Companies with gross revenue of more than $1.17m will be taxed an extra 0.1% if their highest-paid executive is paid 100 times or more its median worker’s salary, 0.2% if they are paid 200 times or more, and so on, with the tax capped at 0.6%.
The Overpaid Executive Tax, the first such measure announced in the US to affect both privately and publicly owned companies, will come into force in 2022.
“The measure will bring in up to $140m [of revenue], which we will use to support our health and public health systems, which are deeply strained from the consequences of inequality,” said Matt Haney, a local politician who wrote the measure.
“We will hire nurses, social workers and emergency responders, and expand access and treatment.”
San Francisco has seen extreme inequality rise in recent years, owing to the large number of tech companies located there – Silicon Valley sits nearby to the south.
The top 5% of households in San Francisco county make an average of more than $800,000 per year, while the lowest 20% make around $16,000, according to 2018 census data.
The people of San Francisco also voted to introduce a higher tax rate for tech companies and a higher tax on sales of properties worth between $10m and $25m.
Elsewhere in the US, other local governments also had new tax measures approved when people went to the polls to vote last week in the presidential election.
Jersey City, a municipal government, will introduce a tax hoped to benefit its arts scene.
Homeowners will pay 2 cents per $100 of their property’s value, and the revenue will go into an Arts and Culture Trust Fund, which will support creative activities including arts, music, dance, digital media and film.
