Proposition D fight intensifies as report warns of consumer price hikes
Prop. D could lift city revenue by $250 million to $300 million, but a new analysis says grocery and retail prices could rise as San Francisco voters weigh who really pays.
A fight over San Francisco’s Proposition D has turned into a credibility test over who would actually foot the bill if the city’s “CEO tax” passes. The measure is on the June 2 ballot and would raise an existing business tax for companies with at least $1 billion in revenue and executive pay more than 100 times the median worker salary.
Supporters say the tax would bring in hundreds of millions of dollars to help shield healthcare, food assistance and other city services as San Francisco continues grappling with budget pressure. Mayor Daniel Lurie signed a $15.9 billion budget for fiscal years 2025-26 and 2026-27 on July 24, 2025, after closing an $800 million deficit, but by spring 2026 the city was still warning about possible cuts to healthcare, food programs, housing and public health services. In March, Lurie ordered departments to trim $100 million in personnel spending, a move ABC7 San Francisco said could lead to as many as 500 job eliminations.
Now, a new economic analysis commissioned by GrowSF says Prop. D would do far more than tax executive pay. The Pragmatic Policy Group projected that low-margin businesses such as grocery stores and retailers could absorb profit losses as high as a quarter, and that roughly 24% to 40% of the added cost could be passed on to consumers through higher prices. The report estimated the citywide price impact at about 0.1% to 0.2%, a small percentage that still lands hard in a city where residents already pay steep food and housing costs.
GrowSF says the measure is not a true executive-pay tax at all, but a gross-receipts tax that would raise rates by about 800% and bring in roughly $250 million to $300 million a year, according to the Controller’s Office estimate it cites. The group’s warning goes to the heart of the ballot fight: whether large corporations would absorb the added cost or whether households, nonprofits and city services would end up carrying it through higher prices and tighter margins.
The politics are just as sharp. Mayor Lurie has said he will not support either of the competing business-tax measures on the June 2 ballot, while most supervisors back Prop. D. Labor groups, including SEIU affiliates, have backed the measure, and Mission Local reported supporters said it was designed to help fill a roughly $650 million deficit and prevent layoffs.
The fight echoes San Francisco’s 2020 overpaid-executive tax proposal, which the Department of Elections described as an additional gross receipts tax or administrative office tax on businesses with a pay ratio above 100 to 1. A 2018 analysis of a separate commercial-landlord gross-receipts tax projected about $70 million in annual net revenue, a reminder that these business taxes have long carried questions about how much money they raise and who ultimately pays.
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