Trying to tackle the growing wage gap between executives and workers, San Francisco voters have fully approved what is arguably the nation’s first tax to fight inequality. in payroll.
The “overpayment executive tax”, officially known as Prop L, would charge any company that does business in San Francisco and has a senior executive 100 times more expensive than a “local worker Their “typical approach,” says the author of the tax, Matt Haney, a member of the City Supervisory Board.
Companies with top executives in this category must pay a 0.1% surcharge on their annual business tax. Additional surcharges increase 0.1% for each factor of 100, with a maximum of 0.6%. So the top earners earn 200 times more than ordinary workers pay 0.2% tax, etc.
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San Francisco voters accept the tax at a time when CEO compensation is soaring. A study published by the Institute of Economic Policy found that executive salaries and bonuses rose 14% in 2019 to $ 21.3 million. The CEOs now make 320 times more than an ordinary worker.
The latest award applies to many companies. While Portland, Oregon, has a similar measure, passed in 2018, that tax applies only to publicly held companies. This measure affects both private and public companies. This tax not only affects large local companies like Salesforce, but also affects large corporations doing business in the city, such as Visa and JP Morgan.
Haney wrote on Twitter that the proposal would create “up to $ 140 million” that could be used to “support our public health and wellness system, which is under deep stress from the end. We will hire nurses, social workers and emergency responders, and expand access and treatment. “
A city analysis more conservatively estimates that taxes will bring in between $ 60 million and $ 140 million, but notes that this amount could vary from year to year.
But there are some who oppose the plan. In a city submission expressing her objections, Richie Greenberg, a political commentator and former mayor candidate, warned that the proposal would affect the city’s business before it is voted on.
Companies will reduce or stop hiring low-level staff as an answer to this measure, if it passes, he wrote. “Such a tax will most likely hinder attracting new businesses to move to San Francisco, at a time when we are witnessing an unprecedented economic slowdown caused by the pandemic.”