General Motors Sues San Francisco for $121M in Back Taxes

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Facts

• General Motors (GM), the parent company of the self-driving car company Cruise, is suing the city of San Francisco, Calif. for $108M in back taxes for the past seven years plus $8M in interest and penalties. While the city taxed them because Cruise is based in San Francisco, GM claims the subsidiary is separate from the GM corporation, which is based in Detroit.¹
• In the lawsuit, filed in the California Superior Court and the County of San Francisco, GM argued that despite having only made $677K in retail sales in 2022, as well as having no employees, manufacturing plants, or dealerships in the city, San Francisco taxed Cruise's $3B in global revenue.²
• While GM acknowledged that Cruise made an annual average of $148B in gross revenue between 2016 and 2022, it believes it shouldn't be taxed as heavily because of its limited presence in the city. The corporation stated in the suit that Cruise's driverless 'delivery business is fundamentally different from GM's business' of making and selling cars.³
• The Detroit car manufacturer further stated that by using Cruise's payroll to calculate GM's liabilities, San Francisco issued the company a tax bill 'tens of thousands of times greater than if Cruise’s payroll were not included in GM’s payroll factor.'³
• This follows the resignation of Cruise's former Chief Executive Officer in November after all of its cars were pulled from the streets to update its software due to safety concerns. On Oct. 2, an autonomous Cruise vehicle dragged a person along the road after the person was hit by another car and pushed in front of the Cruise vehicle.²

Sources: ¹NBC Bay Area, ²The Hill and ³The San Francisco Standard.

Narratives

• Narrative A, as provided by Bloomberg. San Francisco taxed GM's more than $3B in global revenue even though the corporation has no dealerships or factories and made less than a million dollars in San Francisco retail sales in 2022. Furthermore, Cruise has taken all of its cars off the road, which shows that even its San Francisco-based subsidiary has not been a money-maker for the corporation. It makes no sense for a Detroit-based company with little presence in California to make up 2% of a California city's yearly tax revenue — this was a bad-faith assessment by the city.
• Narrative B, as provided by Detroit Free Press. Car manufacturers do a lot of good for the country and have received much-deserved praise for their innovation and job creation. However, companies like GM and Ford have over the last 20 or so years benefited from bailouts when business is bad and tax loopholes when profits are booming. Whether it be at the local, state, or federal level, it's time to question this newfound greed and public-private corruption within America's historically beloved auto industry — it's fair and reasonable to expect proportional taxation.

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