Tax reform can and does happen at the ballot box. Indeed, startup companies in San Francisco should soon feel the benefit of the recent passage of the city's Proposition E.
Proposition E implements a tax on gross receipts, phasing out San Francisco's prior payroll tax. This will be very beneficial for startup companies that have paid staff but have yet to earn much revenue.
Furthermore, given that business tax trails only property tax for bringing in dollars to the city of San Francisco, by taxing gross receipts instead of payroll, there will likely be more regularity and less fluctuation in terms of dollars flowing into city coffers.
Proposition E passed with more than 70 percent of the vote, according to Business Insider -- an overwhelming victory. The proposition was backed by Ron Conway, a venture capitalist, and had broad-based, political, cross-party support.
San Francisco in recent times has become home to a new startup culture. However, when start-ups are taxed based on payroll and not gross receipts, there is a real possibility that the startups might go elsewhere. Now that the tax will focus instead on gross receipts, startups hopefully will remain in San Francisco and will pay their fair share as their revenues grow.
In the humble opinion of your faithful blogger, San Francisco voters did the right thing by passing Proposition E!