The Facts

The so-called “CEO tax” that San Francisco voters may see again on the June 2, 2026 ballot is not actually a tax on CEOs. In fact, it is a "gross receipts tax" on revenue from transactions in San Francisco, and charged on the total revenue rather than on profits. Business and consumer advocates are concerned that this tax will lead to higher prices for everyday goods and services.

The Chronicle has reported the union-backed June tax would raise the top rate almost 800%.

CEOs themselves do not pay this tax directly, and economists believe that such taxes are often passed on to consumers in the form of higher prices.

So why are supporters of the tax calling it a "CEO tax"? Besides the political advantages of using misleading populist branding, the tax bases its tax brackets on the ratio of CEO pay to median worldwide employee pay within a company. So, for a company like Safeway where the CEO makes significantly more than a cashier, their taxes may increase by as much as 800%. So this "CEO tax" is really a "transaction revenue tax with brackets determined by CEO pay ratio," which is a lot less catchy.

And the detail rarely mentioned is that the tax will also raise the "Administrative office tax," which is based on employee payroll based in San Francisco, almost 800% as well.

The Context

The gross receipts tax has varied wildly since it was first enacted in 2018.

In 2018, voters approved Proposition C, layering a new gross-receipts tax for homelessness on large businesses. Financial company Stripe moved its headquarters out of San Francisco, citing the inability to afford the new tax rates due to a flawed tax structure that wiped out their profit margin.

Then in 2024, voters approved Proposition M to cut and streamline business taxes—including lowering the overpaid-executive tax.

Now labor unions are at it again, saying their measure would raise about $200 million per year for the general fund. Critics counter that a gross-receipts hike this large will be passed through into prices (especially for high-volume, low-margin retailers like groceries), as described by CBS Bay Area, and push businesses out of San Francisco like Stripe before them.

The GrowSF Take

Not only is the "CEO tax" dishonestly named, but it is also a poorly designed tax that will likely hurt the very people it purports to help. By leveraging these massive tax increases on gross receipts, the tax will wipe out the profit margins on low-margin businesses like grocery stores and discount retail stores, primarily impacting working-class and low-income consumers who cannot afford higher prices on basic goods.

We're particularly disappointed to see Supervisor Bilal Mahmood supporting this tax, which will impact residents of his district the hardest. People who use SNAP benefits to buy groceries will see their food costs rise and struggle to keep their families fed. Meanwhile, every "overpaid CEO" that lives in his district will see no impact whatsoever on their personal finances.