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San Francisco Voters To Decide ‘Overpaid CEO Tax’

“Billionaires added hundreds of hundreds of billions to their wealth during a pandemic.”
Participant holding a Tax The Rich sign at the protest. CUNY students, faculty, and community members, joined by elected officials participated on a march from Brooklyn Borough Hall to the Defund The Police Occupation at City Hall demanding the city administration to redirect funds from the New York Police Department to the City University of New York (CUNY), which serves predominantly low-income black and brown students. (Photo by Erik McGregor/LightRocket via Getty Images)
Erik McGregor/LightRocket via Getty Images

On Tuesday, the people of San Francisco will decide whether the city should tax companies for paying their CEOs too much money.

Progressive lawmaker Matt Haney introduced the “Overpaid Executive Tax” to the SF Board of Supervisors in June to better protect the city’s health care system from the COVID-19 threat. His colleagues unanimously agreed to put his idea before voters on the November ballot, listed as Proposition L. The measure requires a simple majority for passage.

“Billionaires added hundreds of hundreds of billions to their wealth during a pandemic,” Haney tweeted in August, calling the current tax system “backwards, brutal, and immoral.”

“I authored Prop L, the Overpaid Executive Tax, to put a surcharge on these companies who pay their top executives millions in salaries while underpaying their workers,” he continued. “This will allow us to hire hundreds of health care workers, nurses, doctors and emergency responders.”

Haney said most small businesses would be exempt.

To qualify for the proposed tax, businesses must generate at least $1.17 million in gross receipts annually. According to the San Francisco Chronicle, the measure would tax those earnings under the following criteria:

Companies subject to the tax would have to pay 0.1% of their gross receipts earned in San Francisco to the city if their highest-paid employee makes 100 times the median salary of the company’s San Francisco-based workforce. The figure goes up to 0.2% for executives making 200 times the company’s median salary for local workers, and upward to 1% of gross receipts when top brass makes 1,000 times the median.

Haney insists the extra revenue is needed to cover the city’s annual budget deficit, which he said is projected to be more than $2 billion over the next two fiscal years. If approved, officials estimate the new policy could raise between $60 million and $140 million additional annual revenue for the city’s general fund.

When promoting Prop L, Haney has emphasized the “massive wealth” in the city and country, saying “it should be shared.”

Even though his proposed CEO tax would affect a narrow base of payers, opponents say its approval could still drive companies and jobs out of town.

Haney recently told CalMatters, “We need companies who aren’t fueling our crisis of economic inequality.”

The outlet went on to report:

San Francisco lawmakers aren’t the first to turn to business to make up for budget deficits or tackle the income gap. Washington State is weighing legislation proposing a surcharge on publicly-traded corporations with a CEO-to-worker pay ratio of 150 to 1 or above. At the federal level, the Tax Excessive CEO Pay Act, introduced last year by Sen. Bernie Sanders, I-Vermont, with Rep. Rashida Tlaib, D-Michigan, and Barbara Lee, D-Oakland, would apply gradual tax increases upward of 5 percent on companies with disproportionately paid CEOs.

Portland in 2018 became the first city to tax publicly-traded companies based on their chief executive’s pay, but San Francisco’s measure goes farther by taxing private and public companies alike. House Speaker Nancy Pelosi, D-San Francisco, endorsed the measure, as has the city’s Democratic Party and the San Francisco Labor Council, among others.

According to the CalMatters report, “not one penny has been spent so far on campaigns” opposing the proposed CEO tax in San Francisco, citing information provided by the Ethics Committee. An official with the city’s Chamber of Commerce told the outlet that business groups “had to prioritize” their political battles this election cycle because there are multiple tax proposals on the local ballot.

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