SAN FRANCISCO HAS NEW TAX ON CEOS
January 24, 2021 - Douglas Myser
San Francisco has new tax on ceos. San Francisco voters went to the polls and approved a ballot to impose a additional tax on any large company that pays its highest paid employee over 100 times more than its median worker. The political winds have been pushing for some time on this issue, and it finally came to a head. The ballot question was approved by 65 percent of the voters. The ballot question states, the new tax is to be imposed on "businesses in San Francisco when their highest paid managerial employee earns more than 100 times the median compensation paid to their employees in San Francisco. The tax is expected to generate about $60 million to $140 million a year. Large businesses, that is those with over $1 billion in gross receipts, 1,000 employees nationwide, and administrative offices in San Francisco, would have to pay an additional tax of 0.4 percent to 2.4 percent of their San Francisco payroll expenses. Other businesses that pay taxes on gross receipts instead of payroll expenses "would pay an additional tax from 0.1 percent to 0.6 percent of the San Francisco gross receipts. San Francisco has new tax on ceos.
"This tax not only affects large, local firms like Salesforce, but also large corporations that do business in the city like Visa and J.P. Morgan, NBC News wrote. A similar tax in Portland, Oregon, affects only publicly held companies, but the San Francisco tax affects both private and publicly held firms, the NBC News article said. The percentage charged will vary depending on the size of the "executive pay ratio" between the top and median salaries. City government leaders urged voters to approve the tax, stating "The more inequality between the top executive and their workers, the higher the surcharge Corporations can avoid the tax by simply paying their executives less or by raising their employees wages. We believe that big corporations that can afford to pay their executive million dollar salaries every year can afford to pay their fair share in taxes to help us recover. Over the last 30 years, executive salaries in the U.S. have skyrocketed by 940 percent. But regular workers, salaries have grown by just 11 percent. Proposition ! incentivizes companies to invest in their workers, not just their executives.