San Francisco asks voters to tax corporations with big pay gaps

Union members hit the streets for Prop D

On March 14, union members across San Francisco gathered at the SEIU 1021 union hall to start knocking on doors for Proposition D, also called the Overpaid CEO Act. The measure goes before voters on June 2, 2026.

It is backed by the Stand Up for SF coalition, which brings together several major unions, including SEIU Local 1021, IFPTE Local 21, and Teamsters Joint Council 7, plus community groups like SF Rising and the Chinese Progressive Association.

Prop D targets big corporations with wide pay gaps

The measure would add a surcharge to the city business taxes of companies with at least 1,000 employees and more than $1 billion in revenue, but only when a company’s top executive earns more than 100 times the median worker salary.

The wider the pay gap, the bigger the surcharge. Small businesses, homeowners, renters, and working families would not pay anything extra.

Revenue would go to the city’s general fund to support mental health programs, public hospitals, and emergency services.

Coalition says it could raise $200 million a year

Supporters say the measure could bring in more than $200 million a year for San Francisco. That estimate comes from the Stand Up for SF coalition.

San Francisco is staring down a projected $936.6 million budget shortfall over the next two fiscal years, a gap that city analysts expect to grow to nearly $1.2 billion by 2029.

Supporters argue that the tax revenue would help the city avoid cutting services that residents depend on most.

Federal Medicaid cuts are pushing this measure

Congress passed, and President Donald Trump signed, the One Big Beautiful Bill Act on July 4, 2025. The Congressional Budget Office said the law cut roughly $1 trillion from federal Medicaid spending over a decade.

San Francisco’s city controller estimates those cuts will cost the city more than $200 million per year by the 2027-28 fiscal year.

About 53% of patients at San Francisco’s public hospitals rely on Medicaid, and a city analysis found between 25,000 and 50,000 San Franciscans could lose Medi-Cal coverage by the end of 2027.

San Francisco invented this kind of tax in 2020

San Francisco voters first passed an overpaid executive tax in November 2020, known as Proposition L, with about 65% support. It was the first tax of its kind in the country.

The original measure added a surcharge ranging from 0.1% to 0.6% on a company’s gross receipts based on the CEO-to-worker pay ratio, and it took effect in 2022.

The city projected it would generate between $60 million and $140 million a year.

A 2024 deal slashed the tax by 80%

In November 2024, voters approved Proposition M, a broad business tax overhaul that labor and business groups negotiated together.

That deal cut the overpaid executive tax rates by roughly 80%, dropping the maximum surcharge from about 0.6% to roughly 0.1%. Business groups now say Proposition D breaks the terms of that agreement.

They argue the coalition is walking away from a compromise both sides struck just over a year ago.

Prop D changes how the pay gap gets measured

One of the biggest changes in Prop D is how the pay ratio would be calculated.

The current tax compares executive pay to the median salary of a company’s San Francisco workers only. Prop D would use a company’s entire nationwide workforce instead.

Because workers outside San Francisco often earn less, that would widen the pay gap on paper and likely increase what companies owe.

The measure would also bar the Board of Supervisors from cutting the tax without putting it back to voters.

How this measure made it onto the ballot

The coalition submitted the measure to the city Registrar of Voters in November 2025. On Dec. 6, more than 150 volunteers launched a signature drive at the SEIU 1021 union hall.

They collected more than 21,000 signatures, more than twice the roughly 10,500 required to qualify. The measure officially landed on the ballot in January 2026.

Five governor candidates back the measure

On March 4, 2026, five Democratic candidates for California governor endorsed Proposition D. The group includes Katie Porter, Tom Steyer, Eric Swalwell, Tony Thurmond, and Betty Yee.

State Assemblymember Matt Haney, who wrote the original 2020 tax, has also spoken out in favor of it. San Francisco Supervisor Bilal Mahmood has also publicly supported the measure.

Business groups raise money to fight back

Campaign finance filings from mid-March 2026 show that about three-quarters of the more than $800,000 raised by a business-backed committee opposing the tax came from billionaire donors.

The San Francisco Chamber of Commerce has put forward its own competing measure, the Small Business and Economic Recovery Act.

That measure would expand small-business tax exemptions while also raising the overpaid executive tax rate on a slower schedule.

Business groups warn the tax could drive companies out of San Francisco, and they note that companies would owe it even if they are not profitable.

Voters will pick a direction on June 2

Both measures appear on the June 2 ballot. If both pass, the one with more votes wins.

Political scientists note that competing measures on the same ballot can confuse voters, which can increase the chance that both fail.

San Francisco requires signatures from only about 2% of registered voters to put a measure on the ballot, one of the lowest thresholds among California cities.

Mayor Daniel Lurie has already ordered $400 million in ongoing budget cuts and signed a $15.9 billion budget that closed an $800 million shortfall in 2025.

June 2 will show which direction San Francisco voters want to go.

This article was created with AI assistance and human editing.

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