Good afternoon sf.citi members,
Happy Friday. As there is never a dull day in San Francisco politics, I am writing to update you on the return of the CEO Tax. The ordinance was filed on Thursday, not introduced at the Board, and became available online today.
The ordinance, re-introduced as Tax on Businesses With Disproportionate Executive Pay to Fund Mental Health Services, and sponsored by Supervisors Haney, Ronen, Walton, Mar, Brown and Yee, is intended to be placed on the November 2020 ballot as a tax to fund Mental Health SF or other mental health services offered in San Francisco. This is a dedicated tax and would require two-thirds voter approval to pass.
The ordinance imposes an additional gross receipts tax or an administrative office tax on businesses with a greater than 100:1 ratio of the compensation of the businesses highest-paid employee to the median compensation paid to the businesses employees based in the San Francisco, and seeks to increase the City’s appropriations limit by the amount collected under the additional tax for four years from November 3, 2020. In the language of the ordinance, “compensation” is defined by “wages, salaries commissions, bonuses, property issued or transferred in exchange for the performance of services (including but not limited to stock options), compensation for services to owners of pass-through entities, and any other form of remuneration paid to employees for services”.
The Mental Health Gross Receipts Tax shall be calculated as follows:
- 0.1% of the person or combined group’s taxable gross receipts for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 100:1, but less than or equal to 200:1;
- 0.2% of the person or combined group’s taxable gross receipts for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 200:1, but less than or equal to 300:1;
- 0.3% of the person or combined group’s taxable gross receipts for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 300:1, but less than or equal to 400:1;
- 0.4% of the person or combined group’s taxable gross receipts for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 400:1, but less than or equal to 500:1; or
- 0.5% of the person or combined group’s taxable gross receipts for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 500:1.
The mental health administrative tax will be measured by the person’s total payroll expense and will be calculated as follows:
- 0.4% of the person or combined group’s total payroll expense attributable to the City for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 100:1, but less than or equal to 200:1;
- 0.8% of the person or combined group’s total payroll expense attributable to the City for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 200:1, but less than or equal to 300:1;
- 1.2% of the person or combined group’s total payroll expense attributable to the City for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 300:1, but less than or equal to 400:1;
- 1.6% of the person or combined group’s total payroll expense attributable to the City for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 400:1, but less than or equal to 500:1; or
- 2.0% of the person or combined group’s total payroll expense attributable to the City for a tax year if the person or combined group has an Executive Pay Ratio for that tax year of greater than 500:1
The legislation is currently assigned to the Budget and Finance Committee and has yet to be calendared for discussion. We will be sure to keep you informed should it be calendared before the Board of Supervisors go on Winter Break between the dates of 12/18/19 and 1/6/20.
Please do not hesitate to reach out with any questions in the meantime. Thank you for your continued membership.
Jen
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