General Motors, the Detroit-based auto maker, has filed a lawsuit against the city of San Francisco, claiming that it has been unfairly taxed $108 million over the span of seven years, despite having no physical presence or employees in the city.
The lawsuit stems from the city’s alleged incorrect usage of GM’s robotaxi business, Cruise, which is headquartered in San Francisco, to calculate the tax bill. As a result of this error, San Francisco attributed $3 billion of GM’s global revenue to the city for taxation purposes in the previous year alone.
In addition to seeking a refund of $108 million, General Motors is also requesting penalties and interest amounting to $13 million, bringing the total amount being pursued to $121 million.
While this lawsuit does not have a significant financial impact for General Motors, given its annual revenue of $157 billion last year, it poses a much greater challenge for San Francisco, as the city is currently facing an $800 million two-year budget deficit.
General Motors emphasized that Cruise is an independent business unit and that combining the revenues of both GM and Cruise “significantly distorts” the true economic activity of each entity in the city.
This legal dispute between General Motors and San Francisco sheds light on the important issue of accurate tax assessments for businesses operating in multiple locations. With the proliferation of remote operations and virtual businesses, it becomes crucial for cities to enforce fair taxation policies that accurately reflect a company’s physical presence and economic activities within their jurisdiction.
As this case unfolds, it will be interesting to see how it impacts not only General Motors and San Francisco but also the broader conversation around taxation in an increasingly digital and interconnected world.
General Motors Challenges San Francisco City Taxes
General Motors (GM) has filed a complaint arguing that the city of San Francisco’s taxes do not accurately reflect its business activities within the city. GM claims that its core automotive business does not have any employees, plants, physical locations, or dealerships in San Francisco. Furthermore, the company asserts that it sells only a minimal amount of retail goods within the city, with approximately $677,000 in sales for 2022.
In addition to the tax issue, GM’s self-driving subsidiary, Cruise, has faced challenges in San Francisco. Last October, Cruise had its license to operate self-driving cars suspended following an accident involving a hit-and-run victim. The incident occurred when a Cruise taxi hit the victim and dragged them several feet before coming to a stop. As a result, Cruise suspended all operations nationwide during the ongoing investigation and an independent safety review.
At the time of writing, neither General Motors nor the San Francisco city attorney’s office has provided a comment on the matter.
Automotive Stocks Show Slight Gains in Pre-Market Trading
General Motors (GM) stock remained stable in pre-market trading, while Ford shares experienced a slight 0.2% increase. Tesla, on the other hand, witnessed a modest 1.1% surge.