Labor advocates says big companies need to pay ‘fair share,’ while others say higher business taxes will hurt The City's economy
With a huge city deficit looming amid federal budget cuts, the fight over two ballot measures that are competing over whether to raise or cut certain San Francisco business taxes is turning out to be expensive and divisive.
This month alone, wealthy individuals and companies have poured more than $300,000 into the Protect San Francisco’s Small Businesses and Economic Recovery committee, a San Francisco Chamber of Commerce-led effort to defeat Proposition D, a union-backed measure that would increase The City’s Overpaid Executive Gross Receipts Tax by about 800%. Of that money, $250,000 came in this week, including $200,000 from Chris Larsen, the executive chairman of the blockchain-software firm Ripple. The labor-led Stand Up for SF coalition says that raising the tax — also called the Top Executive Pay Tax — would generate an estimated $250 million to $300 million that is desperately needed to prevent cuts to public services because of funding reductions to medical, food and other programs instituted by President Donald Trump’s administration. Business interests, for their part, say that the proposed tax increase will apply to companies, not individual executives, and will hurt consumers in the form of higher prices; drive companies out of The City, resulting in lost jobs and commerce; and damage The City’s ongoing recovery from the economic devastation that followed the COVID-19 pandemic. Companies have already left The City because of its taxes, they contend, a contributing factor to the roughly one-third office-vacancy rate and numerous empty storefronts downtown. Others insist that past experience shows the proposed tax increase would not cause companies to leave. Proponents of the increase counter that the big corporations that would be paying — which have recently received large federal tax cuts — could easily afford the higher rates, which for most businesses would rise next year from between 0.021% to 0.125% to between 0.183% and 1.121%. The tax would continue to apply to companies with more than 1,000 employees and $1 billion in revenue. The tax is currently collected from some large businesses at which the highest-paid managerial employee earns more than 100 times the median compensation paid to their San Francisco employees, with the rate increasing depending on pay disparities . Prop. D would change the formula for calculating ratios of pay disparities to include employees both inside and outside of San Francisco, not just within The City. Mayor Daniel Lurie and a majority of the Board of Supervisors are on opposite sides of Prop. D. The mayor has expressed opposition, while the local Democratic Party split narrowly this week against the initiative. The Chamber of Commerce and Advance SF, another employer group, have sponsored the competing Prop. C, which would cut taxes on small businesses and would accelerate a scheduled increase in the Overpaid Executive Tax by one year. It would reduce revenue to the city by $30 million to $40 million per year, according to the city Controller’s Office. The division over the Overpaid Executive Tax was on stark display Wednesday night at the San Francisco Democratic County Central Committee, which voted 17 to 14 to oppose Prop. D. The committee also overwhelmingly voted to oppose Prop. C, which the mayor does also. “It’s a simple question — whose side are you on?” said Kim Tavaglione, executive director of the San Francisco Labor Council, a coalition of more than 150 unions that include a majority of city employees, while addressing the party committee. “Are you on the CEOs’ side, or are you on our side?” Numerous other union and community-based-organization members — particularly in health care — passionately cast the issue as a battle for the soul of the party and called for CEOs and big corporations to “pay their fair share” to prevent further disastrous cuts at the local level. Business representatives say the unions are attempting to renege on a carefully crafted 2024 compromise among political, business and labor leaders that led to voter passage of Proposition M, a city business-tax overhaul measure that lowered the Overpaid Executive Tax by 80%, which voters originally approved in 2020.The city Controller’s Office has reported that One Big Beautiful Bill Act championed by Trump — which, among other provisions, includes historically large cuts to Medicaid — will cost San Francisco more than $200 million per year by 2027-28. The City is facing an estimated $877 million two-year budget deficit. City Controller Greg Wagner has estimated that starting in 2027, Prop. D’s tax increase would generate $250 million to $300 million in new revenue for The City’s general fund, though he said those numbers could be different because the tax would apply to “a narrow base of expected payers” and