Ballot measure added in San Francisco to increase taxes on corporations with large CEO-worker pay gap

“We believe that big corporations that can afford to pay their executives million-dollar salaries every year can afford to pay their fair share in taxes to help us recover.”

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This upcoming November election will give San Francisco voters a chance to help combat unfair pay practices. 

This comes at a time when the pandemic really shed light on the corporate corruption of CEO wages versus worker wages. Covid-19 left millions of workers suffering while profits for those high up the corporate ladder remained high or experienced profit gains. 

Proposition L has been added to the San Fransisco voter ballot by the city’s Board of Supervisors. The measure would increase taxes on corporations that have an extreme wage gap between CEO and worker wages. 

Specifically, the proposal would increase tax rates on local business revenue, ranging from an additional 0.1 percent on corporations that pay their CEO more than 100 times their typical San Francisco worker pay to 0.6 percent for companies with pay ratios of 600 to 1 or more, reports Common Dreams.

If passed, this new measure would encourage corporations to fairly narrow their pay gaps but will also be contributing to reducing poverty and inequality. 

“We believe that big corporations that can afford to pay their executives million-dollar salaries every year can afford to pay their fair share in taxes to help us recover.” says San Francisco Supervisor Matt Haney.

Portland, Oregon was the first state in the nation to adopt a tax on unfair CE)-worker pay gaps making San Francisco the second state in the nation if the measure passes. 

Common Dreams author Sarah Anderson points out some of the differences between the San Francisco proposal and the Portland tax:

  • The Portland measure uses CEO-worker pay ratio data large publicly held corporations already have to report to the Securities and Exchange Commission. Under the San Francisco model, companies would need to make some additional calculations.
  • Under the SEC regulation, companies base their median worker pay figure on their global workforce and they may not convert the compensation going to part-time employees to full-time equivalents.
  • Under the San Francisco plan, median worker pay is based on employees working in the city of San Francisco and the companies can convert part-time wages into full-time equivalents. (This will narrow the pay ratios at companies that rely heavily on part-time employees)
  • Because Portland uses SEC data, the tax applies only to publicly held corporations, whereas the San Francisco reform covers all companies (except small businesses with less than $1 million in sales), regardless of their ownership structure.
  • Due to differences in local business tax structures, the base of the two cities’ tax differs. In Portland, the surcharge is on a local business profits tax. For most companies in San Francisco, the increase would apply to the city’s existing gross receipts tax. The exception is for operations that are mostly engaged in administrative or management services and thus don’t have significant local sales. If these companies have more than 1,000 employees and more than $1 billion in annual sales nationwide, they would be subject to a tax increase based on the size of their local payroll.

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