VOTE411 Voter Guide

Increases to Business Tax Based on Comparison of Top Executive's Pay to Employee’s Pay.—.Shall the City permanently change the top executive pay tax it collects from some large businesses when their highest-paid managerial employee earns more than 100 times the median compensation paid to their San Francisco employees, by changing the tax to be calculated using the compensation of all employees, not just those based in San Francisco, and shall the City increase the top executive pay tax rates for these businesses to either between 0.183% and 1.121% of their gross receipts or between 0.75% and 4.47% of their payroll expense in San Francisco, for an estimated annual revenue increase of $250-$300 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: The City collects an Overpaid Executive Tax, or 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. Gross receipts are the total money a business brings in from sales and activities before expenses..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 Board of Supervisors can lower the tax without voter approval..The proposal: Proposition D would change the Overpaid Executive Tax in 2027. Instead of basing the tax only on a business’s employees in San Francisco, it would compare the highest-paid executive’s salary to the median pay of all of its employees everywhere..It would also increase the tax so that most taxed businesses would pay 0.183%–1.121% of their San Francisco gross receipts. Businesses that spend more than half their San Francisco payroll on in-house management would pay 0.75%–4.47% of that payroll. The Board of Supervisors would be prohibited from lowering the tax without voter approval. 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 Overpaid Executive Tax..👎 If you vote NO, you do not want to make these changes..Supporters include: IFPTE Local 21, Small Business Forward, Supervisors Chen and Mahmood..Supporters claim: Provides funding critical to save government services. Increases taxes on large corporations, not working families. There is no evidence that implementing this tax in 2020 drove out businesses..Opponents include: Supervisor Dorsey, SF Chamber of Commerce, SF Democratic Council Central Committee, Y-Combinator, Advance SF, sf.citi, ConnectedSF, SF Republican Party, Briones Society..Opponents claim: Increases the tax rate when there is still a large vacancy rate in office space. Won’t attract new businesses. Based on punitive politics, not fiscal reasoning..—.Controller's Statement on "D".City Controller Greg Wagner has issued the following statement on the fiscal impact of Proposition D:.Should the proposed ordinance be approved by the voters, in my opinion, it would result in additional annual revenue to the City in the range of $250 million to $300 million. Results in a given year could vary due to economic conditions. The ordinance would increase an existing general tax that is deposited in the City’s General Fund..The proposed ordinance would amend the City’s Business and Tax Regulations Code, changing an existing tax ("The Overpaid Executive Gross Receipts Tax"). The City collects this tax from some large businesses 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 uses the same definition of executive pay as existing law. However, it calculates it using the median employee compensation for all ofa business’s employees, not only those based in the City. The ordinance would also increase tax rates by approximately 800%. For nearly all businesses subject to this tax, this would result in a tax rate increase from 2027’s scheduled range of 0.021%–0.125% to the new range of 0.183%–1.121% 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 is a narrow base of expected payers, significant annual fluctuations in the value and form of executive compensation, and potential risk of business relocation. Because of these factors, estimates based on prior years’ activity may not accurately predict future revenues..—.Links to more information.Digest by the Ballot Simplification CommitteeFull text of Proposition D (14-page PDF)Controller's cost analysisCampaign finance dashboard (San Francisco Ethics Commission)Measures C and DMeasure D~~~~~.YES on Proposition D.Proponent argument author(s): Brittany Hewett, Registered Nurse, San Francisco General Hospital; Adam Wood, Retired San Francisco Firefighter; Justin Dolezal, CEO, Small Business Forward; Christian Vierra, IFPTE Local 21; Feng Mei Chen, In-home Support Services Care ProviderProponent argumentProponent's rebuttal to opponent's argumentPaid argument(s) in favor (PDF).NO on Proposition D.Opponent argument author(s): Matt Dorsey, San Francisco Supervisor, District 6**For identification purposes only; author is signing as an individual and not on behalf of an organization.Opponent argumentOpponent's rebuttal to proponent's argument - No rebuttal to the proponent’s argument in favor of Proposition D was submittedPaid argument(s) against (PDF)