The ‘CEO Tax’ That Doesn’t Tax CEOs

San Francisco’s labor coalition wants to pile an 800% tax increase on top of an already crushing business tax burden—right as downtown struggles with 1/3 vacancy and companies flee to the suburbs.

The Tax That Doesn’t Tax CEOs

Let’s be clear about what this is: The “Overpaid CEO Tax” is called that because polling shows those words perform well. It doesn’t actually tax CEOs. It’s a gross receipts tax on companies with 1,000+ employees, $1B+ revenue, and CEO pay exceeding 100x median worker salary.

According to GrowSF, this would raise both the transaction revenue tax and administrative office tax by nearly 800%. Who gets hit hardest? Grocery stores and pharmacies—the businesses everyday San Franciscans depend on. Those costs get passed straight to consumers.

Stand Up For SF claims it will raise $200 million annually. But taxes change behavior. When you make a city uncompetitive, companies don’t just pay up—they leave.

The Numbers That Explain the Exodus

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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

A startup with 250 employees and $750 million in gross receipts (not profit!) pays $10.4 million annually in San Francisco. In Oakland? $4 million. San Jose? $17,000. Sunnyvale? $3,600. That’s not a rounding error—that’s a death sentence for SF’s competitiveness.

Companies worth $400 billion—Schwab, Stripe, Square, McKesson—have already left SF due to gross receipts tax burdens. And what’s the solution? Add another 800% on top. SF is trying to fill downtown but pricing itself out of the competition.

Breaking the 2024 Compromise

Here’s what makes this infuriating: In 2024, voters approved Prop M—a hard-negotiated compromise between business and labor to provide tax relief and simplify SF’s byzantine business tax system. That deal is barely a year old.

Now the hard left is breaking it. One-third of downtown is still empty. The recovery hasn’t happened. And instead of giving businesses a chance to come back, Stand Up For SF needs only ~10,500 signatures to put this on the June 2026 ballot.

They’re emboldened by 2020’s Prop L (the original “Overpaid Executive Tax”) which passed 65-35. The playbook is clear: give it a populist name, pretend it targets rich CEOs, and watch voters approve it without realizing they’re taxing their own grocery stores.

The Budget Bloat Nobody Mentions

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Not sure how many people know this but, in SF, a union is proposing fines for companies whose CEO is paid more than 100x their median employee. Again, like in the asset seizure tax, the proceeds would be to pay for various services that could be funded if there was instead a focus on cutting waste. https://t.co/RLL6r4neUs

Chamath Palihapitiya @chamath January 20, 2026

As Chamath points out, these proceeds would fund services “that could be funded if there was instead a focus on cutting waste.” Here’s what Stand Up For SF won’t tell you: San Francisco’s city budget is larger than the budgets of 17 states.

The city claims it needs this tax to offset $400 million in lost federal funds. But it’s spent tens of billions on homelessness with the problem only getting worse. Custom-made $20,000 trash cans. Massive waste at the Human Rights Commission. This isn’t a revenue problem—it’s a spending problem.

The CEO tax is headed to June ballot signature gathering. With 1/3 of downtown empty and companies already fleeing to suburbs where taxes are 200-1,300x lower, SF voters will decide whether to double down on the policies that created the doom loop—or finally recognize that you can’t tax your way to a vibrant city.

Follow @garrytan for more.