from gross receipts taxes and improved city services;2. Invite larger corporations to make deeper investments in gross receipts taxes in order tohelp rebuild and strengthen our city;3. Raise revenue to increase and improve city services for the businesses and residents ofOakland, including homelessness services and housing, illegal dumping clean-up, streetand sidewalk maintenance, small business assistance, fire safety, and community safety;and4. Modernize the gross receipts tax structure and close loopholes.
Under the proposed system, many small businesses in Oakland will see a reduction in theirgross receipts tax rate, while large and very large companies in Oakland will pay rates that arecomparable to other large cities, but less than San Francisco. The progressive, tiered systemwill ensure that all businesses are paying their fair share of taxes in Oakland and will ultimatelyraise much-needed revenue for the city’s general purpose fund.Moreover, in this grossreceipts tax structure, businesses will only pay higher rates if they are earning morerevenue. Businesses earning less revenue will pay lower rates.
C. Policy Changes
The proposed system makes the following key changes to Oakland’s gross receipts taxstructure:
1. Tax Breaks for Small Businesses:Over 20,000 smallbusinesses will receive a tax cut.This includes tax cuts for all retailers, restaurants, grocers, wholesalers, business andpersonal service firms, hotels, motels and professional/semi-professional businesseswith up to $2.5 million in gross receipts and all manufacturers with up to $1 million ingross receipts.
2. Progressive, tiered structure:As a business owner’sgross receipts increase, the ratethey pay on that revenue increases.While 97% of businesseswill receive a tax cut orpay rates similar to what they pay now, the top 3% of businesses in Oakland willbe asked to contribute more while keeping our city regionally competitive.Thehighest tax rates will only apply to businesses with $100 million or more in annualgross receipts and administrative headquarters of companies with over $1 billion in totalannual revenues.
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3. Closes loopholes: Creates a “master certificate” requirement for all related businessentities for the purposes of determining the business tax due in the aggregation of theseentities’ gross receipts. Sunsets the five-year business tax exemption for new buildingconstruction on December 31, 2023.
4. Raises over $40 million annually in new revenue to expand and improve cityservices: For too long, Oakland has been starved forresources to fund general cityservices that improve the quality of life for all residents and create a vibrant, safe andclean city where businesses can thrive. By raising $40 million in new general fundrevenues, Oakland will be able to fund all functions of city government for decades tocome, including homelessness services and housing, street and sidewalk maintenance,trash collection, small business assistance, fire safety, and community safety.
The proposed system leaves “as-is” and unchanged the business tax rates for cannabisand residential and commercial rentals, which were both updated by the Council in 2019.
D. Importance of City Services to the Business Community The Blue Ribbon Equitable Business Tax Task Force recommended a number of ways in whichthe city could improve support for businesses in our community, including increased fundingfor city services, especially for clean streets and homelessness services, and small businessassistance.
The 2017 Small Business Task Force developed a number of recommendations that are stillrelevant today, including improving service delivery to small businesses, better data collectionof the small business community, and coordinated marketing.
A2020 study by students at the Goldman School ofPublic Policy(Attachment C) found thatbusiness tax rates are not a factor in businesses’ decisions to locate in Oakland.In a survey of 7 59 Oakland business owners, not a single respondent indicated that the business tax rates werea factor in why they chose to open their business in Oakland. In interviews with members of thebusiness community, business owners and representatives from local chambers of commerceand Business Improvement Districts did not emphasize the gross receipts tax as being aparticularly salient aspect of the overall cost of doing business in Oakland.
However, what members of the business community did emphasize was the need for improvedcity services that are more responsive to the needs of business owners. Routine services such asstreet and sidewalk maintenance are of critical importance to businesses, as are the longer-termefforts the city puts into addressing the homelessness crisis and affordable housing crisis.Business owners understand that their taxes pay for these services, and some even went as faras to say in interviews that they would be happy to pay higher taxes for better funded services. 7 https://bit.ly/37KqQsJ Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page10 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax E. Oakland Residents Overwhelmingly Supportive
A poll conducted in May 2020 by David Binder Research interviewed 400 Oakland residents.The results were significantly positive: about 60 percent of participants supported the measure,and this jumped to nearly 78 percent after a short and neutral explanation of the measure. Anew poll will be conducted and results will be shared.
