California is home to the largest share of the United States’ billionaires. Soon, lawmakers say they could have to pay up.

Assemblyperson Alex Lee (D-San Jose) re-introduced a tax on extreme wealth this week. It would tax people with a net worth of $50 million or more an extra 1%, and billionaires an extra 1.5%. That would affect about 15,000 households in the state. Lee says the tax would be on a person’s full wealth, whether that wealth has been “realized as income or not.”

The False Claims Act got its name from its authors’ research on income tax avoidance of some of the world’s richest people.

“The ProPublica analysis released last year revealed that the richest 25 Americans pay just a tiny fraction of their wealth in taxes, and some are able to pay little to nothing in income tax, with effective tax rates lower than the average American. By increasing their fortunes in assets such as stocks and property and then borrowing off those assets, they are able to avoid selling the assets and paying capital gains taxes,” explained Lee.

There are fears it could push some of those wealthy people out of California. For instance, when Elon Musk faced restrictions in California, he moved Tesla's headquarters to Austin, Texas and likely has most of his personal wealth parked there now too.

Assemblymember Lee argues that won’t be the case.

“While some say California is driving away higher-income residents, the opposite is true – we’ve actually been losing lower and middle-income residents that are being priced out while continuing to gain higher-income residents.”

Lee also says a vast majority of Californians support such a tax, with a David Binder poll clocking that number in at 70% of California residents.

While California does have the most billionaires, it also has the highest poverty rate. Before the pandemic, the Golden State’s poverty rate was about 16.4%,whereas the nationwide average was 13.4%. Those numbers have only worsened in the pandemic.

A UC Berkeley and UC Davis study estimates the wealth tax would bring the state about $22.3 billion a year. Right now, there’s no guidelines for how that money would be used.

The bill would need voter approval, since it exceeds the state’s tax rate limit, which right now is set at 0.4%. Last year, Lee’s attempt at the same tax didn’t even make it to committee.

Other similar efforts have also failed repeatedly, and even California Governor Gavin Newsom has avoided the issue. The California Taxpayers Association has come out against the bill.

If it passes, AB 2289 would kick into effect in 2023 for billionaires and in 2025 for 50-millionaires.

Photo by Giorgio Trovato on Unsplash

Just in case you needed another depressing statistic about our local surroundings, San Francisco now has a greater density of billionaires than any other city in the world.

This latest data point comes from WealthX, which has been conducting an annual "billionaire census" for the past five years. They say that there are now 2,604 billionaires worldwide, with 750 of them residing in North America. There are still more billionaires scattered across Europe (792), but the number of Asian billionaires dropped to 677 last year, and the US still has the largest share of the richie-richest, with 705 of them calling America home.

This is the 2019 billionaire census, and it's all based on 2018 data — the sources of which are a bit mysterious because WealthX claims to have "proprietary data assets and specialized research capabilities."

As of 2017, San Francisco leapfrogged over Moscow and London as a city with a large billionaire set. As of 2018, our city was allegedly home to 75 billionaires (1 more than the previous year, though 2017 saw a 14-billionaire leap over 2016), and that put us in third place overall behind New York (105), and Hong Kong (87). But given how small a city SF is, this still ranks us #1 for billionaires per capita, as Vox points out. There's now a billionaire for every 11,600 of us in the city.

This figure is essentially unchanged from the previous billionaire census data in 2017, so this title for San Francisco is not new.

Via Forbes and elsewhere we know who a bunch of those 75 billionaires are here in town: Mark Zuckerberg (net worth estimated $62.3 billion), Oracle founder Larry Ellison ($62.5 billion), Google co-founders Larry Page ($50.8 billion) and Sergey Brin ($49.8 billion), Laurene Jobs ($18.6 billion), WhatsApp co-founder Jan Koum ($10.5 billion), WhatsApp co-founder Brian Acton ($6 billion), former Google chairman Eric Schmidt ($13.4 billion), Twitter and Square CEO Jack Dorsey ($4.9 billion), Facebook COO Sheryl Sandberg ($1.7 billion), cryptocurrency guy Chris Larsen ($4.7 billion), and Salesforce founder Marc Benioff ($5.6 billion). SF Luxe has a whole running list, and yes many of these people technically live in Woodside or Palo Alto.

