San Francisco voters have rejected a union-backed ballot measure that sought to raise taxes on large corporations with highly paid executives, dealing a significant setback to organized labor’s efforts to address the city’s budget challenges.
Proposition D, known as the Overpaid CEO Act, was defeated by 53.6% of voters, according to the latest election results. Although additional ballots remain to be counted, the measure no longer has a viable path to passage.
The proposal would have increased taxes on large companies whose chief executives earn more than 100 times the median pay of their workers. It would also have expanded the tax calculation to include compensation paid to employees outside San Francisco.
Supporters, including unions representing city workers, argued the measure would generate up to $300 million annually to help offset a growing budget deficit that has been worsened by reductions in federal funding. The projected revenue represented roughly half of the city’s current budget shortfall.
Opponents, including Mayor Daniel Lurie and the San Francisco Chamber of Commerce, contended the measure could discourage business investment and lead some companies to reduce operations, eliminate jobs or pass costs on to consumers through higher prices.
Their arguments were bolstered by an analysis from the city’s chief economist, which estimated the measure could result in an average loss of 944 jobs over the next two decades and reduce the city’s economic output by $206 million.
Business groups and wealthy donors spent approximately $6.6 million campaigning against the measure, while supporters raised about half that amount.
Voters also rejected Proposition C, a competing business tax proposal backed by the Chamber of Commerce. That measure would have made more modest changes to the same tax structure targeted by Proposition D while expanding tax relief for additional small businesses.
The defeats leave San Francisco officials facing continued pressure to find solutions to the city’s budget challenges without the new revenue sources proposed in either measure.
Source: SF Chronicle