F. An Equitable Recovery
Ever since the last great recession in 2008, the City of Oakland’s staffing shortage has createdserious citywide service delivery problems. The City has a 12.42 percent vacancy rate as ofSeptember 22, 2021, which means that approximately 12.42 percent of budgeted full-timeequivalent positions are not currently filled.TheCity is not able to sufficiently provide 8 services to businesses and residents alike, but passing a progressive gross receipts tax wouldhelp address that in the long term.
Rather than making cuts, the City should raise revenue, so it can increase its staffing capacityand provide better, more responsive services to its businesses and residents.Our priorities forOakland are clear: support small businesses, fix our streets, clean up trash, address thehomelessness crisis, and ensure fire and community safety. We saw what happened last timewe faced an economic downturn: vital city services were cut and never restored. Oaklandresidents are coming together to fight this pandemic and are ready to work to make sure ourcommunities recover. By acting now and reforming Oakland's business tax to make it moreequitable, we can make sure that communities are not further harmed, but are stronger as theeconomy recovers. 8 https://oakland.legistar.com/LegislationDetail.aspx?ID=5182307&GUID=1EB51A07-CD86-41DC-8E6E-8ADF48957B87&Options=&Search= Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page11
Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax
IMPLEMENTATION AND ADMINISTRATION
These updates would be submitted to the voters as an ordinance on the November 8, 2022ballot, and should it pass with a simple majority vote, it would be effective as of January 1,2023. The Finance Department will update its systems and procedures to conform with theseproposed updates to thegross receipts tax structure.
FISCAL IMPACT
The proposed ballot measure updates the current flat gross receipts tax system into an equitableand progressive, or tiered, gross receipts tax system, in which larger businesses with highergrossreceipts pay more than smaller businesses withless gross receipts. In a progressivesystem, every business pays their fair and proportional share into the city’s general purposefund. An analysis by Blue Sky Consulting Group shows that the proposed system with the rateschedule inAttachment Ais projected to generateapproximately $40 million in additionalannual revenue to the City’s general purpose fund.
Amendments to Task Force recommendations on tax ratesAttachment Ashows amendments to the Task Force recommendations.Thedifferencesbetween the Task Force proposal and this 2022 Council proposalare as follows:
1. This proposallowers rates in the up to $1M bracketfor these categories:Administrative Headquarters, Media Firms, Public Utilities, and Miscellaneous.Thischange ensures that all small businesses with gross receipts under $1M get taxrelief.2. This proposalincreases rates in the $75M to $100Mbracketfor these categories:Auto Sales, Wholesale, Business/Personal Services, Professional/Semi-ProfessionalServices, Recreation and Entertainment, Contractors, Manufacturing, Hotel/Motel,Administrative Headquarters, Media Firms, and Miscellaneous.3. This proposalcreates a new bracket for $100M andabovefor these categories:Grocers, Auto Sales, Wholesale, Business/Personal Services,Professional/Semi-Professional Services, Recreation and Entertainment, Contractors,Manufacturing, Hotel/Motel, Administrative Headquarters, Media Firms, andMiscellaneous.4. This proposalamends Taxi, Ambulance, Limousine andTransportation, Truckingratesas proposed by CM Dan Kalb in his July 12, 2020memo.
Please note that this proposalmaintains the TaskForce recommendation for anadministrative headquarters tax for large national firmswith administrative functions inOakland. This tax would apply in lieu of the regular payroll-based administrative headquarterstax for firms with more than 1,000 employees nationally and $1 billion in revenue. This isestimated to raise an additional $8.2 million.
Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page12 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax Also note that this proposalleaves “as-is” and unchanged the business tax rates forcannabis and residential and commercial rentals, which were both updated by the CityCouncil in 2019.
The charts below compare the revenue and job impacts of the Task Force recommendationswith this 2022 Council proposal. This proposal would raise about $5 million more than theTask Force recommendations.
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax At the March 31, 2022 Rules & Legislation Committee meeting, theUC Berkeley Center forLabor Research and Education (CLRE) will present its analysis of the possible impacts ofa proposed restructuring of Oakland’s Gross Receipts Tax, including an evaluation of thejob impact estimates made by the Blue Sky Consulting Group and the key factors that affectbusiness location and expansion. CLRE will also discuss the importance of strengthening thecity’s revenue base to support Oakland’s continued recovery from the impacts of theCOVID-19 pandemic and the importance of improving public services to support businessgrowth and retention, most immediately by filling key staff positions that currently lackfunding. Oakland’s small businesses in particular—which generate economic activity that stayslocal and supports Oakland’s residents of color—could benefit from both a reduced tax burdenand additional strategic supports.A progressive businesstax equitably shifts responsibilityto larger businesses to benefit Oakland’s long-term economic health and is in alignmentwith the approaches being taken by similar jurisdictions.
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Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax
PUBLIC OUTREACH / INTEREST
Updating Oakland’s business tax has been discussed and debated significantly since 2020. Theauthors of the 2020 legislation (Councilmembers Bas, Thao and Kalb)met with the followingbusiness groups about the proposed changes to the gross receipts tax structure: the EthnicChambers of Commerce (including the African American Chamber, Chinatown Chamber,Latino Chamber, and Vietnamese Chamber), the Business Improvement Districts andAssociations, local merchant associations, the Oakland Indie Alliance, Metropolitan Chamberof Commerce, and Jobs and Housing Coalition. The authors are continuing to engage theseassociations along with individual businesses about this proposal and particulars within theproposed rate schedule. They also met with the Refund Coalition, a coalition of labor andcommunity organizations that organize around the City budget.
In January 2021, City Council established theBlueRibbon Equitable Business Tax Task Forceto engage in a thorough process of analysis and stakeholder engagement to developcomprehensive recommendations for a modernized, progressive business tax. The elevenmember Task Force consisted of nine members of the business community. These businesscommunity members included representatives of small, medium, and large businesses,cooperatives, business improvement districts, and business associations. The Task Force alsohad one representative from labor and one workforce development representative.
The Task Force met 16 times over the course of 7 months from April 2021 to October 2021 andheld over 20 hours of public meetings and discussion. The Task Force meetings were open tothe public and the public could watch recorded videos of each meeting.
Over the course of the public meetings, the Task Force heard presentations from a wide array ofsubject matter experts ranging from affected businesses and business organizations like theOakland Chamber of Commerce and TRI Commercial to staff from cities with progressivebusiness taxes like the City and County of San Francisco’s Chief Economist Ted Egan and theFinance Department staff of the City of Richmond. Additionally, the Task Force received manypublic comments from businesses and community members over the course of the 16 meetings.After a thorough and transparent process, the Blue Ribbon Task Force delivered a set ofrecommendationsto City Council in January 2022.
Since the Task Force recommendations were approved, the authors of this legislation haveengaged numerous stakeholders including business associations, individual businesses,community groups, labor unions and community members.
COORDINATION
The City of Oakland Budget Advisory Commission (BAC) formally recommended that theCouncil look into new revenue streams in their Budget Advisory Memos in 2019, 2020 and2021 as well as in previous budget cycles. Council President Bas presented the 2020 proposal Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page16 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax at the BAC Meeting on June 10, 2020. CP Bas will present this 2022 proposal at the BACMeeting on April 13, 2022.
In 2020, the Finance Department was extensively consulted about the legislation and provideddata and financial modeling critical to the development of the rate schedule. The FinanceDepartment provided the recommendations for modernizing and closing loopholes in the City’scurrent business tax structure. In 2022, Council President Bas and Councilmember Fife areconsulting with the Finance Department, who continues to engage the Economic andWorkforce Development Department and Blue Sky Consulting Group to support economicanalysis.
