Measure C — San Francisco — Decreases to Business Taxes
.Decreases to Business Taxes .Shall the City permanently change the taxes it collects by exempting most businesses with up to $7.5 million in San Francisco gross receipts from both the gross receipts tax and the top executive pay tax on some businesses whose highest-paid managerial employee earns more than 100 times the median compensation paid to their San Francisco employees, and by increasing the rates of the top executive pay tax to either between 0.021% and 0.129% of their San Francisco gross receipts or between 0.086% and 0.514% of their San Francisco payroll expense, for an estimated annual revenue decrease of $30- $40 million?."YES" votes needed to pass: 50%+1.Placed on the ballot by signature collection. Requires a simple majority to pass. Proposition C and Proposition D are conflicting ordinances. If both pass, the proposition that receives the most votes goes into effect..Pros & Cons Guide – League of Women Voters of San Francisco.Background: Gross receipts are the total money a business brings in from sales and activities before expenses. The City collects various business taxes, including:.Gross Receipts Tax: Businesses pay this tax on total gross receipts in San Francisco. Rates depend on business type and amount of gross receipts. Most businesses with gross receipts under $5 million and nonprofits are exempt..Overpaid Executive Tax: Also called the Top Executive Pay Tax, businesses pay this tax when their highest-paid executive earns more than 100 times the median pay of their San Francisco employees. As the pay gap grows, the tax rate increases. Businesses are usually exempt if they have under $5 million in San Francisco gross receipts, fewer than 1,000 U.S. employees, or less than $1 billion in U.S. gross receipts, or are nonprofits. Most taxed businesses pay 0.02%–0.12% of their local gross receipts, rising to 0.021%–0.129% by 2028. Businesses spending over half their local payroll on in-house management pay based on the payroll instead of gross receipts. Their rate is 0.08%–0.48%, rising to 0.086%–0.514% by 2028. Voters passed this tax in 2020 and lowered it in 2024..The proposal: Proposition C would change the City’s business taxes. It would increase the amount of San Francisco gross receipts a business earns before it has to pay both the Gross Receipts Tax and Overpaid Executive Tax from the current $5 million to $7.5 million. It would also start the planned increase to the Overpaid Executive Tax a year earlier in 2027 instead of 2028. Voters could repeal these changes. The City could use this tax revenue for general needs..👍 If you vote YES, you want to make these changes to the Gross Receipts Tax and Overpaid Executive Tax..👎 If you vote NO, you do not want to make these changes..Supporters include: SF Chamber of Commerce, Advance SF, Golden Gate Restaurant Association, Hotel Council of San Francisco, Bay Area Council, sf.citi..Supporters claim: Provides immediate, targeted relief for small businesses still struggling economically. Accelerates taxes on large corporations already approved by voters. Encourages employers to keep workers and stay in the city..Opponents include: Larry S. Marso, SF Tenants Union..Opponents claim: Raising the small business exemption creates incentives for businesses and jobs to leave the city. Accelerating the Overpaid Executive Tax increase will boost incentives to fire low-wage workers. Reduces critical funding to City services like public safety and SF General Hospital..Controller's Statement on "C".City Controller Greg Wagner has issued the following statement on the fiscal impact of Proposition C:.Should the proposed ordinance be approved by the voters, in my opinion, it would result in a decrease in annual revenue to the City in the range of $30 million to $40 million. The ordinance would decrease the number of businesses subject to two existing taxes, resulting in decreased revenue. Decreases in a given year could vary due to economic conditions..The proposed ordinance would amend the City’s Business and Tax Regulations Code by (i) raising the small business exemption ceiling for the Gross Receipts Tax and the Overpaid Executive Gross Receipts Tax, and (ii) accelerating a scheduled tax rate increase for the Overpaid Executive Gross Receipts Tax. Both taxes are general taxes that are deposited in the City’s General Fund..Under current law, the Gross Receipts Tax and the Overpaid Executive Gross Receipts Tax have small business exemptions, meaning the taxes do not apply to most businesses that report under a certain amount of revenue ("gross receipts") within the City. The proposed ordinance would raise the small business exemption ceiling from $5,000,000 to $7,500,000 in gross receipts within the City for each tax, reducing the number of businesses subject to each tax..In addition to the small business exemption, the Overpaid Executive Gross Receipts Tax generally applies to certain large businesses in the City when their highest-paid managerial employee (Top Executive) earns more than 100 times the median compensation paid to their San Francisco employees. The tax rate increases based on how much the Top Executive’s pay exceeds the median San Francisco employee’s pay. Currently, the tax rates increase over time, with rates scheduled to rise in 2027 and then again in 2028. The proposed ordinance would accelerate the scheduled rate increase by setting the 2027 tax rates to the rates currently scheduled to apply in 2028. For nearly all businesses subject to this tax, the 2027 tax rate would increase from the currently scheduled range of 0.021%–0.125% to the proposed range of 0.021%–0.129% of their San Francisco gross receipts. A small number of businesses pay the tax based on their payroll, rather than gross receipts. Their rates will similarly increase. There would not be any further increases scheduled...Links to more information.DIGEST BY THE BALLOT SIMPLIFICATION COMMITTEEFull text of Proposition C (12-page PDF)Controller's cost analysis (2-page PDF)Campaign finance dashboard for measures C and D (from the San Francisco Ethics Commission).YES on Proposition C.Proponent argument author(s): Rodney Fong, San Francisco Chamber of CommerceProponent argument (PDF)Proponent's rebuttal to opponent's argument (PDF)Paid argument(s) in favor (PDF).NO on Proposition C.Opponent argument author(s): Larry MarsoOpponent argument (PDF)Opponent's rebuttal to proponent's argument (PDF)Paid arguments against (PDF)
