San Francisco voters approved several new taxes on Tuesday amid the recession brought by the coronavirus pandemic despite arguments that higher taxes could worsen the economic problem.
There were still about 90,000 votes to be counted by Wednesday, but the four new significant taxes had nearly enough leads to nearly guarantee that they would be passed. The recession the coronavirus pandemic caused has not deterred San Francisco residents from their favor towards taxes targetting big businesses.
Despite having immense support from voters, the new tax measures are not guaranteed to lift the city’s economy back to its former status. However, a spokesman for the mayor of San Francisco, Jeff Cretan, said the taxes would help the city recover its economy from the COVID-19 crisis.
Mayor London Breed and the Board of Supervisors were most anxious with two different measures. Proposition F is a major tax overhaul that focuses on businesses, while Proposition A is a bond measure worth $487.5 million to be used on homelessness, parks, and mental health programs. Officials consider both taxes to be crucial in maintaining the city’s $13.1 billion budget.
However, the budgets the mayor approved for the next two fiscal years were balanced on the premise that the economy would recover slightly by the year’s end. They also assume that the Federal Emergency Management Agency (FEMA) would continue financially supporting the city with expenses related to the coronavirus, the San Francisco Chronicle reported.
Three of the tax measures aim to generate additional funds to provide affordable housing, COVID-19 relief packages, and other public assistance. Proposition I raises the transfer tax on sales in real estate. Proposition F will increase business tax for some while lowering the payment for others. And Proposition L aims to tax “overpaid” executives based on a formula the city created.
Officials expect Proposition I, which District 5 Supervisor Dean Preston authored, to generate about $196 million per year by raising the transfer tax on real estate sales from 3% to 6%. The additional payment would include both residential and commercial property sales worth at least $10 million.
Earlier in the evening, Preston said he was glad the proposition was garnering massive support from the community. He added the generated funds would provide much-needed assistance to those affected by the pandemic.
Despite the number of supporters, multiple real estate and businesses opposed the idea. The opposition raised more than $4 million for their campaign in the months before the November 3 election. They argued that the additional tax would hinder transactions and deter more companies from staying within the city.
Proposition F, also known as the Small Business and Economic Recovery Act, aims to make large businesses responsible for the city tax. Breed and the president of the Board of Supervisors, Normal Yee, plan to use the measure to give the economy an equal business tax system.
The third tax measure, Proposition L, is also called Tax on Businesses with Disproportionate Executive Pay and provides the city the authority to tax public and private businesses whose top executives are considered “overpaid.” The additional tax criteria are having an annual income of at least 100 times more than the average of their workers.
The new tax would require CEOs to pay a 0.1% surcharge, which would be added to a company’s annual tax payments. The law would begin taking payments in 2022. The CEO pay is based on bonuses, stock options, and other non-income forms of compensation.
The proposition’s author, Matt Haney, said it would urge top executives to invest more in their workers. He added that the additional tax could simply be avoided by raising their employees’ average salary, Biz Journals reported.