The City Attorney’s Office is extensively consulted for this legislation and developed the draftordinance.
SUSTAINABLE OPPORTUNITIES
Economic:The additional revenue generated from thegross receipts tax will enable the City toincrease its capacity to provide services from its general purpose fund, including small businessassistance, homelessness services and housing, street and sidewalk maintenance, trashcollection and illegal dumping clean-up, fire safety, and community safety services.
Environmental:The additional revenue generated fromthe gross receipts tax would be used toreduce trash and litter on the streets, address the environmental impacts caused byunsheltered/unhoused persons living in the City streets, and develop structural solutions toupdate and improve outdated and wasteful systems within City government.
Race and Equity:In its current form, last updatedin 2005, the City’s gross receipts taxstructure is flat, meaning that very large businesses are taxed at the same rate as very smallbusinesses. This does not reflect the city’s currentvalues of helping small, local businesses tothrive.Oakland’s smallest businesses disproportionatelybear the burden of taxation. In fact,93% of all Oakland businesses earn less than $1 million in gross receipts annually. However,while their combined revenue comprises only 18% of taxable gross receipts citywide, togetherthey paiddouble their share– 34% – of all businesstaxes in FY 2019-2020. This inequity isfurther demonstrated by the fact that the remaining 7% of businesses in Oakland – thoseearning more than $1 million in annual gross receipts – comprise 82% of gross receiptscitywide, yet paidfar less than their share, only66% of total business taxes.
The authors have requested a race and equity analysis from the Administration. However, thedemographic data from the Finance Department reveals that about 40% of businesses decline toshare demographic information, and many of these are larger businesses. The FinanceDepartment is seeking additional information from the Economic and Workforce DevelopmentDepartment. Nonetheless, we do know thatthe overwhelmingmajority of businesses inOakland are very small (93% have gross receipts of under $1 million) and many are owned by Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page17 Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax BIPOC community members. It is not equitable that Oakland’s smallest businesses are payingthe highest proportion of business taxes.
The proposed structure is, at its core, an equity reform. It would update the City’s current flattax into an equitable, progressive tax system, where smaller businesses pay less taxes, whilelarger businesses pay more. It would protect and add resources to vital city services forresidents and businesses in Oakland, provide needed tax relief to Oakland’s smallestbusinesses, and make the City’s local business tax structure fairer to everyone.
ACTION REQUESTED BY THE CITY COUNCIL
We respectfully request that the City Council, in order to raise revenue for the City’s generalpurpose fund and create more equity and fairness in the City’s business tax structure, consider:
Adopting A Resolution: 1. Amending Resolution No. 88227 C.M.S., Which, Among OtherThings, Submitted To The Voters At The November 8, 2022 General Municipal Election, AnOrdinance Repealing And Replacing Chapter 5.04 Of The Oakland Municipal Code, ToModify Said Ordinance To Incorporate Recommendations From The Blue Ribbon EquitableBusiness Tax Task Force; And 2. Directing The City Clerk To Take All Actions Necessary ToPrepare For And Conduct A November 8, 2022 General Municipal Election.
For questions regarding this report, please contact Cinthya Munoz Ramos, Chief of Staff,Office of Council President Nikki Fortunato Bas, at [email protected].
Respectfully Submitted,
______________________________Nikki Fortunato BasCouncil President, District 2 ______________________________Carroll FifeCouncilmember, District 3 Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page18
Council President Nikki Fortunato Bas and Councilmember Carroll FifeSubject: Progressive and Equitable Business Tax Attachments:A. Current and Proposed Rate ScheduleB. Recommendations from the Equitable Business Tax Task Force (2021)C. Goldman School of Public Policy Presentation: Business Taxes & Perception of CityServices In Oakland (2020)D. Council Resolution Item No.:________Rules & Legislation CommitteeMarch 31, 2022Page19