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Seaport Industrial Association Business License Tax Comments July 19, 2024 3 • A progressive tax rate is a reasonable option, but a $500,000 cap creates a disincentive to bring new employees to Redwood City. By itself, the amount per employee may not seem burdensome, but companies operate in a competitive market, and they gauge the regulatory environment of a city compared with others. Long after the City closes its budget gap, the high rate for new employees could signal that Redwood City is not friendly to business. • Without a rigorous risk analysis, it is impossible to know exactly how far the City can push the license tax before it impacts business attraction and retention, and therefore how much net revenue it would generate over time. The absence of such an analysis makes it even more important to take seriously the feedback from businesses. Practical Considerations Redwood City has earned a reputation for having a culture of collaboration among government, business, education, and community organizations. There are countless institutions in the city that support one another and knit together the kind of community where people want to live, work, and grow their businesses. How the City approaches its budget challenge has both practical and intangible implications. The risk of miscalculation is that it could divide the community, divert resources into a costly political campaign, and ultimately jeopardize the ballot measure’s chance of success. At every meeting on this issue, we heard businesses acknowledge the need to update the tax and a commitment to help close the budget gap. We urge you to find a solution that has broad business support and reinforces the strong relationships that make Redwood City exceptional. Thank you for the time and effort you have given to this challenging issue. Sincerely, Greg Greenway Executive Director cc: Melissa Stevenson Diaz, City Manager