San Francisco weighs 'overpaid executive' tax on city's businesses

California’s proposed big business tax will cause Tesla, Thiel to leave state: Andy Puzder

Former CKE Restaurants CEO Andy Puzder argues California’s proposed big business tax, as part of coronavirus relief legislation, will cause companies to leave the state.

San Francisco is looking to hike taxes on its highest-earning business leaders under a proposal that could be put on the local ballot in November.

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The city’s Board of Supervisors moved to submit an additional gross receipts tax, or an administrative office tax, on businesses with a compensation ratio in excess of 100:1 for the highest-paid employee to the median employee salary. The tax has been dubbed the “Overpaid Executive Gross Receipts Tax Ordinance.”

Executive compensation would take into account things like wages, salaries, bonuses and commissions.

CALIFORNIA MULLS HEAD TAX ON BIG BUSINESS AS ELON MUSK, PETER THIEL CONSIDER LEAVING

The tax itself would be progressive, equal to 0.1 percent of taxable gross receipts for an executive – or group of executives – earning between 100 to 200 times more than their average employee. The levy would rise to 0.2 percent for those earning 200 to 300 percent more than their workers and up to 1 percent for those earning 900 to 1000 times their median salary of employees.

Small businesses would largely be exempt from the tax.

The measure, which would be voted on by residents on Nov. 3, was first reported by the San Francisco Chronicle on Tuesday.

The goal would be to have it in place beginning in 2022.

SAN FRANCISCO RENTS PLUNGE AS TECH EMPLOYEES ABANDON HIGH-PRICED CITY TO WORK REMOTELY

San Francisco is contending with a loss of residents as work-from-home policies turn permanent for some tech employees – a trend that could exacerbate coronavirus-related revenue declines if it continues. Rents for a one-bedroom apartment in the major metro area were down 9.2 percent in June when compared with the same period last year, according to data from rental site Zumper. That is the largest decline since at least 2015 and brings the price point ($3,360) down to where it was three years ago.

Anthemos Georgiades, the CEO of Zumper, called the San Francisco price decline “unprecedented” in a Twitter post, saying it supports the theory that people are starting to leave the city as options for remote work in the technology sector become more widely available.

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And the overpaid executive tax is not the only hike lawmakers in California are considering imposing on businesses, as the state seeks to recover from coronavirus-related financial losses.

As previously reported by FOX Business, California lawmakers are considering coronavirus relief legislation that includes a head tax on the state’s big businesses.

The Local Government and School Recovery and Relief Act, which was recently amended in the California state Senate, includes a proposal to impose a tax “on large business.” Specifically, companies with more than 500 employees “that perform any part of their duties within the state” would pay a tax equal to $275 per employee.

As the state wrestles with the fallout from the virus, it faces a $54 billion budget hole, according to Gov. Gavin Newsom.

No other state has a head tax.

Seattle came close to implementing a head tax in 2018, which was also set at $275 per employee annually (on companies that make more than $20 million in revenue). While unanimously approved by the city council, the measure was met with staunch resistance from local businesses, including Amazon and Starbucks. Amazon said it would reconsider projects in the city if the measure went into effect.

Ultimately, Seattle did not follow through with the policy.

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