The past election results throughout the country made one thing abundantly clear: Affordability is at the top of mind for nearly every single voter. Inflation is still affecting our economy and prices, and now proposed new taxes threaten to make things even more expensive.
At a time in San Diego County when small businesses are still finding their footing, families are still wrestling with high housing, fuel and grocery costs, and entrepreneurs are deciding whether to scale up or stay flat, we are now confronted with multiple proposals that will make it harder for both people and businesses to thrive.
Consider three of the most prominent proposals. First, there is the push by a coalition of labor unions to place a one-cent sales tax measure in the city of San Diego. A past attempt fell just short of approval, yet the strategy remains the same: Increase the base sales tax rate and generate hundreds of millions in new revenue.
Second, at the county level, a half-cent sales tax is being polled for possible inclusion on the ballot, with a projected annual extraction of about $360 million from local households.
Third, and perhaps most concerning, the city of San Diego is advancing a proposal to impose an annual tax of up to $5,000 per bedroom on short-term vacation rentals and second homes. That kind of tax would not only hit homeowners who use extra space to make ends meet, but also the small business hosts who rely on that revenue.
Each of these measures, in its own way, threatens to reduce economic flexibility and raise costs on ordinary San Diegans. A higher sales tax means every purchase, from household basics to business supplies, comes with an extra layer of cost. For businesses already squeezed by supply chain pressures, labor costs and regulatory burdens, sacrificing competitive pricing to absorb additional tax burdens is a real challenge. For households, it means less disposable income, reduced investment in their children’s futures and more financial stress.
The vacation rental tax deserves special attention. While the intent may be to raise revenue or reduce speculative second-home ownership, the effect will fall on many local hosts who are simply using property to support their families — teachers, military families and retirees. Hotels and short-term rentals are part of our visitor economy infrastructure. Shrinking the supply or increasing costs will ripple into reduced visitor spending, fewer jobs and less diversity of income in our neighborhoods.
And look around. In the polling driving these proposals, one theme stands out: overwhelming distrust of local government’s ability to spend responsibly. In a poll on the city sales tax measure, 62% of respondents said the city is on the wrong track. It is exactly when public trust is low that new tax increases require the highest standards of transparency, accountability and visible results. Without that, every extra dollar taken just becomes another layer of cost, not a lever for improvement.
The mission of the Lincoln Club Business League is clear: to fight for a San Diego County where people and enterprises can thrive and where affordability is real. It is our view that tax increases of this magnitude, layered on top of existing cost pressures, will undermine that mission. Rather than complex revenue grabs, we should prioritize smarter spending, budget reform, housing supply expansion and regulatory relief that drives costs down. If we truly want to build a sustainable economy for all San Diegans, the path is not to ask for one more tax but to give our businesses and households the space and the confidence to invest, grow and hire.
Faulconer was mayor of San Diego from 2014 to 2020 and now is the president and CEO of the Lincoln Club Business League.