The “CEO Tax” Doesn’t Tax CEOs. It Kills SF.

San Francisco’s union-backed “Overpaid CEO Tax” isn’t about taxing CEOs at all—it’s an 800% increase in gross receipts taxes that would drive out what’s left of SF’s startup ecosystem, right when downtown desperately needs businesses to return.

The Numbers Don’t Lie: SF Is Already Uncompetitive

Let’s talk about what the gross receipts tax already does to startups in San Francisco. Garry Tan laid it out in stark terms:

Archived tweet

SF is trying to fill its downtown again with businesses but adding more gross receipts taxes just means no more startup HQs long term in SF, right at the moment they are taking off. A startup with 250 employees and $750 million in gross receipts (NOT PROFIT) would pay $10.4M annually in San Francisco, compared to $4 million in Oakland, $17,000 in San Jose, and $3,600 in Sunnyvale.

Garry Tan @garrytan January 20, 2026

That’s $10.4 million annually for a 250-employee startup in SF—versus $17,000 in San Jose, and just $3,600 in Sunnyvale. Same company. Same employees. Different tax jurisdiction 30 miles away.

Companies representing $400 billion in market value—Schwab, Stripe, Square, McKesson—have already fled SF partly due to this tax burden. And one-third of downtown office space still sits empty. The solution to this problem, according to unions? Make it worse.

The “CEO Tax” That Doesn’t Tax CEOs

Let’s be clear about the naming here: the “Overpaid CEO Tax” was chosen because it polls well. It sounds like you’re taxing greedy executives. But according to the Pacific Research Institute, it doesn’t tax CEOs at all—it taxes businesses. Specifically, it’s a gross receipts tax increase on companies with 1,000+ employees and $1B+ revenue where the CEO earns more than 100x median worker pay.

Gross receipts means revenue, not profit. A company can be bleeding money and still owe millions in SF taxes. Stand Up For SF, the union coalition pushing this measure, needs roughly 10,500 signatures to qualify for the June 2026 ballot. They’re emboldened by the fact that San Francisco voters passed the original Overpaid Executive Tax (Prop L) by a 65-35 margin in 2020.

Breaking the 2024 Deal

Here’s what makes this particularly infuriating: Proposition M passed in 2024 as a negotiated compromise between business and labor to reform SF’s tax structure. That deal specifically exempted smaller companies from the Overpaid Executive Tax—an acknowledgment that the tax burden was too high.

Now, barely a year later, hard left groups are breaking that agreement. They’re going back on a deal made in good faith. If business groups can’t trust that compromises will stick, why would any company negotiate with San Francisco in the future? Why would any startup choose to headquarter here?

Cut Waste, Don’t Add Taxes

Stand Up For SF claims this tax will generate $200 million annually to offset federal funding cuts. But the Pacific Research Institute points out that San Francisco’s city budget is already larger than 17 states. Finding $200 million in a budget that size shouldn’t require new taxes—it requires actually cutting waste.

SF’s new Inspector General, Alexandra Shepard—who helped prosecute the Mohammed Nuru corruption scandal—might finally tackle fraud and abuse in city contracting. But that requires political will to cut spending, not endless new taxes on the businesses that fund everything.

San Francisco faces a choice: continue piling taxes on businesses until downtown is permanently empty, or finally admit that its tax structure is what’s keeping the city from recovering. Every “progressive” tax increase makes SF less competitive with neighbors just 30 miles away. The June 2026 ballot will determine whether SF learns this lesson or repeats history.

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