San Francisco’s Proposition D, dubbed the “Overpaid CEO Tax,” is still hanging on to a sliver of a chance of passing as of early Wednesday morning, after initial results.
But the end is nigh: The measure, which would increase business taxes on firms whose top executive makes 100 times more than their median employee, was losing 45-55 as of 11:45 p.m. Tuesday, the night’s final results drop.
It needs to get more than 50 percent of the vote to win. More than 12,000 votes separate the yeses and the nos.
Labor unions who backed the measure kept the faith Tuesday evening as the yes votes crept up from about 43 percent to 44 percent. Still, the remaining votes would need to split 55 percent in favor of Prop. D for it to pass — a tall order.
Prop. D was meant to raise revenue for the city, which is facing a two-year deficit of more than $600 million.
To balance the budget, Mayor Daniel Lurie has laid off 127 city workers and is proposing cuts to nine more filled positions and hundreds of vacant ones. City-funded programs, including several health clinics, are also on the chopping block.
Unions hoped that Prop. D funds, predicted to be $300 million per year, would help stave off cuts to vital city services. At least $3.3 million went into the Yes on D campaign, most of which came from unions SEIU 1021, SEIU 2015 and IFPTE 21, who count large numbers of city employees in their ranks.
Focused on tiding over the budget, the measure brought labor unions, progressives, and even some city moderates together.
“We don’t have Zohran, but we have Prop. D,” said Marisela Mares, the lead organizer of the San Francisco Rising Fund, at an election night party for various progressive groups in the Mission.
A cardboard cutout of New York City Mayor Zohran Mamdani watched over the crowd from behind El Rio’s bar.
“Adore him down,” Mares said.
Mares tried to get “mujeres trabajadoras,” working women, out to vote for the measure she believes will promote affordability, Mamdani’s battle cry.
Two miles away, at a Prop. D party in the Castro, both current District 5 Supervisor Bilal Mahmood and his former competitor, Dean Preston, came out in support of the measure.
Prop. D’s proponents, Mahmood said, “were the only ones who presented a holistic solution to close the city’s deficit.”
“A tax is not the reason why a grocery store or a pharmacy decides to leave the city,” Mahmood added. “They go when customers can’t afford their products.”
Connie Chan, who had the most to celebrate Tuesday night after pulling ahead in the No. 2 spot for the November congressional run-off, was spotted at the Prop. D party instead of her own when the first ballot results dropped.
The better news for labor groups was the apparent death of the rival measure Proposition C, which was placed on the ballot by the San Francisco Chamber of Commerce: Only 35 percent of initial ballots favored C, which would also need over 50 percent to pass.
Prop. C would have mostly kept the current tax system intact, but raised the revenue threshold for having to pay from $5 million to $7.5 million. It also contained a “poison pill” to eliminate Prop. D if it received more votes, but that appears unlikely.
Lurie, sitting at a 74 percent approval rating, became the face against Prop. D and graced its critics’ mailers. Opponents put $6.6 million into the Yes on C, No on D campaigns.
Much of that money came from perennial donors to pro-business politics, like billionaires Chris Larsen, Michael Moritz and political pressure group Neighbors for a Better San Francisco. Other funds came from firms who would have to pay up under the new structure, including Gap, Comcast, DoorDash and Safeway.
Dozens celebrated Prop. D lagging behind its target in early results at a Hayes Valley party hosted by the political group GrowSF and briefly attended by Lurie.
“Our evil propaganda worked!” laughed George Correa, who works at an AI firm he declined to name. He was one of many tech workers in the crowd. A GrowSF supporter reminded them that younger, more progressive votes, typically cast later, could change the tide.
San Francisco’s business community said the measure risked the city’s post-pandemic recovery. Much of the anti-D ad campaign focused on telling voters their local grocery store would shut if the tax passed.
At a press conference on Monday, Lurie insisted that the passage of Prop. D would not change anything for his office this budget cycle because the tax wouldn’t go into effect until 2028.
“We’re going to be a city that spends what it has,” he said, and not bank on “future potential ballot measures.”
As of early Wednesday morning, that potential is greatly diminished.
Oscar Palma and Sarah Hopkins contributed reporting.
From the article:
“A tax is not the reason why a grocery store or a pharmacy decides to leave the city,” Mahmood added. “They go when customers can’t afford their products.”
This is an improper framing of the problem with Prop D. Grocery stores and pharmacies probably won’t leave the city if Prop D manages to pass. The issue is that these are very low-margin businesses and a gross receipts tax is a direct subtraction from their margins. They have little choice but to pass increases in a gross receipts tax on to consumers in the form of higher prices. The big chains like Safeway, Vons, Whole Foods, Walgreens, CVS, and Grocery Outlet would have to raise prices. This would take some pressure off mom-and-pop shops, but they will follow by raising prices — just because they can.
You may have imagined that you were striking a blow for income equality and punishing corporations who overpay their CEOs. But you were really voting for what effectively would have been a regressive kind of sales tax — it’s just slightly hidden from you.
Don’t take my word for it. Janet Yellen herself said it in her macroeconomics class at U.C. Berkeley. Corporations don’t “pay” higher taxes — in response to them, they pay their workers less and raise prices.
Corporations must purchase labor on the labor market and sell their products in the marketplace.
Corporations can’t pay labor less than market rate and cannot sell their products for more than the market will bear.
Corporations under those circumstances will either stop producing and forgo all profit or cut profits to keep sales going.
Gotta wonder if public sector labor is going to go double or nothing in the November election with yet another revenue measure, antagonizing the electorate just enough with their selfish greed to ensure that charter reform passes.
Great write-up. Glad to know that the anti-Prop D people and AI tech elite are *literally* cartoonishly laughing at the poor and fired city workers that their astroturfing and big spending works.
““We don’t have Zohran, but we have Prop. D,” said Marisela Mares, the lead organizer of the San Francisco Rising Fund, at an election night party for various progressive groups in the Mission. ”
This is the problem here. Zohran proffered an appealing broad based non-means tested affordability agenda, while Prop D promised more funding to the constituent usual suspects nonprofits of San Francisco Rising:
Chinese Progressive Association, La Colectiva, Coleman Advocates, Dolores Street Community Services, Filipino Community Center, Mujeres Unidas y Activas, People Organizing to Demand Environmental and Economic Justice (PODER), South of Market Community Action Network (SOMCAN)
The days of progressive politics as a self service bottomless mimosa are coming to a screeching halt.
Measure D (nb: not Proposition D) reflects bad economic and tax policy in many ways. Nevertheless, I’m pretty surprised to see it failing. The SF electorate really does appear to have become more moderate after the backlash to some dalliances with pretty far left positions a few years ago. No other real surprises in this election.