City of San Francisco: Proposed Mental Health Gross Receipts Tax Likely to be on November Ballot

Recently, certain members of the San Francisco Board of Supervisors filed a ballot measure with the City Department of Elections that would increase taxes on certain persons and combined groups engaging in business in the City.

If approved by voters, effective for tax years beginning on or after January 1, 2021, an annual Mental Health Gross Receipts Tax would be imposed on persons and combined groups doing business in the City if the Executive Pay Ratio of the person or the group exceeds 100:1. The “Executive Pay Ratio” is generally the ratio of the compensation of the organization’s highest paid employee or officer compared to the median compensation of City-based full-time and part-time employees for the year. The additional mental health gross receipts tax rates range from 0.1 percent on persons or combined groups whose Executive Pay Ratio is greater than 100:1 all the way up to 0.5 percent if the person or a combined group has an Executive Pay Ratio greater than 500:1. An additional payroll expense tax would also be imposed on persons engaging in the business of operating an administrative office in the City. This tax would be based on the person’s or the combined group’s San Francisco payroll and would range in rate from 0.4 percent to 2.0 percent based on the entity’s Executive Pay Ratio.

The new mental health gross receipts tax would be in addition to all other City taxes, including the relatively new homelessness gross receipts tax that is currently the subject of litigation over whether it was required to be approved by a 2/3 vote.  Revenues from the additional tax would be used to fund free mental health services for San Francisco residents. A separate measure- Mental Health SF- would set forth the specifics of the mental health program and would also need to be approved by voters. Please contact Joy Gray at 415-963-8613 with questions on the measure.