San Francisco’s “Overpaid Executive Tax”: Pay Justice or Revenue Enhancement?

Proposition I, passed by San Francisco voters in the just-concluded election, is billed as a measure to combat pay inequity, at least between top executives and workers. Leaving aside whether Prop I’s 0.1% per hundredfold pay differential surcharge on annual business taxes will work as intended, an at least equally interesting question is: What, exactly, is Prop. I intended to do?

If Prop. I is intended to in some way diminish pay differentials between top executives and average workers by curbing executive pay, the authors of Prop. I are counting on businesses to engage in tax avoidancearranging their affairs (in this case, executive compensation) to reduce or eliminate their exposure to the tax. By contrast, if the intention is to raise revenue – as comments by San Francisco Board of Supervisors member and principal Prop. I proponent Matt Haney suggest – then Prop. I’s authors are counting on businesses to maintain their current executive compensation practices and thus do nothing (at least, at the executive compensation end) to diminish pay differentials. So, what is Prop. I actually about—pay justice or revenue enhancement? >>>

LINK: San Francisco voters pass ‘Overpaid Executive Tax’ (by Cyrus Farivar for NBC News)

Trying to address the growing wage gap between chief executives and workers, San Francisco voters overwhelmingly approved . . . Proposition L, [which] will charge any company that does business in San Francisco and has a top executive earning over 100 times more than their “typical local worker,” according to the tax’s author, Matt Haney, a member of the city’s Board of Supervisors. . . . 

Haney wrote on Twitter that the proposition would generate “up to $140 million” that could be used to “support our health and public health systems, which are deeply strained from the consequences of inequality. We will hire nurses, social workers and emergency responders, and expand access and treatment.” . . .

What do you think?

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