S.F.'s Overpaid CEO Tax could cost city more than 900 jobs, city study says

Restoring San Francisco's Overpaid CEO Tax would hurt the city's economy, an analysis by the Controller's Office found.

Voters will decide on Proposition D on June 2, which if approved would re-implement a gross receipts tax for large companies with CEOs that make 100 times more than the median employee. It applies to companies with over 1,000 workers.

Passing Prop D would result in an average of almost 950 fewer jobs each year over the next 20 years and a reduction of $206 million in gross domestic product, compared to no policy change, the controller's office estimated.

The controller's office expects the measure to generate $250 million to $300 million per year in tax revenue, but expects job losses and reduced business investment to offset additional government spending.

"The tax increase will encourage affected businesses to reduce their tax burden by reducing employment in the city, or by raising prices; both reactions would weaken the city's economy," said the controller's office.

Voters first approved the Overpaid CEO Tax in 2020 and it went into effect in 2022. But in 2024, voters lessened the tax burden as part of a larger business tax overhaul.

Supporters are now seeking to bring back the tax as the city faces a major deficit and massive cuts to federal funding. A coalition of unions including SEIU are major supporters and held a rally on Wednesday in support of the measure. Sen. Bernie Sanders, I-Vermont, also backed the measure.

"This is the only solution being presented to voters to protect programs and services from being cut," Scott Mann, a spokesperson for the coalition, said in March.

Mayor Daniel Lurie, the San Francisco Chamber of Commerce and Bay Area Council, a business advocacy group, oppose the measure.

Proposition C, a competing measure backed by businesses also on the June ballot, would make minor changes. If both Prop C and Prop D pass, only the one with more votes would take effect. Both require a simple majority to pass. Approval of Prop C would result in a small gain of 90 jobs on average and a GDP increase of $20 million on average over the next 20 years, the controller's office said.

Prop D differs from the prior version of the tax by calculating median worker pay for all employees, rather than those based in San Francisco. Businesses subject to the tax would see their tax ranges between now and 2027 rise from the current 0.021% to 0.125% to a new range of 0.183% and 1.121%.

The controller's office forecasts that Prop D would predominantly affect the tech company-heavy information sector, which would pay for an estimated 36% of new taxes. Retail would owe 27% and financial services would pay 14% in the forecast.

Prop D "represents a policy choice to raise business taxes in a period when there is substantial evidence that businesses are reducing their presence in San Francisco, relative to other locations," the controller's office stated. "San Francisco's economy cannot credibly be described as being in a downward spiral at the moment. But raising taxes on a shrinking tax base - and thus encouraging further relocation out of the city - does raise that risk."

The controller's office used the REMI economic model in its analysis, based on the impact of $275 million in production costs and $275 million in additional city spending.

The Bay Area Council Economic Institute, a think tank affiliated with the Bay Area Council, released a report last week that found San Francisco has a higher business tax burden compared to other cities such as Austin, Boston, Miami and Seattle. The study attributed part of the city's slow recovery from COVID to higher taxes.

"San Francisco continues to offer extraordinary advantages in talent, innovation, and global connectivity, but this report makes clear that the city's tax structure has become a growing competitive disadvantage," said Jeff Bellisario, executive director of the Bay Area Council Economic Institute, in a statement. "Tax competitiveness matters, particularly in industries where companies can increasingly deploy talent and investment across multiple regions."

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This story was originally published May 14, 2026 at 10:35 AM.