While national debate focuses on the role of billionaires in politics, San Francisco voters are confronting a local test case.
Six-figure checks from prominent tech investors and business leaders have fueled a ballot fight over the city’s executive pay tax, reigniting discussion over a policy compromise approved less than two years ago. After labor leaders launched a measure for the November ballot to increase the tax, billionaire-backed committees moved swiftly to finance a competing proposal to keep it scaled back.
The question animating the competing proposals is whether to increase an existing tax on high-earning executives.
The city’s overpaid-executive tax, approved by voters in 2020, adds a surcharge to companies where the highest-paid executive earns far more than the typical worker. A lower surcharge was negotiated and approved by voters two years ago. Spawned by concern over possible deep federal funding cuts, the labor-backed measure seeks to raise it once again. The measure, the Overpaid CEO Act, was designated Proposition D for the June 2026 ballot Monday. (See detailed explainer below).
Beneath that policy dispute lies a broader power struggle over who can reopen negotiated compromises and who can afford to put measures before voters. It also raises questions about how San Francisco’s ballot-initiative system, which some see as too permissive, influences the direction of the city.
Campaign finance filings with the San Francisco Ethics Commission show that roughly three-quarters of the more than $800,000 raised by a business-backed campaign committee opposing the tax comes from billionaire donors. That includes $500,000 from Chris Larsen, a prominent figure in cryptocurrency, and $125,000 from Michael Moritz, the venture capitalist owner of the news site San Francisco Standard.
Politico Playbook recently reported that Neighbors for a Better San Francisco, a business-backed political committee, plans to spend $1 million to defeat the CEO tax. National political observers have taken notice. Critics from the city’s progressive coalition have called out the group for relying on funding from wealthy tech and real estate figures such as Republican donor Bill Oberndorf and real estate investor Steven Merrill, along with companies like Uber.
On the opposite side of the issue, labor-backed Stand Up for SF has reported roughly $350,000 in union political action committee contributions, including $200,000 from Service Employees International Union Local 2015 Issues PAC and $150,000 from SEIU’s Local 1021 Issues PAC.
The funding models behind the two measures highlight a familiar San Francisco dynamic: concentrated wealth on one side, organized labor on the other.
What studies suggest about spending
Political scientist Jason McDaniel of San Francisco State University says money can influence ballot fights — but not always by directly moving voter sentiment.
Early campaign spending, he said, often serves more as a signal of which interests are backing a measure than as a direct effort to sway the electorate.
Of the large infusions of cash at the start of a ballot fight, he said, “some of the original research found that it was effective.” But more recent scholarship suggests persuasive effects “decay kind of quickly.”
In contests without party labels or candidates to sway voters, financial resources can play a larger role. “When those two big things are absent, in theory money can matter more,” he said.
Still, persuading voters on complex policy issues can be difficult. Research consistently shows that opposition spending tends to be more effective than proponent spending in ballot measure contests, particularly when voters feel unclear.
Faced with complexity, voters often default to caution — meaning they vote no — especially when same-subject propositions compete . “If they’re uncertain, it’s going to just increase the likelihood that both measures lose,” McDaniel said.
Does money shape the direction of the city?
The influence question is not simply whether a billionaire’s check persuades an individual voter. McDaniel argues that the more significant impact may lie in how San Francisco’s ballot initiative system structures policymaking.
San Francisco requires only 2 percent of registered voters’ signatures to qualify initiatives for regularly scheduled elections, far lower than the 10 to 15 percent thresholds common among California cities.
“It’s just really easy to get things on the ballot,” he said.
And even easier for those with a lot of capital.
Paid signature gathering can cost $250,000 or more for a citywide measure. Add legal review, compliance services and professional campaign consultants, and the cost of simply reaching the ballot can approach $500,000.
That means that while ballot access may be formally open to voters, it is accessible primarily to well-financed interests, which in essence bypasses the usual legislative process.
Ordinarily, tax policy is crafted through the Board of Supervisors, with amendments negotiated and compromises shaped through documented revisions. Ballot measures, on the other hand, tend to reward clarity of purpose instead of the sometimes complex wording that results from negotiating the middle ground.