Previously: Atherton Is Still, Pretty Definitively, America's Most Expensive Zip Code

According to Bloomberg's analysis of data for the 100 largest metropolitan areas in the United States — numbers from the Bureau of Economic Analysis — San Jose is the figurative gold medal winner.

At $105,482, the gross metropolitan product (GMP) per capita in the nouveau riche capital was more than twice the national average. Bridgeport, Connecticut earned silver with $94,349 and San Francisco was bronze with a paltry $80,643.

According to Time Money, "since the Great Recession, technology hot spots have inched their way forward in attracting the smartest and most highly compensated residents, surpassing the East Coast centers of the financial elite."

There's an ''ongoing trend towards skilled places being far more compensated than non-skilled places," Harvard University professor Glaeser, a keen observer of city growth, told Bloomberg. "The poster-child of this in the data is the San Jose metropolitan area, which is off the charts in terms of income growth.''

Here, the top capitals of capital:

1. San Jose - $105,482

2. Bridgeport - $94,349

3. San Francisco - $80,643

4. Seattle - $75,874

5. Boston - $74,746

6. Durham - $73,523

7. Washington D.C. - $72,191

8. New York - $70,830

9. Houston - $70,097

10. Des Moines - $67,256

Related: Atherton Is Still, Pretty Definitively, America's Most Expensive Zip Code

Home prices in Atherton, already sky high as of last fall when Forbes declared it America's toniest zip code, continue to climb, in part because Forbes published that article. As SFGate's real estate blog notes, home prices in the Silicon Valley suburb are up 40 percent over last year, meaning that mansions and even little bungalows there are now 40 percent more expensive than what qualified as the most expensive place in the country 8 months ago.

CNBC reported last week that mansions are regularly going for prices over $10 million, and some of that is being fueled by foreign buyers, including those in China, who want to claim the prestige of living in America's wealthiest zip code. One Chinese buyer just plopped down $14 million for a mansion, sight unseen.

The median home price there is now a stupidly insane $9.44 million, up from $6.67 million last year.

Just in the first quarter of this year, brokers in Atherton sold seven properties that were priced over $10 million. Currently, the most expensive listing there is $25 million.

And this just goes to show that this guy's ranking of America's richest zip codes, which was not taking into account home prices, is way off — he had Atherton at #151.

[CNBC]
[SFGate]
[Curbed]

Well, would you look at this. A photo captured by Twitter user David Bellona, himself a designer at Twitter, is making the rounds for its perfect evocation of San Francisco's much-ballyhooed incipient class war. Posted with the pithy "current status of SF," the photo juxtaposes a man with a cardboard sign that reads "HUNGRY," sitting outside a Porsche 911 Carrera S with the vanity license plate reading "DRUNK."

Sure, it looks like it could be photoshopped, but SF Citizen tracked the car down and yes, it does exist. The car is named Sally Carrera, and and she and her owner do not care what you think of them: "I realize many people feel this says bad things about me. I feel that says bad things about them." Jason Weisberger of Muir Beach is the owner of the car (and the publisher of Boingboing): SF Citizen reports that there may be an unpaid ticket for blocking a street sweeper in the mix as well.

Perfect approximation of San Francisco's social climate or just a typical evening commute? You decide.

[@DavidBellona/Twitter]
[h/t SF Weekly]
[SF Citizen]

New data from the U.S. Census Bureau shows just how much San Francisco's middle class has faded amidst a growing population of high-income earners. As reported by the SF Examiner, the middle class declined by about 10 percent from 2008 to 2012, while the upper echelon of earners increased by the same amount. This means middle class earners now represent only 33 percent of the city's population, compared to 42 percent of California households in general and 44 percent nationwide.

