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San Francisco will put ‘CEO tax’ on the poll this November

Large San Francisco corporations with seven-figure salaries could be forced to save a dime for the city’s general fund if voters approve a new tax this November.

The supervisory board unanimously voted on Tuesday to put the measures referred to as “CEO tax” and “overpaid executive tax” on the November vote.

If approved, a tax of between 0.1% and 0.6% would be added to the annual business tax payment for companies in the city that compensate their executives 100 times more than their average employee. The tax rate starts at 0.1% for a ratio of 100: 1, then increases to 0.2% for a ratio of 200: 1, and so on, up to 0.6% for a six hundred times the pay gap between executives and employees.

“What we are proposing today is a very simple, straightforward tax measure,” said Board Chairman Matt Haney, who supported the law along with nine other board members and presented the bill to the board of directors. “When it happens, any company that pays its top manager 100 times more than its median worker will have a 0.1% surcharge added to its annual business tax payment. The greater the inequality between top management and workers, the higher the percentage. “

For example, a company with 3,000 employees and an average salary of $ 125,000 would pay additional income tax of $ 375,000 if it had an executive who also earned at least $ 12.5 million annually; If his CEO made $ 75 million, he’d have to pay $ 2.25 million in taxes. However, a company that pays its employees less, say a median of $ 50,000, would be more likely to be affected by the tax; it would start paying the additional rate on a board pay of $ 5 million.

Wells Fargo, the San Francisco-based bank, reportedly increased its CEO’s salary to $ 23 million in 2019. She would have to pay her average city worker at least $ 38,000 to avoid the highest tax rate and $ 230,000 to avoid the lowest tax rate.

Uber, the ridesharing giant headquartered in San Francisco, reportedly paid its CEO $ 45 million in 2019. Its drivers are considered independent contractors, so the salary test would fall on its well-paid engineers in town. Still, the average worker would have to earn $ 450,000 annually to avoid the tax at a compensation rate as high as Dara Khosrowshahi.

“Big companies that can afford to pay their executives multi-million dollar salaries each year can afford to pay their fair share of taxes,” Haney said.

The law was written to cover the many types of compensation paid to top executives, including bonuses and stock options. In the text of the bill, “compensation” is defined as “wages, salaries, commissions, bonuses, property issued or transferred in exchange for the provision of services (including but not limited to stock options).”

The additional tax would only apply to companies with gross annual revenue of $ 1.7 million or more and to executives with annual revenue of $ 2.7 million or more.

Regulators estimated that the new tax would raise $ 140 million each year for the city’s general fund, what Haney described as a “much-needed source of income to tackle income inequality,” which would enable the city to “help hundreds of doctors, “Hire nurses and first aiders.”

Earlier this year, San Francisco officials announced that the coronavirus pandemic had set their projected two-year budget to a deficit of $ 1.7 billion.

The proposal is one of three additional tax measures that San Francisco voters will face this November. If approved that required a simple majority at the ballot box, the tax would come into effect in 2022.

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