While critics call it government overreach, supporters say it’s an attempt to address what they call outrageous compensation for top executives.
San Francisco is considering a ballot measure that could expand its “overpaid executive tax,” raising rates for the wealthy in an attempt to combat income inequality.
The city’s proposed tax was approved in 2020. After it was scaled back in 2024, it could be on the ballot again in June.
While critics call it government overreach into private business, proponents say it is an attempt to address what they say is outrageous compensation.
Here are the details on the tax and the debate unfolding in California.
What the Tax Does
The “overpaid CEO tax” applied to companies with more than 1,000 employees and more than $1 billion in revenue that had top executives who earned more than 100 times the median salary of their San Francisco-based workers.
Certain nonprofits were exempt, as were businesses excluded from local taxation.
The tax was a 0.1 percent surcharge on a company’s annual gross receipts if the CEO’s pay was more than 100 times the median worker’s pay. But the rate increased as the disparity rose—for a company where CEO pay was more than 600 times the median worker’s, the charge would top out at 0.6 percent.
The city estimated the tax would raise $60 million to $140 million annually.
San Francisco voters approved the tax on Nov. 3, 2020, and it became effective Jan. 1, 2022.
But in 2024 voters approved Proposition M, which lowered tax rates on small and large businesses alike, prompting a new push to extract money from companies with high earners.
Organizers belonging to three health care unions in San Francisco submitted more than 21,000 signatures to the Department of Elections to put the Overpaid CEO Act, called Proposition D, on the June 2026 ballot.
Proposition D would calculate the ratio of executive pay to all workers, not just those based in San Francisco. The goal is to produce a lower median and make more businesses subject to the tax, while also pushing more businesses into higher brackets.
By Tom Gantert