But just how do you define "middle class" in San Francisco, besides the usual nods to professions like teaching, nursing, and hospitality? As it turns out, any household making between 50 and 150 percent of the area median income of $73,000 is officially identified as "middle class," which means that combined household incomes between 36,500 and 109,500 qualify. These are divided into categories of low, moderate and above-moderate income, with low and moderate middle income earner categories declining, hitting 55,000 and 60,000 households respectively. But above-moderate income households have, unsurprisingly, risen to 36,000, and 38 percent of all city households are now high-income.

That means that anyone from a single resident earning $100,000 a year to a married couple with a combined income of $50,000 qualifying as "middle-class," meaning that the shrinking sector comprises a wide swatch of individuals, from the people you'd typically think of (non-profit workers, construction workers, bartenders, etc.) to so-called "tech workers" who are single and not breaking a $100K salary. So, basically, you and me and everyone we know.

Previously: Middle Class Screwed In Current S.F. Housing Market, San Francisco Is The Least Affordable City For Middle Class Homeowners

[Examiner]

Call it the Early Twenty-Teens Tech Boom, or whatever you want to call it, but it has officially surpassed the late-'90s Dot-Com Boom with no slowing in sight. In fact, as Ted Egan of the city controller's office tells Matier & Ross, this economic surge grew in about three years, while the dot-com boom took six years to get to this point. And while many say that all bubbles must burst, Egan points to strong earnings in the tech sector that set this era apart from the untethered stock speculation of fifteen years ago.

San Francisco may just be at the front of a larger wave of economic recovery happening across the country, and we happen to be home to several industries that are performing the strongest in today's economic, including tech and biotech.

It isn't just tech, though: There are now a record 600,000 jobs in San Francisco proper, with 5 percent unemployment (down from a high of 10 percent a couple years ago), and only about 20,000 of the new jobs are in tech. The rest are in health care, business services, hospitality, and other traditional industries — some of which may, arguably, be growing as a result of the deep pockets and high-paid workers of the tech industry.

Earlier this month we noted that this boom had already exceeded the last in terms of office leases, and now it's official that the job numbers back that up. It's only worrying that Kozmo.com is trying to make a comeback, because that seems like the first signal of doom, but we digress.

Sunday's column stands in sharp contrast to Matier's writings of just two months ago, in which he was using the Twitter IPO to expound on his theories about the economy, calling this just the latest in the Bay Area's long history of booms and busts. He was sounding pretty gloomy then, but maybe this chat with the Controller's Office has cheered him up.

Meanwhile, coverage of last week's Google bus protests is ongoing.

[Chron]

We talk a lot about rental prices and middle-income-earners these days, but the somewhat-better-off have it hard too! Those looking to buy a condo in San Francisco right now are going to find newly constructed ones in very short supply, and prices up 14 percent over the same time last year.

This data comes from a new report from The Mark Company, showing that the average price per square foot for a 1,000-sq-ft condo in S.F. is $1,011 (on the 10th floor), and $1,736 per square foot for a 2,000-sq-ft condo on the 30th floor, based on recent sales data. Both of those figures show a 14-percent rise over November of last year.

The price per square foot of resales is up 11 percent over last year at this time, at $816 per square foot.

Despite all the new construction happening, a lot of it isn't finished, so the current inventory of newly constructed condos is only 125 units, down 70 percent from this time last year.

Sadly, as we saw in 2008, if the bottom drops out of the economy we're not likely to see any drop in rents as condo prices fall, because people who are stuck in condos they can't afford will be suddenly thrust back into the rental market, creating more demand.

Sigh.

Previously: Condo Conversion Legislation Gets Amended With Ten-Year Moratorium

We've said it several times, and now progressive former mayor Art Agnos chimes in for NPR in a national story about how shitty San Francisco's real estate market now is for the middle class.

The story is specifically about the rental market, and NPR's Morning Edition just caught wind of the rapidly multiplying cases of Ellis Act evictions.

But Agnos is quoted on the topic of how rising rents are specifically impacting those middle-income earners, people who are not poor but are not rich, which in this city means they make less than $150K.

