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San Francisco voters overwhelmingly approved a tax measure this week penalizing major corporations whose CEOs are paid far more than their average workers, a levy meant to narrow an income gap that has widened for decades.
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Under Proposition L — otherwise known as the "Overpaid Executive Tax" — San Francisco companies will be forced to pay an extra 0.1% surcharge on their annual business tax payments if their top executive earns 100 times more than their average worker.
‘OVERPAID EXECUTIVE TAX’ GOING TO VOTE IN SAN FRANCISCO IN NOVEMBER
The wider the gap between the top executive and workers, the higher the surcharge will be. For example, if a CEO makes 200 times more than the average employee, the surcharge increases to 0.2%, and 300 times gets a 0.3% surcharge.
Critics called the surcharge a blatant attempt at redistribution of wealth and said it was poorly timed.
“The middle of a pandemic-fueled shutdown is the wrong time to raise taxes,” said Jim Wunderman, president and CEO of the business advocacy group Bay Area Council.
However, the author of the measure, city supervisor Matt Haney, had argued that it's a necessary step as cities around the country prepare for another spike in coronavirus cases. He noted that the measure would raise over $140 million every year, allowing the city to hire hundreds of nurses, doctors and first responders.
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Voters were convinced. The measure passed in nearly every precinct with more than 65% support, Haney said on Twitter.
The results “show that San Franciscans are concerned about growing economic inequality,” Haney said Wednesday. “The very wealthy are gaining more and more. They’ve gotten much richer during the pandemic, while everyone else has remained stagnant.”
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Over the last 30 years, Haney argued, executive salaries increased by 940% while employees' salaries grew just 11%.
"Prop L incentivizes companies to invest in their workers, not just their executives," Haney wrote.
Corporations can easily avoid the tax by "simply paying their executives less or by raising their employees' wages," Haney added.
The Associated Press contributed to this report.
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