A new economic report has reignited the debate over San Francisco's Proposition D, a proposed 'CEO tax' that would increase business taxes for large corporations with high executive-to-worker pay ratios. Supporters argue it would generate hundreds of millions for city services, while opponents warn of higher consumer prices and economic strain on businesses. The measure is set for a June 2 vote amid broader efforts to tax corporations and high earners.
A new economic report has intensified the debate surrounding San Francisco 's Proposition D as voters prepare to cast their ballots this June. The proposed 'CEO tax' aims to increase an existing city business tax linked to executive compensation, targeting companies with annual revenues exceeding $1 billion where executives earn at least 100 times more than the median worker.
Proponents argue that the measure would generate hundreds of millions of dollars to mitigate impending cuts to healthcare, food assistance, and other essential city services. However, a recent analysis by the Pragmatic Policy Group, commissioned by Grow SF—a coalition opposing Proposition D—suggests the tax could have broader economic repercussions beyond large corporations.
The study, based on economic modeling rather than a single outcome prediction, estimates that low-margin businesses like grocery stores and retailers could face profit losses of up to 25%. Additionally, between 24% and 40% of the increased business costs could be passed on to consumers through higher prices, potentially raising overall consumer prices in San Francisco by 0.1% to 0.2%. Steven Bacio, policy director at Grow SF, criticized the proposal, stating, 'The Prop D tax doesn’t actually tax CEOs.
What it does is tax transactions, and that’s going to be passed on to consumers.
' He warned that everyday San Franciscans would bear the brunt of rising prices for groceries, pharmacy items, home goods, and clothing. While acknowledging the need for a well-funded government, Bacio emphasized the importance of fair taxation without disproportionately burdening consumers. The measure is not entirely unprecedented; San Francisco voters approved a similar tax in 2020, though it was later scaled back as part of a broader business tax reform to support economic recovery.
Alan Auerbach, an economics professor at UC Berkeley, likened the tax to an increased sales tax, explaining that it functions as a surcharge on the gross receipts tax, which businesses pay based on their sales revenues in the city. He noted that while companies might raise prices in response, the tax is unlikely to directly reduce CEO pay or increase worker wages. Supporters of Proposition D, however, argue that the critique overlooks the city’s pressing fiscal challenges.
Kristen Schumacher Nascimento, lead researcher for IFPTE Local 21, contends that the tax would generate over $300 million in revenue by targeting the city’s largest corporations. She pointed to potential federal cuts to healthcare and food assistance programs, warning that without new revenue, San Francisco could face severe budget shortfalls.
'The reason we’re facing these cuts is because huge corporations are getting tax cuts at the federal level, and in exchange, these services are getting cut locally,' she said. 'While this measure won’t solve the problem entirely, it will help prevent some of the most devastating cuts to essential services. ' The debate over Proposition D is unfolding amid a broader political movement by labor groups to increase taxes on corporations and high earners.
A separate statewide proposal to tax billionaires’ assets is expected to appear on California’s November ballot. As one of the most expensive local ballot fights in 2026, Proposition D will be decided by San Francisco voters on June 2
San Francisco Proposition D CEO Tax Business Tax Economic Impact
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