The reasoning behind the tax is to ensure “that the biggest corporations, whose executives earn hundreds of times more than their average workers, contribute their fair share.” Stand Up believes dollars generated by the tax will offset the loss of $400 million in federal funds that “have threatened essential city services,” and provide new funding for “critical programs like public health, housing, homelessness response, and neighborhood safety.”
This a version of the “firemen first” municipal budgeting strategy: “If we don’t get the tax hike we’re demanding, we’re going to have to layoff police officers, firefighters and probably teachers.”
Never mentioned is the massive amount of fat elsewhere in the budget that can be easily eliminated without hurting public safety and education. It can’t be hard to find the obesity in one of the most bloated city budgets in the country – larger than the budgets of 17 states
Maybe the city’s first inspector general, Alexandra Shepard, appointed in October, will be able to clean up some of the city’s spending problems. As one of the federal prosecutors who had a part in convicting former Public Works Director Mohammed Nuru for bribery and kickbacks, “she has exactly the skills needed,” says Grow SF, “to tackle fraud and abuse in city contracting” that have caused overspending. The city has wasted tens of thousands on custom-made trash cans, frittered away millions through excessive and improper spending at the Human Rights Commission and squandered tens of billions on a homelessness problem that it cannot solve.
It’s worth asking why one of the richest cities in the country can’t take care of itself and not rely on taxpayers elsewhere who need to look after their own communities’ needs.
The “small surcharge” paid by these big companies will supposedly produce $200 million a year in revenue. But taxes have a funny way of changing behavior among the taxed. In California, we’ve seen an exodus of businesses seeking locations where their tax bills will be lighter Another “small surcharge” on top of the current tax structure and the likelihood that there will be further attempts to tax businesses is enough to send corporate executives to their atlases in search of friendlier business climates, some of which aren’t far away. A report from the San Francisco city controller’s office, as reported by The San Francisco Standard, shows that “a hypothetical tech company with $30 billion in sales and 10,000 local employees” located in San Francisco would be hit with “20 times more in local business taxes” “than if it were located in Mountain View, 200 times more than in San Jose and 1,300 times more than in Sunnyvale.”
Just five years ago, San Francisco voters approved the first-in-the-nation punitive tax on businesses that pay their top bosses too much for some people’s taste. The Overpaid Executive Tax ballot measure, Proposition L, was passed 65-35, allowing City Hall to levy
“an additional gross receipts tax on taxable gross receipts from businesses in which the highest-paid managerial employee, within or outside of San Francisco, earns more than 100 times the median compensation of employees based in San Francisco.”
To qualify the Overpaid CEO Tax for the June 2026 ballot, Stand Up for SF will need roughly 10,500 signatures. The group is likely emboldened by the 2020 ballot outcome, but it’s not what the city needs as it struggles under a new administration to emerge from a bruising doom loop.
Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.
