PPG was commissioned to independently assess the economic impact on SF businesses, from the proposed ballot measure to increase the Overpaid Executive Tax.
Independent economic research & policy analysis.
Civic advocacy for San Francisco’s future.
Key findings at a glance
How the OET ripples through San Francisco’s economy
Because the OET is a surcharge on gross receipts — not profit — it raises operating costs regardless of profitability. That cost flows through prices, margins, wages, jobs and, ultimately, city revenue.
20–25%
Retail margin pressure
$574M
Worker wages at risk
10,000+
Jobs potentially at risk
+0.1 – 0.2%
Consumer price impact
3 – 4×
Higher relative burden
$12.5 – 15M
Tax revenue at risk
THE TAX INCREASE BECOMES SUBSTANTIALLY LARGER IN 2027
The Overpaid Executive Tax is a surcharge applied to businesses where the compensation of the highest-paid managerial employee exceeds the median San Francisco employee’s compensation by more than 100:1.
CEO : Median Pay Ratio
2026 Rate
2027 Rate
>100:1 to 200:1
0.02%
0.18%
>200:1 to 300:1
0.04%
0.37%
>300:1 to 400:1
0.06%
0.56%
The 2027 step change: Across the OET brackets, the surcharge increases by more than 800% between 2026 and 2027. This sharp increase is what drives the substantially larger modeled impacts on business profitability, jobs, wages and prices in 2027.
THIN-MARGIN BUSINESSES COULD FACE THE GREATEST PRESSURE
Businesses with limited profitability have less capacity to absorb a tax applied directly to gross receipts. The analysis estimates that the higher OET could absorb approximately 20%–25% of typical profit margins in grocery and food retail, where margins are already particularly thin.
Figure 1 Across San Francisco’s economy, as many as 1,500 establishments could face sustained pressure on profitability, increasing the likelihood of cost-cutting, downsizing, restructuring or relocation.
Grocery
20–25%
Economy
2.7–3.4%
Pharmaceutical
1.4–1.8%
Source: PPG
Why retail is more exposed: A gross-receipts surcharge applies before considering profitability. For a business operating on very narrow margins, even a relatively small increase in costs can represent a substantial portion of annual profit.