What to know about San Francisco's Proposition M

SAN FRANCISCO - San Franciscans will vote on several propositions in November. Here's what to know about Prop M.

What is Proposition M?

This measure makes changes to San Francisco business taxes. It requires 50%+1 affirmative votes to pass.

What a yes vote means

A yes vote means you want to change the following taxes San Francisco collects from businesses:

Gross receipts tax
Homelessness gross receipts tax
Overpaid executive gross receipts tax
Administrative office tax
Business registration fees

What a no vote means

A No vote means you don’t want to change the City’s business tax.

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Breaking down Prop M

According to the Ballot Simplification Committee, an impartial group of volunteers, most small businesses would be exempt from the gross receipts tax up to $5 million.

Prop M would reduce the number of business types from 14 to seven and San Francisco gross receipts would be calculated more based on sales and less on payroll expenses, depending on the type of business.

The proposal would change rates to between 0.1% and 3.716%

In addition, Prop M would 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%.

Prop M would also 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%.

The proposition adjusts business regulation fees to between $55 and $60,000.

It would 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.

The prop would make administrative changes to the City’s business taxes.

Who supports Prop M?

Golden Gate Restaurant Association
San Francisco Chamber of Commerce
Hotel Council of San Francisco
San Francisco Council of District Merchants Associations

These groups argue that a yes on M vote would help small businesses thrive and that it would revitalize the city’s economy. They say the support for M is widespread among progressives, moderates, small business owners and city leaders.

"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," the official proponent’s argument reads.

The collective of proponents says Prop M offers crucial tax relief to more than 2,700 small businesses by eliminating their taxes while also preventing the city’s largest employers from leaving the city. They say it fixes taxes that had previously penalized large employers for having employees in the office, which contributed to record office vacancies downtown.

Proponents say Prop M reduces business license fees for restaurants, hotels, arts venues, and neighborhood stores.

"San Francisco currently has some of the highest business tax rates in the country, penalizing both small and large businesses for continuing to operate here," proponents said in their argument.

Who opposes Prop M?

The opposing argument comes from Larry Marso, described as a tech executive and attorney. He was a member and executive of the local Republican Party.

He says Prop M introduces a new tax rate that dramatically increases the burden for many businesses in the city, especially mid to large-sized businesses facing doubled or quadrupled tax rates.

Marso argues that the tax change would further burden businesses still reeling from the negative economic impacts of the coronavirus pandemic.