"Once the advocates and the organizers and the artists are gone, who will be left to care about our city?" [asks Beverly Upton, director of the San Francisco Domestic Violence Consortium, who's facing eviction from her apartment of 25 years.]

That's a big concern in San Francisco, where traditionally there's always been a balance between the comfortable and the nonconformists, says former Mayor Art Agnos.

"The struggle to keep people who make between $60,000 and $150,000 a year is what we're facing in San Francisco. That's who the struggle is for today," Agnos says. "Frankly, it's all but over for the poor in this city."

Even those of you who do make over $200,000 a year and are considered among the comfortable should consider this — especially those of you who bristle at the idea that "affordable housing" is important or that anyone who earns less than you has a right to a nice apartment. Will this still be as awesome a city to live in when all the cool kids are gone and it's just a bunch of craft cocktail bars and high-end restaurants?

Also this week, there's an editorial in the USF newspaper, the San Francisco Foghorn, discussing the Ellis Act and the ways in which it's being employed, illegally, as a bluff to get some tenants to relocate on their own.

[NPR]
[SF Foghorn]

Yikes. What started out as an innocent private club/restaurant for the wealthy and unique has all but nosedived into a signifier of the current tech bubble and disastrous PR. We are, of course, talking about The Battery. Only a month after opening its rustic, artisan legs for the public, major changes have already pockmarked the tony club.

According to Inside Scoop, "Much of the opening management team is no longer there," including restaurant manager Jason Arbusto, general manager Tex Doughty, and food and beverage director Jason Reilplinge.

The Scoop goes on to note, "The search for an executive chef has also begun." So at least there's that. Oh, and The Battery sure is pretty. It also managed to renovate a former eyesore. There's that too.

[Inside Scoop]

For people likes Fox News' John Stossel, who believe panhandlers are really raking it in for upwards of $80K/year, here's a news flash: according to a survey funded by the the Union Square Business Improvement District, San Francisco panhandlers make less than $25 a day.

According to the survey, which involved 146 people over a two-day period around Union Square, "the typical panhandler is a disabled middle-aged single male who is a racial minority and makes less than $25 per day despite panhandling seven days a week for more than five years." Contrary to popular suspicions, 94 percent said that they use the money they glean for food (44 percent use it for drugs or alcohol).

Other findings:

• 83 percent are men


• 48 percent are African American


• 31 percent are white


• 69 percent are single


• 26 percent served in the military


• 70 percent are 40 to 59 years old


• 58 percent have been panhandling for at least five years


• 53 percent panhandle seven days a week


• 60 percent make $25 a day or less


• 94 percent use the money for food


• 44 percent use it for drugs or alcohol


• 62 percent are disabled


• 25 percent are alcoholics


• 32 percent are addicted to drugs


• 82 percent are homeless

Researchers also surveyed 400 people who had given money to panhandlers in the past year, and found that the majority were young working-class Bay Area residents (not tourists or tech workers). Meanwhile, a New York Times article notes that Twitter's payroll tax break will save them at least $22 million over six years in their new nearby mid-Market offices.

[Think Progress]
[NYT]

The hotly anticipated public offering of Twitter stock is happening on Thursday, and today the business world is abuzz with news that the company is cockily raising the price range of their first stock sale. Originally proposed at $17 to $20 a share, it's looking like the stock price for TWTR stock will open at between $23 and $25 per share.

This puts the valuation of the company at around $15 billion, and means that they'll be raising somewhere in the neighborhood of $1.7 billion in capital for themselves from the IPO.

Also, this means the company and its advisors from Goldman Sachs are feeling pretty confident that this IPO won't go the way of Facebook's, which initially tanked after their $38 price proved to be a little high at first. (Nonetheless, Facebook stock has fully recovered in the last year and today it's trading at $48.82.)

According to one analyst noted by the NYT, the target price for the stock after opening day could be around $29.

If you see any Twitter employees out celebrating on Thursday evening and lighting piles of cash on fire, please kick them.

[Dealbook/NYT]
[CBS]