SAN FRANCISCO—San Francisco voters approved a new tax that will target the salary gap between CEO’s and their workers.
Measure L, also known as the Overpaid Executive Tax, was passed by 65.18% of voters on November 3. San Francisco is the first U.S. city to tax both private and public businesses based on how “overpaid” their top executives are.
The San Francisco News previously reported the tax includes companies where the CEO receives 100 times that of the average employee. In those cases, the corporation would be taxed an additional .1 percent of their annual business taxes. If the disparity is larger, then the tax is larger.
The measure, introduced by San Francisco District 6 Supervisor Matt Haney, is expected to generate an estimate of $60 million to $140 million a year in general funds.
Starting in 2022, the city plans to apply these additional funds towards healthcare needs. “We are going to put those resources to good use by hiring thousands of healthcare workers that the city needs to get us through the pandemic,” Haney said. “These health works just saved the lives of countless San Franciscans and we absolutely still need them to be there for all of us.”
In 2018, Portland, Oregon became the first U.S. city to begin taxing some of its companies based on a CEO-to-worker pay. The tax only applies to publicly held companies because the cities rely on SEC data. The city estimated that the tax would raise roughly $3.5 million in its first year.