Does San Francisco Need Another Union-Backed Tax?
San Francisco and Portland are the only two US cities that tax companies if the pay ratio between the CEO and other employees is “too high.”. After agreeing to lower this tax in 2024 via Proposition M, the Service Employees International Union (SEIU) and its organized labor allies are pushing a ballot measure to raise it again, giving companies another reason to regret their decision to locate in San Francisco.
Proposition D would increase the so-called Overpaid CEO Tax to as much as 1.121% of gross receipts or 4.47% of payroll. Those changes would apply indefinitely unless repealed by voters.
Supporters say the tax would raise more than $200 million a year to help protect hospitals, mental-health services, homelessness programs, and in-home supportive services. The ballot ordinance says that the tax is needed to offset cuts from HR1, last year’s federal budget bill which made significant changes to the Medi-Cal program.
But this looks like a case of double dipping.
Another SEIU local, United Healthcare Workers West, is sponsoring of the Billionaire Wealth Tax, using the argument that it is needsed to offset HR1 cuts. Voters are left to wonder: do we need to tax both California billionaires and San Francisco companies to make up for these federal “cuts,”, which, in fact, are simply a reduction in the rate of increase in federal health spending.
Among the other unions bankrolling the “Yes on D” campaign are IFPTE Local 21 and Transport Workers Union Local 250A. The latter union also supports the regional transit tax expected on the ballot this November as does SEIU. So business interests that have been allying with unions to pass the transit tax may want to give second thought to whom their allies are.
The CEO tax comes at a precarious time. San Francisco’s economy is improving, but it is hardly out of the woods. CBRE reported a 30.4% office vacancy rate in the city in the first quarter of 2026. Its broader 2026 headquarters study found that headquarters relocation activity accelerated in 2025, with many companies downsizing or rethinking office footprints in response to hybrid work. Proposition M itself was sold partly as a response to the city’s overdependence on a relatively small number of major taxpayers. Adding another narrow, highly visible tax aimed at large firms may not trigger an instant exodus, but it does reinforce the impression that San Francisco treats major employers as a bottomless well of potential revenue. In one or more cases, it could be the straw that breaks the camel’s back.
Also, based on the City’s past performance, voters might question whether it will spend hundreds of millions of new revenues responsibly. In 2025, the City Attorney announced a $1 million settlement with Providence Foundation after an investigation found fraudulent invoices, accounting irregularities, and wage violations; the city said $105,000 in public money had been wasted. A city audit of HomeRise found more than $200,000 in bonuses, a $12,500 social event charged to operations, and 118 active credit cards in use as of January 2023. The Dream Keeper scandal produced findings of $4.6 million in improper spending, and the Parks Alliance controversy exposed allegations that millions in restricted funds were misused.
Also, the federal cuts may not prove as large as supporters estimate. One anticipated cut, a reduction in funding for Disproportionate Share Hospitals (those that take a lot of Medi-Cal patients) has already been postponed. If Democrats take control of Congress next year, they may be able to implement their stated goal of reversing HR1 cuts in future budget negotiations.
As San Francisco voters review their ballot guides, hopefully they will consider that SEIU has gone back on its agreement with other San Francisco interests to seek a redundant tax that may not be needed and whose proceeds may well be squandered.
Marc Joffe is a Visiting Fellow at California Policy Center