(The Center Square) – The city of San Francisco took in $206 million in fiscal year 2023 based on a new tax that penalized private businesses who it was determined had “overpaid” its executives.
The Overpaid Executive Tax was approved by voters on Nov. 3, 2020 and became effective Jan. 1, 2022.
The city’s recently released audited budget stated that 2022-23 was the first year the tax was collected.
The Overpaid Executive Tax imposes a gross receipts tax on businesses in which the highest-paid employees – even outside city limits – earns more than 100 times the median compensation of that company’s employees.
The higher the gap between the top-paid executive and the company’s median salary for employees, the higher the tax rate.
Certain non-profits as well as banks and insurance companies are exempt from the tax.
The city provided an example of how the tax works. A company that had just over 1,100 employees who had a median compensation of $50,000 and whose CEO made $8 million. That company had gross receipts of $36 million. The Overpaid Executive Tax would be $36,000.
