San Francisco voters will soon decide on two dueling business tax measures backed with millions of dollars in campaign contributions for the June 2 election.
Proposition D, or the “Overpaid CEO Salary Tax,” proposes to increase tax rates of large businesses and corporations through changing the city’s tax structure as a way to increase revenue for the city.
The city currently collects a Top Executive Pay Tax from businesses when their highest-paid employee earns more than 100 times the median salary paid their San Francisco employees. That tax rate increases based on how much the top executive’s pay exceeds that of its San Francisco employees.
Prop D would alter the Top Executive Pay Tax by calculating the rate to include the median income of all employees, not just those in San Francisco. The measure also proposes to add more gross receipts taxes and administrative taxes on businesses that are subject to the Top Executive Pay Tax.
Proponents of Prop D include labor unions, small business owners, and numerous members of the Board of Supervisors, including Bilal Mahmood and Chyanne Chen.
They argue that revenue from passing Prop D will help the city to avoid budget cuts and help close its budget gap. Controller Greg Wagner estimates that if passed by a majority of voters, it could bring in up to $300 million in revenue to the city.
An argument in favor of Prop D was submitted to the Department of Elections by Christian Vierra, senior political director of the International Federation of Professional and Technical Engineers Local 21 union, or IFPTE Local 21.
“Proposition D is the solution to our budget deficit,” says the written argument. “It asks large corporations — not small businesses, not working families — to contribute a little more.”
Opponents of Prop D include the San Francisco Chamber of Commerce, several large companies, a few billionaires, Mayor Daniel Lurie, and supervisors Matt Dorsey and Stephen Sherrill.
They argue that Prop D will push large businesses out of San Francisco and result in layoffs of employees since those subject to the tax hikes will have to pay larger rates.
“San Francisco is already one of the most expensive cities in the country to live and do business,” wrote Dorsey in an argument submitted to the Department of Elections. “Adding extreme and unpredictable tax increases risks driving employers away just as we are trying to bring jobs, workers, and foot traffic back downtown.”
Some opponents of Prop D have backed Proposition C, a competing measure to reduce tax rates for small and medium-sized businesses by increasing the exemption ceiling for the Gross Receipts Tax.
Currently, most businesses with gross receipts of up to $5 million are exempt from paying the Gross Receipts Tax, but Prop C would raise the threshold to $7.5 million.
Prop C also proposes to accelerate the Top Executive Pay Tax by applying the scheduled 2028 rate increase in the existing tax to the year 2027.
Wagner estimates that if Prop C goes through with a majority of voters, the city could lose revenue in the range of $30-$40 million.
Proponents say that Prop C will reduce financial strain on small businesses in the city.
A submitted argument in favor of the measure was written by San Francisco Chamber of Commerce CEO Rodney Fong and Chris Wright, senior vice president of Advance SF, an organization that advocates for a vibrant local economy through supporting businesses and conducting research.
“By raising the exemption threshold and allowing thousands of neighborhood businesses to qualify, this measure helps employers keep workers on payroll, stabilize operations, and remain rooted in San Francisco,” the written argument reads.
Those against Prop C say that the measure would hand further tax breaks to large businesses and was introduced to try to torpedo Prop D.
Because Propositions D and C are competing measures, the one with the most votes will go into effect in the event that both are passed by voters.
“Prop C is being sold as relief for small businesses, but it’s written to kill Prop. D and let the wealthiest corporations off the hook,” wrote San Francisco resident Claudia Preparata in an argument submitted to the Department of Elections.
The “Yes on C, No on D” campaign has raised around $4.3 million. Opponents of Prop D include large businesses such as Visa, Uber, PG&E, Google, Amazon, Gap and DoorDash, according to campaign finance disclosures.
Major contributors to the campaign include venture capitalist Michael Moritz at $625,000 and cryptocurrency billionaire Chris Larsen at $700,000, according to campaign finance data from the San Francisco Ethics Commission.
Ballots have already been sent out in the mail. There are 37 ballot drop-off boxes around the city and they will be available 24 hours a day until 8 p.m. on Election Day.
Residents can find more information about in-person voting and other voting options on the City and County of San Francisco’s official voting information page.
