Measure C: Decreases to Business Taxes

Prop C is a balanced adjustment to SF business taxes that helps small businesses while raising rates on larger ones to partially offset the cost.

The $5M small business tax exemption approved in 2024 (https://sftreasurer.org/proposition-m-2024-business-tax-reform) was a good start, but costs have kept rising. Bay Area business costs have spiked by over 15% since 2021 (https://fred.stlouisfed.org/series/CUURA422SA0), making the $5M limit outdated. A neighborhood restaurant making $6M in sales isn't a "corporate giant"; it's a small business with thin margins. After paying for San Francisco wages, rent and supplies, their actual take-home pay is often very small. Raising the exemption to $7.5M (/voter-guide/san-francisco-voter-guide-june-2026-election/measures/prop-c/legal-text/#prop-c-small-business-exemption) ensures that tax relief stays in line with the actual cost of doing business in our city today.

Is Prop C a perfect solution? No. The rate increase is small and won't fully close the revenue gap, but it's the reasonable, moderate solution on this ballot. San Francisco cannot tax its way to prosperity — and Prop C reflects the reality that keeping small businesses alive and growing is what will ultimately generate the revenue the city needs.

Vote Yes on Prop C to keep San Francisco affordable for small businesses.

Source (https://growsf.org/voter-guide/san-francisco-voter-guide-june-2026-election/#prop-c)

Prop. C - YES     Decreases to Business Taxes
Exempt most businesses with up to 7.5 million in San Francisco gross receipts taxes and the Top Executive Pay Tax. This mainly affects small businesses.
Accelerate the 2028 Top Executive Pay Tax increase to apply in 2027.
Controller: Decreases in annual revenue to the City in the range of 30 million to 40 million. It would decrease the number of businesses subject to two existing taxes

Source (https://www.sfcadc.org/6_2_26_endorsement_partial)

San Francisco’s small and mid-sized businesses are the backbone of our neighborhoods. Prop C would raise the gross receipts tax exemption threshold to $7.5 million, allowing more local businesses to benefit from a tax decrease. It also accelerates a previously scheduled adjustment to the Overpaid Executive Tax, moving it to 2027.

Supporters include the San Francisco Chamber of Commerce. If both Prop C and the competing Overpaid Executive Tax measure pass, only the one with more votes takes effect.

Vote YES on Prop C to keep San Francisco working for everyone.

Source (https://sfciti.org/june-2026-sf-citi-voter-guide/)

VIG listing; Decreases business taxes in San Francisco

VIG listing; Amends Oakland Business Tax Ordinance to provide one-year tax exemptions for small businesses with gross receipts of $1M or less

Prop C: Business Tax Poison Pill: No

Prop D: Overpaid CEO Salary Tax: Hell Yes!

Between Props C and D, only one can pass. Each has a poison pill that negates the other, so the one that gets the most votes over 50% will go into effect. 

Unions and community organizations put Prop D, the Overpaid CEO Salary Tax, on the ballot to fill the gaping hole Trump’s Big Bullshit Bill ripped in the City budget. Downtown businesses put Prop C on the ballot as a smokescreen to confuse voters and defeat Prop D. 

Prop D is not gonna hurt regular people. It’s not gonna drive companies out of the city. It only applies to companies with (a) top executives who earn 100 times their median workers’ salary, (b) over 1000 employees, and (c) over $1 billion in revenue. Prop D would generate an extra $300 million in revenue a year to pay for vital neighborhood services, like medical clinics and in-home health care for seniors, that are on the chopping block this year in yet another of Mayor Lurie’s “austerity budgets.” Prop D addresses the larger issues of systemic inequality that plague our city, and provides the resources to keep our city strong. SF voters overwhelmingly passed the first Overpaid CEO tax in 2018, but that tax was reduced in 2022 to help encourage economic recovery from the pandemic. Now that the city is seeing a return of the workforce, it’s time we ask the companies making the most to pay their fair share.

