One of the most outrageous and economically stupid measures to pass on Election Day came out of San Francisco: a new tax called the “Overpaid Executive Tax.” It’s really as bad as it sounds. This law levies a .1% surcharge on any company in San Francisco whose top executives earn 100 times more than the “typical worker.” It was enacted as a means to fight against pay inequality, but all it does is show how incompetent its proponents really are.
It’s worth noting that this tax applies to both publicly traded companies and private companies within San Francisco and it ensnares both local companies and large companies that conduct business within the city. What’s more, it’s completely arbitrary. What are you comparing when you say 100x or 200x the typical local worker? Does that mean on an hourly basis? Does it mean a part time typical worker compared to a high level overtime executive? Do you include overtime? Do you include benefits? It’s a virtually impossible number to calculate. And even if you did have a number to calculate, why is it 100x and not just 50x? Let’s say you compare a high tech company with a retail company such as a supermarket. The supermarket will have a lot of lower wage workers, whereas a tech company will have a lot of higher paid workers. It’s comparing apples to oranges in an effort to get someone to “pay their fair share.”
I hope this has the economically expected effect of them losing a lot of money and business, which is obviously the opposite of what San Francisco probably wants during a pandemic. Current companies will likely change their hiring plans to eliminate or reduce the amount of lower-lever/lower paid workers. Likewise, companies considering doing business in San Francisco will undoubtedly hesitate or entirely change their mind. Why do business in a locality that is particularly anti-business with such ridiculous rules. Furthermore, this surcharge is basically not a tax, it’s a forced donation (because those affected have the option of leaving if they want to). It puts a responsibility on the company to leave San Francisco because the tax affects all the shareholders of the company. This also means that any company that doesn’t leave San Francisco because the tax applies to them is someone who is ultimately abusing their shareholders to whom they have a fiduciary responsibility.
This tax is utterly meaningless and it just shows that people proposing this are so economically ignorant that they should be embarrassed. The problem is that the people on the Left who come up with such ridiculous ideas are never actually embarrassed by that ignorance.