Proposition L — November 2020

From the San Francisco November 2020 Nonpartisan Voter Guide.

Executive pay has been on the rise, growing faster than the stock market and the pay of typical workers and college graduates, according to the Economic Policy Institute. That contributes to rising inequality, the institute finds. This measure proposes a business tax increase intended to encourage businesses to equalize their pay structure or pay higher tax rates. The tax rate would increase in step with the ratio of CEO pay to median worker compensation.

Revenue from the measure is expected to range from $60 million to $140 million a year. The Board of Supervisors intends to direct revenue from this tax toward hiring doctors, nurses and first responders during the coronavirus pandemic. 

The tax would be higher for businesses whose only functions in San Francisco locations are administrative. 

A Recode report last year found that in San Francisco this kind of tax would hit the retail sector harder than others. At Gap, for instance, the ratio between CEO pay and the pay of a median worker is more than 3,000 to 1. While that ratio may reflect the comparison between the company’s median worker in its global workforce, Proposition L would only consider the earnings of San Francisco-based employees.

Opponents argue that, rather than reducing the difference between executive and median worker pay, businesses might just move their lowest-paid workers out of the city or stop hiring entry-level employees. They also contend the tax would discourage businesses from staying or moving to the city. 

Listen to this interview on “Civic” with Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, on Proposition L: