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“Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

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Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#31

Post by m0zg »

stanrivers wrote: post #29

“businesses in San Francisco when their highest-paid managerial employee earns more than 100 times the median compensation paid to their employees in San Francisco.“ I'm slightly concerned that you are going to see them just shift jobs out of SF... isn't that logical? May be harder for some businesses, but they will all do a cost-benefit analysis of raising median wages in SF, paying the tax or moving the SF jobs som…

Reminds me of an old Soviet joke. The government made vodka more expensive, so son walks up to his alcoholic dad and says, "Gorbachev made vodka more expensive, dad, so you'll now drink less!" To which dad responds, "No, son, you'll just eat less".

The CEOs that don't move out of SF will just reallocate some employee promo budget to executive comp budget to make up the difference. It's a populist measure that at best will do nothing, and at worst will reduce the SF tax base.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#32

Post by sbuttgereit »

Exmoor wrote: post #27

It's a little unclear to me exactly who this will be enforced on (Does a drugstore count? McDonalds restaurant?), but it seems like it will likely lead to a lot of companies divesting themselves of anything that could put them at risk now or in the future. And it doesn't seem like a great time for SF to be pushing companies away. It's downright impressive to me that one of (if not the most) educated cities in the nat…

"It's downright impressive to me that one of (if not the most) educated cities in the nation is ignorant of the fact this will likely do much more harm than good in the long run."

Never underestimate the ability of emotional responses to trump rationality across all demographic groups.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#33

Post by timoth3y »

SFIsDying wrote: post #3

Its sad that people don't understand economics. Microsoft CEO Satya Nadella for example has created tremendous value for Microsoft over the last 6 years and deserves every penny he is paid. Whereas on the other end its kinda a no-brainer that the McDonalds CEO is paid significantly more than the average fry cook... like come-on. Again a reason I am never going back. This city is a piece of shit. Good luck with the ex…

> Its sad that people don't understand economics.

FIW, Quite a few economists have looked into this, and there is at best no, and at worst an inverse, correlation between value creation and CEO pay. Some of the highest-paid CEOs in America head slow-growth or even unprofitable companies.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#34

Post by programmertote »

baron816 wrote: post #13

Company A and Company B pay their CEOs the same thing. Company A has 1000 employees and pays an average salary of $50k/yr. Company B has 500 employees and pays an average salary of $100k/yr. Company A is taxed, but Company B is not. Is that fair?

Can you explain a bit more on what you are alluding to? This new law is not related to employee count (i.e. the size of the firm). It takes into account the median salary at the firm AND how much the CEO makes. I'm trying to understand what you are trying to argue here.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#35

Post by gentleman11 »

wittyreference wrote: post #4

I’m confused. What’s to stop these orgs from shuttling all their lower paid employees into a distinct staffing solutions LLC and just use them to “hire” staff for a parent company comprised of executives? Other fields do this regularly - hospitals often organize their physicians into a distinct staffing org, for instance. It’s entirely legal. So is this anything other than a feel good law that will push some minor co…

Is the legal system really so inflexible that it can’t prohibit this using general statements? Do you really need a 10 page long comma separated list of every possible situation?

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#36

Post by jawns »

Unfortunately, this hits companies from the wrong direction. Even if it incentives good behavior (which is debatable), the good behavior it incentivizes is to lower one person's enormous compensation so that it's slightly less enormous but still quite large.

What the law should promote is upward pressure on the lowest earners' compensation rather than downward pressure on the top earners' compensation. Minimum wage hike, for example. Much greater potential to improve the lives of the lowest-paid workers; businesses often threaten to compensate via layoffs but usually don't follow through, at least not enough to completely offset the change.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#37

Post by [deleted] »

WalterBright wrote: post #8
dastx wrote: post #6

Earlier quoted context omitted.

You're not wrong. But neither of those examples justify less than 3% compared to the lowest workers (assuming lowest = $30,000, and highest = $1,000,000). In reality the highest paid executives earn waay more then 1 million. This isn't okay.

> This isn't okay. If he produces more than 100x the value that others produce, it's perfectly ok. Nadella and Steve Jobs are obvious examples of the tremendous value a CEO can bring.

[deleted]

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#38

Post by arthurcolle »

gentleman11 wrote: post #35
wittyreference wrote: post #4

I’m confused. What’s to stop these orgs from shuttling all their lower paid employees into a distinct staffing solutions LLC and just use them to “hire” staff for a parent company comprised of executives? Other fields do this regularly - hospitals often organize their physicians into a distinct staffing org, for instance. It’s entirely legal. So is this anything other than a feel good law that will push some minor co…

Is the legal system really so inflexible that it can’t prohibit this using general statements? Do you really need a 10 page long comma separated list of every possible situation?

> Is the legal system really so inflexible that it can’t prohibit this using general statements?

Yes.

> Do you really need a 10 page long comma separated list of every possible situation?

Yes.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#39

Post by Ericson2314 »

fennecfoxen wrote: post #17
srtjstjsj wrote: post #14

Idiocy. If they want to tax high-income people, set an income tax. Why does an arbitrary subset of other people's income matter? This pairs hilariously with Prop 22 making all Uber's low wage employees non-employees.

s/idiocy/ideology/

"ideology" needs to be rehabilitated as less pejorative — in our era of empiricism devolved into mindless statistics, the desire to fit everything into a coherent theoretical framework needs a better rep.

"Virtue signaling" is a phrase with no good connotation to corrode, and one I'd prefer for the critiwue I believe you are trying to make.

Re: “Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

#40

Post by wholien »

This measure [1] is either on gross receipts or on payroll. Seems kinda steep if you have a large revenue but high costs. Apparently this would affect the likes of Gap, Levi's, Wells Fargo, Square, Visa etc [2]. It's not super easy to check who pays the Administrative Office Tax (payroll) and who currently pays the Gross Receipts Tax.

Assuming everyone is paying the gross receipts tax, however, the 0.1% more on gross receipts (0.2% if CEO is paid 200x the median, 0.3% if 300x etc up to 0.6%) can add up quick over a few years.

Visa isn't HQ'd in SF (so they would be paying the Gross Receipts Tax?), but their revenue was 23 billion last year. 0.1% of that is $23 million. If that is true, do they just shutter the SF offices? Can they still do business in SF?

Wells Fargo has $85 billion of revenue last year, so 0.1% would be $85 million. They are HQ'd in SF, so they would be paying the payroll part. I don't have the numbers handy there but I bet it's not cheap either.

Since this applies to public and private companies alike, it seems like a no-brainer that more companies will follow in Stripe's footsteps and move their headquarters to other places in the Bay Area (or Colorado like Palantir lol, though they were never in SF).

1: https://ballotpedia.org/San_Francisco,_California,_Propositi...

2: https://calmatters.org/california-divide/2020/10/san-francis...

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