Proposition M | californiachoices.org

My vote

Currently, the City collects various business taxes on businesses based on their size and amount of gross receipts; a gross receipts tax (0.053%-1.008%), a homelessness gross receipts tax (0.175%-0.69%), an overpaid executive gross receipts tax (0.1%-0.6%), a business registration fee ($47-$45,150), and an office administration tax (3.04%-5.44% in 2024). Proposition M would exempt most small businesses with gross receipts up to $5 million, calculate San Francisco gross receipts based more on sales and less on payroll expenses, change rates of the homelessness tax to 0.1%-3.716% and 0.162%-1.64% (for business activities over $25 million), and modify how the City calculates the overpaid executive gross receipts tax and set the rates to 0.02%-0.129%. Proposition M is an ordinance that requires 50%+1 affirmative votes to pass.

Fiscal Impact: Over the first three fiscal years, Proposition M will reduce revenues by approximately $40 million annually. Beginning in 2027, scheduled rate increases would generate positive revenues of approximately $50 million annually in FY 2028-29 and thereafter. By FY 2029-30, the total positive revenue would offset the reduced revenue in the first three years, making the total amount of business tax revenue over that period comparable to current law.

Next San Francsico County Measure: Measure N

See Endorsements for Proposition M

Details

Pro/Con

Pro:

Supporters argue that The current San Francisco tax structure does not allow our local businesses to thrive. We've seen too many of our small businesses, especially restaurants and retail, close.

Proposition M offers crucial tax relief to help over 2,700 small businesses by completely eliminating their taxes. It will also prevent our largest employers from leaving the city, fixing taxes that previously penalized them for having employees in the office and that contributed to record office vacancy downtown. Proposition M will also significantly reduce business license fees for restaurants, hotels, arts venues, and neighborhood stores, lowering the tax burden for more than 90% of our local restaurants.

A YES vote on this measure means: you want to change the following taxes the City collects from businesses: the gross receipts tax, the homelessness gross receipts tax, the overpaid executive gross receipts tax, the administrative office tax and business registration fees.

Con:

Opponents argue that Proposition M introduces new tax rates that dramatically increase the burden for many businesses in San Francisco. While some small businesses might see minimal changes, others-especially mid-sized and large employers-face doubled or even quadrupled tax rates.

This isn't a "tweak," it's a massive tax increase that could drastically alter the financial future of major companies. Proponents claim the measure is "revenue neutral". The Controller disagrees: it's a $50 million/year tax increase. It shifts the burden heavily onto businesses still reeling from San Francisco's COVID collapse

A NO vote on this measure means: you do not want to change the City’s business taxes.

In Depth

For the gross receipts tax:
- exempt most small businesses with gross receipts up to $5 million (increased by inflation).
- reduce the number of business types from 14 to seven;
- calculate San Francisco gross receipts based more on sales and less on payroll expenses, depending on the type of business;
- change rates to between 0.1% and 3.716%; and
Apply the homelessness gross receipts tax on business activities with San Francisco gross receipts over $25 million, at rates between 0.162% and 1.64%.
Modify how the City calculates the overpaid executive gross receipts tax, determine who pays that tax, and set the rates between 0.02% and 0.129%.
Adjust business registration fees to between $55 and $60,000 (increased by inflation).
Adjust the administrative office tax rates for certain large businesses to range from 2.97% to 3.694%, and adjust the business registration fees for these businesses to between $500 and $35,000 (increased by inflation).
Make administrative changes to the City’s business taxes.

The homelessness gross receipts tax would continue to fund homelessness prevention and services for people experiencing homelessness.

The City would use the other taxes mentioned above for general government purposes. All these taxes would apply indefinitely until repealed.

If Proposition M [this measure] passes with more votes than Proposition L [Additional Business Tax on Transportation Network Companies], then Proposition L [Additional Business Tax on Transportation Network Companies] would have no legal effect.

If Proposition L [Additional Business Tax on Transportation Network Companies] passes with more votes than Proposition M [this measure], both propositions would have legal effect.

Source: Final Digest - Changes to Business Taxes

Voter Resources

City and County of San Francisco Office of Elections