Sure, Prop C would help out those small-ish businesses making between $5 and $7.5 million in sales per year by exempting them from the city’s gross receipts tax. (Prop C would offset that revenue decrease with small tax increases to other businesses, leading to total estimated revenue of $30–40 million.) But it’s not really about small business. Prop C was cynically placed on the ballot by the  Chamber of Commerce to help some very large corporations; it’s got big bucks behind it from conservative wealthy donors, including billionaires Chris Larsen and Michael Moritz, and from Bill Obendorff’s notoriously reactionary Neighbors for a Better SF. 

If Prop C gets more votes than Prop D, big businesses will have torpedoed a truly progressive “tax the rich” opportunity, losing the City $260–270 million a year. Make sure you vote on both: Vote No on C and Hell Yes!!! on D.

Source (https://www.theleaguesf.org/blog#PropC)

Proposition C would speed up the scheduled Top Executive Pay Tax increase, making the planned 2028 tax rates effective in 2027.

The measure would also exempt small businesses with gross receipts of $7.5 million from the Gross Receipts Tax, raising the threshold for the current exemption, which applies to businesses with gross receipts of $5 million or less. It is estimated that about 800 businesses would benefit from this change to the exemption.

Prop. C would have a negative fiscal impact on the city, reducing revenues by an estimated $30 million to $40 million per year, according to the controller.

This ballot measure would nullify Prop. D, a competing business tax measure, if it receives more votes.

The Backstory

Both Prop. C and Prop. D propose changes to San Francisco’s current business tax structure.

Current business tax structure

Bringing in about $1.3 billion annually, business taxes are San Francisco’s second-highest revenue source, exceeded only by property taxes. The Gross Receipts Tax, which accounts for 88% of business tax revenues, applies to businesses with more than $5 million in revenue. The Top Executive Pay Tax is an additional gross receipts tax applicable to businesses with at least 1,000 employees or $1 billion in sales that pay their highest-paid manager more than 100 times the median pay of their San Francisco employees. The tax rate is tiered according to the ratio of the salary for a company’s highest-paid manager to the median San Francisco worker’s salary. The city collected approximately $130 million in revenues from this tax in fiscal year 2023–24, according to the controller.

Evolution of business tax policy in San Francisco

In 2012, San Francisco voters approved the city’s transition from the payroll tax to a gross receipts tax. Like an income tax rate, the gross receipts tax rate increases with gross revenue, making it more beneficial for small businesses than the previous flat payroll tax.

From 2018 to 2020, voters passed additional ballot measures to increase gross receipts taxes, including a homelessness gross receipts tax on large companies and a commercial rents gross receipts tax. In 2020, voters approved the Top Executive Pay Tax, which imposed an additional gross receipts tax on companies with a high compensation ratio between top executives and the median San Francisco worker.

The rise of remote work after 2020 exposed the vulnerabilities of the city’s business tax structure. First, the city was overly reliant on a small number of companies for its tax base. In 2024, the top 10 taxpayers paid 28% of total business taxes. The Top Executive Pay Tax was even more concentrated, with the top 10 companies accounting for 61% of revenue. Second, the city’s “payroll apportionment factor” reduced business taxes for companies with remote workers, disincentivizing local job growth. Third, the city’s tax code had become convoluted, with 14 categories of business taxes.

To address these weaknesses, the city reformed its tax structure again in 2024. In an effort led by the Office of the Controller and the Office of the Treasurer and Tax Collector, the city conducted analysis, engaged with employers and stakeholders, and finalized its proposed reforms in May 2024. Business groups, nonprofits, and labor organizations collected signatures for a November 2024 ballot measure to implement those reforms. The resulting Prop. M:

• Changed the apportionment ratio to remove the disincentive for companies to hire more employees in San Francisco
• Reduced the number of business tax categories from 14 to 7
• Cut the top executive tax rate by 80% and exempted businesses with 1,000 or fewer U.S. employees and $1 billion or less in gross receipts
• Exempted small businesses with gross receipts of $5 million or less from all business taxes and fees

The new tax structure became effective in January 2025, and companies are just beginning to file under it. Therefore, the impacts of the new structure remain unknown.

Federal funding cuts and the city’s growing budget deficit

The One Big Beautiful Bill Act (H.R. 1), enacted in July 2025, will impose significant cuts to critical social safety-net programs nationwide. The controller has estimated $200 million in lost revenue annually due to these cuts, which will exacerbate the city’s fiscal deficit, estimated at nearly $169 million for FY 2026–27.

