On July 17, 2019, San Francisco Board of Supervisors tabled a previously proposed tax on stock-based compensation, which Supervisor Mar proposed in May of this year. (See Tax Alert 2019-0973) The proposal, dubbed the "IPO Tax," was intended to appear on the November 2019 ballot. If approved, it would have imposed an additional payroll tax on stock-based compensation to fund affordable housing in the City. The City acknowledged the proposition would have required a supermajority of greater than 66% of voters to pass.

The tax will likely be re-introduced to voters as a ballot initiative next year. A ballot initiative would likely require a simple majority of greater than 50% of voters to pass. It is not known whether the ballot initiative will propose applying the tax retroactively.

The IPO Tax would have been retroactive to May 7, 2019, the date the proposed ordinance was introduced. This meant that all San Francisco companies would have been subject to the new payroll expense tax when employees exercised their stock options, starting in May of this year. The City had estimated that the tax could collect between $100 million and $200 million within the first two years.

The proposed "CEO Tax" has also reportedly been tabled and will be reintroduced next year through voter initiative. For more on the proposed CEO Tax, see Tax Alert 2019-1160.

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