Voters in San Francisco have fully approved a voting measure that imposes additional taxes on any company that pays its highest-paying employee 100 times more than the average employee.
The question of ballot was passed by 65% of voters on Tuesday, with 230,298 votes in agreement and 123,943 votes no. As the voting question states, the new tax rate will apply to “businesses in San Francisco where their top-paid managers earn 100 times more than the average compensation paid for. their employees in San Francisco. “
The tax rate is expected to increase from $ 60 million to $ 140 million per year. Large businesses – those with over $ 1 billion in total revenue, 1,000 employees nationwide, and administrative offices in San Francisco – will have to pay an additional tax of between 0.4 percent and 2, 4 percent of their San Francisco salaries. Other businesses that pay tax on gross sales instead of payroll costs “will have to pay additional tax between 0.1% and 0.6% of the [their] Total sales of San Francisco. “
“This tax not only affects large local companies like Salesforce, but also large corporations doing business in the city, such as Visa and JP Morgan,” NBCNews wrote. A similar tax in Portland, Oregon, affects only public companies, but the San Francisco tax affects both private and public companies, the NBCNews article said.
The calculated percentages will vary depending on the size of the “operator pay rate” between top and average wages. City government leaders urged voters to approve the tax, writing:
The more inequality between the top operator and their employee, the higher the surcharge. Companies can avoid taxes by paying their executives less or by raising their employees’ salaries.
We believe large corporations that can afford to pay their executives millions of dollars a year can pay fair taxes to help us recover. Over the past 30 years, operating wages in the United States have soared 940 percent. But ordinary workers’ wages increased only 11%. Measure L encourages companies to invest in their workers, not just their executives.
The City’s leader also said the new tariff “will allow the City to hire hundreds of nurses, doctors and first responders.” But sales can vary a lot from year to year. “A narrow base of expected payers, annual fluctuations in the value and form of executive compensation, and potential resettlement risks associated with tax increases contribute to high variation in tax rates. Proposals and performance-based estimates from previous years may not predict revenue future, ”wrote City Controller Ben Rosenfield, explaining his revenue estimates between $ 60 million and $ 140 million. la a year.
For tax purposes, indemnities include wages, salaries, commissions, bonuses and property including stock options, as well as “compensation for services to owners of entities. transitions and any other form of remuneration paid to employees for services. “
A study by the Economic Policy Institute found that in 2019, the CEOs of the top 350 US businesses “earned[ed] 320 times higher than a regular worker, “increased from 293 to 1 in 2018 and sharply increased from 21 to 1 in 1965 and 61 to 1 in 1989.” Those numbers are based on a measure of the CEO’s salary “calculates the stock awards when awarded and stock options when paid with cash rather than when granted.” The average CEO salary for those 350 companies is $ 21.3 million.
Conservatives broke out “the strange hocus-pocus tax”
Taxes have been opposed by conservatives.
“Employee salaries are based on experience and value for a company. By enacting such a bizarre tax on executive salaries as Measure L seeks to impose, motivations to hiring new recruits (or retraining existing employees due to Covid-19 changes in business) will be reduced, “official statement of the opposition, by Republican politician Richie Greenberg write. “In other words, companies will reduce or stop hiring low-level employees as an answer to this measure, if it is passed. Furthermore, such a tax will most likely discourage attraction. New businesses moving to San Francisco, at a time we are witnessing an unprecedented economic downturn caused by the pandemic. “
Greenberg also accused City Hall leaders of “an unhealthy obsession with social media and information technology” and ignored that “San Francisco is more than just social media technology. “
“[T]he perceived by many City Hall leaders that the technology sector created the economic imbalance – but these same leaders ignored the fact that modern advanced medical research facilities. and the financial services sectors have a great impact and employee base in the city, “he wrote.
The city’s Democrats countered, “Don’t believe Republican intimidating tactics. San Francisco is one of the most desirable cities in the US for companies to be based in. A small percentage. .01% of their corporate tax will have little effect on companies that can afford to pay their CEOs millions of dollars per year. “
The levy was also opposed by the San Francisco Taxpayers Association and the Liberal Party of San Francisco.
The success of the voting question shows “voters are asking us to act on inequality,” wrote Matt Haney, who serves on the city’s Supervisory Board and has sponsored the voting question, wrote on Twitter. The new revenue will “support our health systems and public health, which are stressed by the consequences of inequality. We will hire nurses, social workers and emergency responders. , while at the same time expanding accessibility and treatment, “he wrote.