To fill that deficit, Supervisor Chan proposed raising the Top Executive Pay Tax and imposing new fees on ride-hailing companies. Chan’s measure, co-signed by supervisors Chen, Fielder, and Walton, was withdrawn when three labor unions filed Prop. D.

Prop. C was placed on the ballot through a signature-gathering campaign led by the San Francisco Chamber of Commerce and Advance SF, which represent businesses in San Francisco. The measure was proposed in reaction to Prop. D, a competing tax measure that would increase business taxes. Prop. C requires a simple majority (50% plus one vote) to pass.

Equity Impacts

The measure would worsen the city’s structural budget deficit, making it less likely that the city can provide resources for vulnerable populations. It would provide some additional tax relief for smaller businesses.

Pros

• The measure would cut taxes for 800 businesses, providing some financial relief for smaller establishments.
• The measure would preserve the basic structure of the business tax that was approved by voters in 2024.

Cons

• The measure would worsen the city’s fiscal deficit.
• The measure was placed on the ballot to prevent a competing measure from succeeding.

SPUR's Recommendation

The comprehensive business tax reform under 2024’s Prop. M was developed after months of policy analysis and engagement and has broad support from business, labor, and other stakeholders. Prop. C would not make significant structural changes that warrant another voter measure. It was placed on the ballot primarily to defeat Prop. D, a competing tax measure to increase business taxes. Significantly, it would have a negative net impact on San Francisco’s budget, reducing revenues by an estimated $30 million to $40 million per year at a time when the city is already scrambling to fill a $169 million budget gap for the next fiscal year.

Source (https://www.spur.org/voter-guide/2026-06/sf-prop-c-small-business-tax-cuts)

Another tax cut for the wealthy, when we are already facing a budget shortfall? Hell No! The City's controller has already said that it would reduce city revenue by $80–150 million dollars. No! Also, the language of Prop C would nullify Prop D, the Overpaid CEO Tax. As is usual with competing tax measures, Prop C contains language that would nullify Prop D should Prop C get more votes. So, Yes on D! No on C.

Source (https://www.milkclub.org/endorsements)

After careful consideration through research, interviews, and analysis of the projections from the Controller’s Office, SFWPC recommends No on Prop C and Yes on D.

The Controller’s office projected that Proposition C would result in a loss of $30-40 million (https://media.api.sf.gov/documents/Prop_C_-_Decreases_to_Business_Taxes_-_CON_VIP_Letter.pdf) in general revenue, while Proposition D would bring in $250 million to $300 million (https://media.api.sf.gov/documents/Prop_D_-_Increases_to_Business_Tax_Based_on_Comparison_of_Top_Executive_Pay_-__hxExvCe.pdf) for the general fund. San Francisco is facing a major fiscal crisis in the coming years, and budget cuts will severely impact services to women, immigrants, the LGBTQIA+ community, survivors of violence, as well as working-class and low-income San Franciscans. Beyond federal and state budget cuts, economic pressures are making it harder for everyone to survive, and we cannot in good conscience recommend measures that would lead to a substantial decrease in revenue, especially when cuts threaten core services ranging from healthcare and housing programs to food security, transit, and community safety. The funds generated by Proposition D would provide a safety net for core services we all rely on in a time of economic hardship.

Proposition D would change the existing Top Executive Pay Tax rates for corporations from .021% to 0.125% (2027 rate) to 0.183% to 1.121% for those paying Gross Receipts Tax. For corporations paying the Administrative Office Tax (a payroll versus gross receipts tax), the change would be from 0.083% to 0.499% (2027) to 0.75% to 4.47%. The larger the wage gap, the higher the tax.

Source (https://sfwpc.org/pac-recommendations-for-june-2026-election/)

NO, NO, NO

Prop. C exists only because billionaires Chris Larsen and Michael Moritz (who owns the SF Standard) and the Chamber of Commerce want to undermine Prop. D, which would raise taxes on the biggest companies with overpaid executives to help close the city’s budget deficit. The measure claims to exempt small businesses from that tax, but that’s a scam: No business with less than $1 billion revenue and fewer than 1000 employees would be taxed under Prop. D.