there could be “significant annual fluctuations in the value and form of executive compensation, and potential risk of business relocation.” Ex // Top Stories SF steps up efforts to designate local landmarks amid push for housing New accelerated program adopted to preserve historic and cultural resources in balance with updated zoning rules Why mega-IPOs from OpenAI, SpaceX could hamper broader IPO market The sheer size of the potential offerings from major firms is likely to suck the air out of the room for other public offerings, market watchers say SF Symphony season to center Bay Area stars SF Symphony will once again feature a suite of guest conductors as it searches for a music director District 6 Supervisor Matt Dorsey, who voted against supporting Prop. D, said it would be a mistake to try to counterbalance objectionable federal tax policies with “bad” local tax policies. “Proposition D will drive more employers out of town — and make no mistake, if that happens, that will be abandoning working families in San Francisco.” said Dorsey, who said the measure would “strangle our economic recovery.” “Mayor Lurie and I strongly agree that now is not the time for the largest tax hike in San Francisco history, and that is exactly what Proposition D is,” Dorsey said. Also voting against Prop. D was Nancy Tung, a city prosecutor and union member. Tung said the companies that would pay the Prop. D tax would be grocery stores, pharmacies and food-service businesses, among others. She cited the many pharmacy outlets that have closed in The City in recent years. “Who is paying this tax?” Tung said. “It’s not the tech bros that everybody loves to hate on. It’s not Amazon. It’s not Meta or Facebook.” Opponents of Prop. D say — as the group GrowSF did in its voters guide — companies won’t have to pay the tax if workers have relatively high wages and the disparity with the top executive pay is not extreme. Big tech companies thus could avoid being subjected to the tax, while large companies with lower-paid employees would, the guide states. Tung also highlighted the fact that the money would not be earmarked for any specific purpose but would go into the general fund for The City to do “whatever they want with it.” The measure would prohibit the Board of Supervisors from reducing the Top Executive Pay Tax without voter approval, which is not currently the case. District 5 Supervisor Bilal Mahmood told his fellow Democratic Party committee members that he and a supermajority of the Board of Supervisors are supporting Prop. D because of the budget “hole” created by federal policies, which he said will affect food and health benefits for tens of thousands of San Franciscans, as well as other services, such as public transit. “You don’t have to love this measure, but you just have to acknowledge that this is the only measure you will vote on this year that will provide any source of meaningful revenue to absorb” the effects of those cuts, Mahmood said. Mahmood and some of his colleagues are supporting Prop. D even though they have sided with Lurie on other matters, such as his controversial Family Zoning plan that aims to create more housing. Mahmood said that while the size of the tax hike has been presented as very large, in reality it is “a fraction of a fraction of a percent,” and the companies that would be paying are “not small businesses.” He also questioned whether the tax would really lead to increased prices. Siding with Mahmood, committee member Peter Gallotta said the tax measures posed an existential question. “I agree that this is about which side we are on,” he said. “Are we a party that will cozy up to Wall Street and billionaires? Are we the party of Main Street and working families?” As it happens, the committee fighting against the tax measure has received financial support from several billionaires. In addition to this week’s $200,000 contribution, Larsen previously gave $500,000 in December. DoorDash and the group Neighbors for a Better San Francisco Advocacy also both gave $25,000 this week. Earlier this month, the committee got $50,000 each from billionaire Gap Inc. heirs Robert Fisher and William Fisher, as well as from an Uber ballot committee. The committee had previously reported receiving $284,400 and spending nearly $580,000 from Jan. 1 through Jan. 31. Billionaire venture capitalist Michael Moritz donated $125,000 of that. In 2025, the committee raised $525,000 and spent $235,000. On the other side, the labor-led Stand Up for SF coalition got $350,000 on Feb. 20 from Service Employees International Union Local 2015. The Stand Up for SF committee previously reported raising $350,000 from SEIU Locals 1021 and 2015 in 2025. The committee reported spending nearly $211,000 this year as of Feb. 28.
San Francisco Chamber Of Commerce Service Employees International Union Matt Dorsey Bilal Mahmood
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