NOVEMBER 2024 VOTER GUIDE
YES ON PROP M
Changes to Business Taxes
ENDORSE-O-METER SAYS: STRONG YES
Repeated tax increase ballot measures have warped San Francisco’s business tax structure into an unrecognizable mess, making the city budget incredibly reliant on a few large employers to fund city services. Proposition M is an attempt to reform the city’s business taxes to compensate for those previous ballot measures, and bring back some kind of order to our tax structure. This isn’t a cure-all, but it’s a very good start. Plus, small businesses will be the big winner after this change, and we’re always happy to support that. We’re voting yes on Proposition M because San Francisco needs this business tax reform to pull out of our economic downturn.
The Context
San Francisco’s tax base has become increasingly reliant on a very small handful of large corporations—in 2022, just five companies accounted for 24 percent of all the city’s business taxes. Conversely, voters have passed so many ballot measures increasing taxes on these companies that they are now leaving the city. With remote work becoming the new standard, employers are downsizing office space, reducing headcount, or leaving the city completely, the city’s complex tax structure has made San Francisco’s economy very vulnerable.
Even if it isn’t a panacea, this measure is a solid step in the right direction to simplify the city’s gross receipts tax (GRT) structure. It also increases the small business tax exemption, makes it more attractive for large companies to start or stay here, and increases the voter threshold to place new tax measures on the ballot. These are all needed to reduce the volatility that hits San Francisco during economic downturns. This measure is absolutely vital for San Francisco’s economic future, though we are looking to see even more in the way of progress on this topic in the future.
The Money
After an initial hit to the city's tax revenues of about $40 million annually due to the new exceptions and categorizations, the city would start to see positive gains. By the 2029-30 Fiscal Year, revenue streams from business taxes would course-correct to where they are today after having made up for the initial loss.
The campaign committee Revitalize San Francisco, A Coalition of Small Businesses, Tech Companies and Business Groups is funding this measure.
Additional Details
If this measure passes, about 2,700 small businesses will receive tax cuts. As a bonus, the measure also reduces permitting and licensing fees for small businesses, making it easier to open new brick and mortar stores in San Francisco.
Support & Opposition
This measure is the result of wide cooperation between a number of factions that don’t always play nice with each other. Mayor London Breed, Board of Supervisors President Aaron Peskin and Supervisor Rafael Mandelman initiated a series of approximately 30 meetings with community members, small and large businesses, and labor representatives to get input for this proposition. Given the broad coalition of supporters, and the lack of any official opposition, it’s a solid indication that most stakeholders realize just how important tax reform is to San Francisco’s future.
Supporting
SF Bay Guardian, Grow SF, SF Labor Council, SF Women’s Political Committee, Potrero Hill Democratic Club, Ed M Lee Asian Pacific Democratic Club, Alice B Toklas LGBT Democratic Club, Bernal Heights Democratic Club, Chinese American Democratic Club, Eastern Neighborhoods Democratic Club, Noe Valley Democratic Club
Opposing
SF Green Party, League of Women Voters SF, SF Republican Party
Other Organizations That Share Our Endorsement: The San Francisco Democratic County Central Committee and the United Democratic Club.
Paid for by TogetherSF Action. Not authorized by any candidate or a committee controlled by a candidate. Financial disclosures are available at sfethics.org.