This is part of a larger, statewide agenda to use misleading ballot measures to undermine efforts to tax the rich. Vote no.

Source (https://www.sfbg.com/2026/05/06/endorsements-for-the-june-2-election/)

This measure is sponsored by the Chamber of Commerce and funded by billionaires. It is on the ballot to be a poison pill for Proposition D, the overpaid CEO tax. As of writing this, the title of the measure on the Department of Elections website is “Decreases in Business Taxes.” If you think the wealthy should pay their fair share, vote no on Prop C.

Source (https://sftu.org/endorsements)

WHY NO ON PROP C?

Let’s start with the obvious: “Decreases to Business Taxes” is not as simple as its name suggests. “Decreases” sounds nice. The reality? It’s more of a tax re-mix than a tax cut.

Prop C tweaks the system voters just approved under Proposition M (2024), which was supposed to stabilize San Francisco’s business taxes after years of economic whiplash. Instead of blowing that up completely, like Prop D below, Prop C nudges it, lowering some taxes while quietly dialing the CEO pay tax back up from where Prop M left it.

Prop C is a NO vote for us because…

This so-called “business-friendly” measure still raises the CEO Ratio tax compared to today’s baseline.

Despite the recent vibe change, San Francisco is dealing with empty office towers, a stubbornly slow recovery, and a tax base that’s…let’s just say, “fragile.” Against that backdrop, Prop C reads less like a grand solution and more like a calculated compromise with tax-happy San Francisco voters. In short: if you’re looking for a meaningful decrease in business taxes, Prop C isn’t it. It’s a muddled middle path. Whether that’s pragmatic or ill-advised depends on your perspective. Ours is…VOTE NO.

Source (https://www.connectedsf.com/prop-c-decreases-to-business-taxes)

No on Proposition C: Decrease City business taxes a bit and shift them from smaller to larger businesses

I would have maybe supported this if it was revenue-neutral, but it’s projected to reduce SF city revenue by $30-$40M. Mayor Lurie, the SF DCCC (local Democratic Party politburo), and SPUR oppose it as well. Conversely, GrowSF is in favor, seemingly to have something to support rather than the much-worse competing measure Proposition D.

VIG listing; Decreases business taxes in San Francisco

Proposition C gives bigger businesses a big tax break — and our city really can't afford that right now.
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San Francisco’s government is already spending more than it brings in. Because of this budget deficit, government workers are being laid off (https://www.sfchronicle.com/sf/article/mayor-lurie-layoffs-workers-deficit-22191898.php) and the Mayor is planning to cut critical programs and services (https://www.sfchronicle.com/sf/article/sf-budget-faces-worrying-trends-amid-deficit-21941570.php). Lowering business taxes now would only make things worse. The League of Women Voters supports revenue that meets the needs of local government services, so we strongly oppose Proposition C.
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Already, small businesses making less than $5 million a year don’t have to pay two taxes: the Gross Receipts Tax and the Overpaid Executive Tax. Proposition C gives that same tax break to much larger, multi-million dollar businesses making up to $7.5 million a year. If Proposition C passes, the government will lose about $30 million to $40 million every year (https://media.api.sf.gov/documents/Prop_C_-_Decreases_to_Business_Taxes_-_CON_VIP_Letter.pdf), and responsible budgeting will be more difficult. That means even more cuts to the programs and services the city’s most vulnerable residents need.
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It’s important for voters to know that Proposition C is a conflicting ordinance with Proposition D. If both pass, only the proposition that receives the most votes goes into effect.
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Vote NO on Prop C!
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Source: https://lwvsf.org/ballot-recommendations

VIG listing; Amends Oakland Business Tax Ordinance to provide one-year tax exemptions for small businesses with gross receipts of $1M or less

Prop C is a tax giveaway to the Business Loser community, which will cost the city tens of millions of dollars a year, expanding an already frighteningly large budget deficit that threatens a variety of city services. Giving a tax credit to definitionally wealthy small business owners while cutting services for everyone else would be unfair, even if it wasn’t also a bad idea. We pay our taxes to keep San Francisco a nice place to live, they can too.