“We’re doing a lot of governing and policy decisions on individual things by ballot measure,” McDaniel said.
In that sense, McDaniel suggests, the larger concern is not simply billionaire spending itself, but the structure that allows well-organized, well-financed interests — whether wealthy individuals or institutional labor groups — to reopen negotiated compromises and return them directly to voters.
A broken system or democratic access?
Mayor Daniel Lurie has publicly warned that the competing measures risk sprouting another costly, divisive ballot war.
“They will spend millions upon millions of dollars attacking each other in June and dividing our city again. And this is what San Franciscans are tired of,” Lurie told the San Francisco Chronicle’s editorial board.
In subsequent remarks, he called the situation “a clear sign of a broken system that rewards insiders at the expense of everyday San Franciscans,” and said he wants to make it harder for big-money ballot battles to arise.
On March 11, Lurie announced his intention to collect enough signatures to qualify a charter reform measure for the November ballot aimed at tightening San Francisco’s initiative system, including raising the signature threshold required for ballot measures and requiring at least six supervisors to place an ordinance on the ballot rather than the current four. Placing charter amendments on the ballot already requires the assent of at least six supervisors.
The proposal would also eliminate the mayor’s unilateral authority to put measures before voters and allow initiative sponsors to withdraw measures after signatures are submitted.
Supporters argue that reform would reduce policy-by-ballot volatility. But critics warn that raising thresholds could entrench insider control by increasing the cost of entry.
What San Francisco’s Competing Executive Pay Tax Measures Would Do
Four years after San Francisco voters approved a negotiated business tax overhaul that sharply reduced the city’s executive pay tax, that issue is back on the ballot.
Voters will choose in June between two competing measures that would change the tax in different ways.
The original overpaid-executive tax appeared on the ballot in 2020, when voters approved an additional levy on businesses where the highest-paid employee earns 100 times the median salary of the company’s San Francisco workforce.
The measure did not tax executives directly. Instead, it added a tax to a company’s existing city business taxes when the pay gap exceeded that threshold.
When the law was passed, the additional tax ranged from 0.1% to 0.6%, depending on how wide the pay gap was. A company with a CEO earning just over 100 times its median worker was taxed with a lower add-on, while companies with more extreme ratios paid closer to the maximum.
City officials projected the tax would generate between $60 million and $140 million annually. The tax took effect in 2022, and the San Francisco Chronicle reported that collections in strong earnings periods approached the upper end of the range.
Four years later, voters approved Proposition M, a broad business tax overhaul negotiated between labor and business groups. As part of the deal, the executive pay surcharge rates were reduced by roughly 80%. That lowered the maximum add-on from about 0.6% to roughly 0.1%, with the lower tiers scaled back proportionally.
Now, labor leaders are seeking to increase the tax again.
Labor-backed proposal: Penalize wage disparity, raise revenue
The measure, officially titled Changes to Business Tax Based on Comparison of Top Executive’s Pay to Employees’ Pay, would modify and expand the executive pay tax.
Instead of comparing a CEO’s salary to the median pay of San Francisco workers only, the proposal would calculate the pay ratio using a company’s entire workforce, including employees outside the city. Because many companies pay lower wages in other regions, that broader comparison would typically widen the CEO-to-worker pay ratio and increase the tax owed to the city.
Supporters argue that the change would restore revenue to fund public services when San Francisco faces significant budget pressures and potential federal cuts. They contend that the tax targets only companies with extreme pay disparities, not small businesses.
Business-backed proposal: Ease up on taxes, incentivize growth
The competing measure, titled Protect San Francisco’s Small Businesses and Economic Recovery, would revise the city’s business tax structure, including changes to the executive pay tax first approved in 2020.
The proposal would preserve the scaled-back rates adopted under Proposition M and adjust other parts of the city’s business tax structure, including raising the revenue thresholds that determine which businesses are subject to certain city taxes. It would also cancel or reduce scheduled tax increases.
Supporters argue this would protect small and midsized businesses and reduce the risk of companies relocating.
California law generally dictates that when two competing measures pass, the one receiving more votes prevails, though such scenarios often invite litigation that can delay implementation.
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