June 25, 2019 San Francisco Supervisors propose another corporate tax based on CEO pay On May 28, 2019, San Francisco Supervisors Hillary Ronen and Matt Haney proposed a new additional gross receipts tax based on CEO pay. Titled the Mental Health Gross Receipts Tax and dubbed the "Excessive CEO Salary Tax", the proposal will likely appear on this November's ballot. If approved, a 0.1% surcharge would be imposed on the San Francisco gross receipts of any company doing business in the city whose CEO makes 100 times more than the median wage of its workers. The surcharge would be increased to 0.2% if the company's CEO earns 200 times more than its median employee wage, 0.3% if 300 times more, 0.4% if 400 times more, 0.5% if 500 times more with a cap of 0.6% of gross receipts for any company whose CEO makes 600 times or more than the company's median employee salary. Proponents suggest that this tax would generate $100 million annually to fund the overhaul of San Francisco's mental health and substance use treatment systems — estimated at $70 million in new annual costs. The tax revenues would fund "Mental Health SF", which is another measure that would require voter approval this November and, if enacted, would provide 24/7 access to mental health and substance abuse treatment for individuals in crisis. For businesses engaged in business as an administrative office in the city, rather than being imposed on gross receipts, the tax rates would be imposed on the business's payroll expense attributable to the city, as follows:
The proposal comes on the heels of two 2018 San Francisco voter-approved tax increases: (1) the commercial rents tax (see Tax Alert 2018-1423), and (2) the homelessness tax (see Tax Alert 2018-2307) and would be in addition to the recently proposed "IPO Tax" (see Tax Alert 2019-0973). To appear on the November 2019 ballot, a majority of the eleven San Francisco Supervisors would have to approve the Excessive CEO Tax or the Mental Health SF proposals. If approved for the ballot the Excessive CEO Tax would require a two-thirds majority vote of the people to become law. If the voters do not approve the proposed measure that would create Mental Health SF, but they do approve the Excessive CEO Tax by the requisite super majority, the funds collected from this tax would fund mental health facilities, services and programs in the city more generally. San Francisco Mayor London Breed has not stated a position on the proposal. ———————————————
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