Jeffrey Vesely and Craig Becker Discuss New Gross Receipts Tax

After Proposition E passed with 70 percent of the vote last week, San Francisco will phase in a system in which companies pay the city a percentage of their gross receipts based on one of seven industry classifications. The new system, expected to play out over the next five years, hopes to shift the tax burden across the city’s industries and help law firms and other professional service firms fare better.

Vesely isn’t ready to predict how firms will fare under the new scheme, citing the complex nature of the law. In fact, uncertainty has led many clients to contact Vesely with questions about how the new system will affect their companies.

“There is a lot of interest in knowing what the impact will be on our clients’ business activities in financial services, real estate, entertainment, you name it,” Vesely said. “To be frank, it’s very difficult to advise on it right now.”

Becker has noted a similar interest among clients, making for a busy fall with queries about Proposition E and questions about the statewide Proposition 30, a temporary tax hike to fund education. He stated the change will be implemented retroactively to include this year, so it is an immediate concern for clients making over $250,000 a year, who will face higher income tax.

“Businesses are always very concerned about how state and local tax systems affect them based on where they choose to located,” Becker said.