San Francisco Voters Reject Tax on Highly Paid Executives

In a result that surprised many political observers, voters in San Francisco — one of the most progressive cities in the United States — rejected a ballot measure on June 2 that would have significantly expanded taxes on companies with highly compensated executives. Proposition D failed with 53.64% of voters opposed and 46.36% in favor, according to results from the San Francisco Department of Elections.

What Proposition D Would Have Done

Proposition D, originally known as Measure D, sought to expand San Francisco’s existing “overpaid CEO tax” — a gross receipts tax surcharge approved by voters in 2020 that applies to large businesses when their highest-paid executive earns more than 100 times the median compensation of workers. The proposed expansion would have changed the formula by comparing executive pay to a company’s entire workforce rather than only its San Francisco employees, while also increasing tax rates on affected businesses.

City Controller Greg Wagner estimated the measure would generate between $250 million and $300 million annually in new revenue, though he also warned of the “potential risk of business relocation.” San Francisco Chief Economist Ted Egan released an analysis warning that the initiative could result in more than 900 job losses and shrink the local economy, as reported by the San Francisco Standard.

A Shift in San Francisco’s Political Winds

The defeat of Proposition D adds to a series of election results suggesting that San Francisco voters have moved toward a more centrist approach on economic and governance issues. In recent years, voters recalled progressive District Attorney Chesa Boudin, removed three school board members, and elected Mayor Daniel Lurie — a moderate Democrat and heir to the Levi Strauss fortune who campaigned on public safety and economic recovery.

Speaking to the New York Post after the election, Lurie declared that “common sense is winning” in San Francisco. “I think the mood is one of hope and optimism, one where [voters] want the supervisors and the mayor to work together, around common sense solutions to the issues we have,” he said. A Chamber of Commerce poll found that 64% of San Franciscans now believe the city is on the right track — a striking turnaround from deeply negative sentiment in 2024.

The Battle of Two Ballot Measures

Proposition D was one of two competing tax measures on the June ballot. The rival Measure C, backed by the Chamber of Commerce and business groups, would accelerate a scheduled rate increase for the existing CEO tax to 2027 while raising the small business exemption threshold from $5 million to $7.5 million in gross receipts. If both measures had passed, only the one with more votes would take effect.

The opposition campaign, “Yes on C, No on D,” raised over $5.6 million, with top donors including billionaire venture capitalist Michael Moritz ($625,000), Google co-founder Sergey Brin ($500,000), and Ripple chairman Chris Larsen ($500,000). Brin’s donation was particularly notable as he had moved to Nevada in 2025, citing frustration with California, as detailed by the San Francisco Chronicle.

Supporters and Opponents

The measure drew support from prominent progressive figures, including U.S. Senator Bernie Sanders, former House Speaker Nancy Pelosi, and gubernatorial candidates Katie Porter and Tom Steyer. A supermajority of the San Francisco Board of Supervisors also backed the initiative, along with numerous labor unions including SEIU 2015 and the San Francisco Labor Council.

Opposition came from Mayor Lurie, State Senator Scott Wiener, the San Francisco Democratic County Central Committee (which voted 14-17 against), and editorial boards of major local newspapers including the San Francisco Chronicle, San Francisco Examiner, and Bay Area Reporter.

Implications for California and Beyond

The outcome represents a significant setback for organized labor in San Francisco, which had invested heavily in the measure. For the business community, it marks a clear victory that may encourage more business-friendly policies from the Lurie administration.

Political analysts suggest the result could influence broader Democratic Party debates about tax policy and may serve as a warning sign for a proposed statewide billionaires’ tax expected on California’s November 2026 ballot. In a city that has long been a laboratory for progressive economic policies, voters have signaled that even in deep-blue San Francisco, there are limits to the appetite for tax increases when economic competitiveness is at stake.

What’s Next

With Proposition D defeated and Measure C appearing to have sufficient support, San Francisco is likely to see a modest acceleration of existing tax rates combined with expanded small business exemptions. Mayor Lurie, strengthened by the outcome, is expected to continue pursuing a centrist agenda focused on downtown revitalization, public safety, and budget discipline as the city seeks to capitalize on an AI-driven investment boom while addressing persistent challenges around housing, homelessness, and the budget deficit.