San Francisco implemented a controversial Overpaid Executive (OE) Tax in January 2022 that applies higher tax rates to companies with a more significant disparity in salaries for their top-earning and median employees. This affects all businesses that make over $1.7 million per year and employ San Francisco residents, regardless of the location of their highly-paid executives. 

Businesses whose top executives are paid 100 times more than their average workers are subject to an extra 0.1% annual business tax. The tax rate increases by 0.1% for every additional 100 times more significant the difference is, up to a maximum of 0.6%. 

According to Matt Haney, who was serving on San Francisco's Board of Supervisors when he co-sponsored a measure to put this tax on the ballot in 2020, "in the last 30 years, executive salaries in the U.S. have skyrocketed by 940 percent, while regular worker salaries have grown by just 11 percent." He stated that Latino workers had been hit especially hard by income inequality.

Supporters of the OE tax say that it strengthens the local economy by adding money to the city's general fund, which is used to pay for municipal services, including public health and safety. It will generate an estimated $140 million per year, making it possible for the city to focus on more extensive and comprehensive civil projects.

Opponents say that the tax increase makes San Francisco a less ideal location for larger corporations. They say that it disproportionately affects companies in the hospitality industry and similar sectors that provide a higher number of entry-level jobs with less technical requirements than IT positions, making companies more likely to move their operations elsewhere. 

The question up for debate: Will San Francisco's #CEOTax have a positive impact on reducing #IncomeInequality?