Where’s the Money? Part Three: Tax Cuts For The Genetically-Modified Set

by Marc Norton on June 1, 2004

When BIO 2004, the world’s premier biotechnology industry convention, gathers at Moscone Center in San Francisco June 6-9, they will be greeted by crowds of demonstrators trying to shut the convention down and run them out of town. But they will also find themselves being wooed with a proposal for a big-time tax break to entice them to stay and put down roots.

The wooer is Supervisor Michela Alioto-Pier, the niece of former supervisor and perennial mayoral candidate Angela Alioto. Alioto-Pier got appointed to her seat by Mayor Gavin Newsom, reportedly as part of a deal to get Angela to endorse Newsom in last December’s runoff against Matt Gonzalez.

Alioto-Pier wants to exempt biotechnology companies from the City’s business tax for ten years. The tax would be phased back in over five years after the exemption ends. The business tax is currently a 1.5% levy against a company’s total payroll.

Why a biotech tax cut? According to Alioto-Pier, it can take biotech companies years to develop products for sale. Therefore, they need a break. Simple. Of course, many new companies need a few years to turn a profit, so by this logic the city should also be giving tax breaks to restaurants, retailers and real estate developers. Next in line, please.

Alioto-Pier’s tax cut proposal may have some tough sledding. Hopefully, some of our supes, however dazzled they may be by biotech lobbyists, would be wary of creating yet another corporate welfare program in the midst of the most difficult budget season in memory.

Even the esteemed San Francisco Business Times has a few questions. They recently editorialized that Alioto-Pier’s proposal “…gives away the store: For an industry that’s not even 30 years old, 10 years is one heck of a long time — far longer than biotechs will need to find their footing, and so far longer than any should expect to be carried around on the shoulders of San Francisco taxpayers.” They propose, instead, a five-year tax holiday, followed by a three-year phase in. They call this a “hand up rather than a handout,” but we might be forgiven for calling it a mugging rather than grand theft.

Alioto-Pier’s proposal is reminiscent of former Supervisor Barbara Kaufman’s “New Jobs Tax Credit,” which had a run from 1993 through 2002. This was a business tax break for companies allegedly creating new jobs, and cost the city upwards of $80 million. Nobody ever did any serious study to figure out if this tax break was actually helping to create new jobs, or just giving away buckets of money to companies that would have created new jobs anyway. Thankfully this tax fiasco expired at the end of 2002, although Newsom has made some noises about bringing it back again for a sequel.

Alioto-Pier doesn’t seem to have asked any of the big questions. Do San Franciscans really want the city to become a test bed for biotech firms and genetically-modified organisms? What health and safety concerns are involved? Who would pay for the infrastructure to support and protect these companies?

Even if we want the biotech industry here, what kind of jobs do we want to encourage? Would they be jobs for out-of-town yuppies, or jobs that are accessible to City residents who need jobs? (For a serious discussion on this score, email me for a copy of Robert Lehman’s excellent 1997 study on Jobs and Taxes in San Francisco.)

These questions are just too big for some people. So, the real buzz around town about BIO 2004 is whether or not California’s own genetically-modified Terminator Govenator will show up at the convention. He has reportedly declined an invitation, much to consternation of the event’s organizers. They are hoping, however, that he will do one of his famous surprise entrances.

For more information about the demonstrations against BIO 2004, check out

, and
To bother Alioto-Pier, email her at Michela.Alioto-Pier@sfgov.org, or call her at 415-554-7752.

Copyright C2004 by Marc Norton.
Where’s the Money? Part One published May 11, 2004.
Where’s the Money? Part Two published May 25, 2004.
Part Four next.
Marc Norton is a founding member of San Franciscans for Tax Justice.
He can be reached at nortonsf@ix.netcom.com.

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