FAIR SHARE Business Tax Proposal

The proposed November 2022 Ballot Measure, introduced by Councilmembers Bas and Fife, would [1] modernize Oakland’s 20-year-old, regressive business tax structure, and [2] raise $40 million to protect and expand essential city services to address homelessness, fix and clean our streets, and provide tax relief and COVID recovery support to more than 20,000 struggling small businesses, many owned by women and people of color.

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Date Posted: April 12th, 2022 @ 2:55 PM
Last Updated: May 6th, 2022 @ 2:33 PM

Advancing Equity

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The FAIR SHARE Business Tax proposal by Councilmembers Bas and Fife would reform the current flat-rate business tax in Oakland, which requires small businesses to pay the same tax rate as large corporations earning tens of millions in gross receipts.

This status quo is highly inequitable, with Oakland’s smallest businesses disproportionately bearing the burden of taxation.

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, together they paid double their share – 34% – of all business taxes in FY 2019-2020. This inequity is further demonstrated by the fact that the remaining 7% of businesses in Oakland – those earning more than $1 million in annual gross receipts – comprise 82% of gross receipts citywide, yet paid far less than their share, only 66% of total business taxes.

This progressive business tax proposal would increase fairness and equity by updating the tax to a tiered-rate structure, where smaller businesses pay less taxes, while larger businesses – especially the largest multi-million dollar corporations – pay more. The proposal would not increase taxes paid by homeowners and renters.

97% of Oakland businesses will see their taxes stay the same or go down. Over 20,000 small businesses – 39% of all businesses in Oakland — will receive a tax cut. Only the top 3% of the largest businesses in Oakland will see tax increases. These businesses collectively earn billions in revenue each year and their profits have skyrocketed during the pandemic.

Key features of the Fair Share proposal include:

  • Tax Breaks for Small Businesses: Over 20,000 small businesses will receive a tax cut. This includes for all retailers, restaurants, grocers, wholesalers, business and personal service firms, hotels, motels and professional/semi-professional businesses with up to $2.5 million in gross receipts and all manufacturers with up to $1 million in gross receipts.

  • Progressive, Tiered Structure: As a business owner’s gross receipts increase, the rate they pay on that revenue increases. While 97% of businesses will receive a tax cut or pay rates similar to what they pay now, the top 3% of businesses in Oakland will be asked to contribute more while keeping our city regionally competitive. The highest tax rates will only apply to businesses with $100 million or more in annual gross receipts and administrative headquarters of companies with over $1 billion in total annual revenues.

Stakeholder Engagement & Blue Ribbon Task Force

Updating Oakland’s business tax has been discussed and debated significantly since 2020. The authors of the 2020 legislation (Councilmembers Bas, Thao and Kalb) engaged:

  • the ethnic Chambers of Commerce, including the African American, Chinatown, Latino Chamber, and Vietnamese Chambers;

  • Oakland’s Business Improvement Districts and Associations, local merchant associations, and individual businesses;

  • coalitions of businesses and entrepreneurs such as the Oakland Indie Alliance, Metropolitan Chamber of Commerce, and Jobs and Housing Coalition;

  • and the Refund Coalition, a coalition of labor and community organizations that advocate around the City budget; as well as Oakland’s Budget Advisory Committee.

In January 2021, City Council established the Blue Ribbon Equitable Business Tax Task Force to engage in a thorough process of analysis and stakeholder engagement to develop comprehensive recommendations for a modernized, progressive business tax. The 11-member Task Force met 16 times from April to October 2021 and held over 20 hours of public meetings and discussion.