Two tax measures in San Francisco are going head-to-head Tuesday in a labor-versus-business proxy battle. At their core, the choice is simple: Measure C would lower business taxes. Measure D would raise them. Only one can take effect — whichever passes with the higher share of the vote. But what voters choose will have major repercussions for the city’s economy, post-pandemic recovery, and political landscape.

Business-backed Measure C and union-backed Measure D have each received millions of dollars, becoming one of the most expensive primary ballot measure fights in San Francisco in at least a decade. 

As of Monday, Measure C had raised $6.6 million from moderate political group Neighbors for a Better San Francisco, venture capitalist and Standard chairman Michael Moritz, Ripple co-founder Chris Larsen, and Google co-founder Sergey Brin, among others. Measure D has brought in $3.3 million from the likes of congressional candidate Saikat Chakrabarti, SEIU Local 1021, and IFPTE Local 21.

The Overpaid Executive Tax, first enacted in 2020, is an additional tax on large businesses where the highest-paid executive earns more than 100 times the typical worker’s salary. Proposition M, passed in 2024, modified how the tax was calculated and lowered its rates.

If passed, Measure C would do two things: raise the exemption threshold for the gross receipts tax from $5 million to $7.5 million — shielding more small businesses — and speed up the rollout of the Overpaid Executive Tax increases. The controller’s office estimates C would reduce city revenue by up to $40 million a year, which could have “contractionary effects on city spending and employment.”

The Chamber of Commerce has crafted this measure in response to Measure D, which would raise business taxes even higher than the 2020 rate. Advocates argue that the city’s post-pandemic financial recovery remains fragile and warn that any increase in business taxes will drive more companies out of the city.

If passed, the measure would raise the Overpaid Executives Tax and change how it is calculated. 

Currently, the tax kicks in when a company’s highest-paid executive earns more than 100 times the median salary of its San Francisco employees. Measure D would keep that 100-times threshold but change the comparison pool to its entire employee base rather than just San Francisco. Since San Francisco salaries are far higher than the global median, that shift alone would drag more companies into the tax net.

The controller’s office estimates that Measure D could bring in up to $300 million in annual revenue to the city’s general fund. Supporters of the proposition argue that this funding is needed to counter President Donald Trump’s H.R. 1 bill (also known as the Big Beautiful Bill), passed in 2025, which stripped the city of about $300 million in federal social welfare funding. 

Authored by local labor unions, Prop. D has drawn criticism from the city’s economist, Ted Egan, who estimated that it will cut 1,000 jobs and shrink San Francisco’s economy by $200 million a year for two decades. Egan also said the measure would “encourage further [business] relocation out of the city.”

Whichever measure passes serves as an important bellwether of how San Francisco residents feel about the city’s economy.

If Prop. C wins, it will be a show of confidence for the city’s moderate and business camps, as well as for Mayor Daniel Lurie. (He has opposed both Prop. C and D, arguing that neither will help improve San Francisco’s economy.) The passage of C would also show that the city’s moderate bloc, which has seen success with the election of Lurie and recent legislation on public safety and homelessness, remains in a position of strength at City Hall.

If Prop D. wins, it will be a major boost to the city’s labor unions and progressive wing, which has suffered significant political setbacks in recent years, especially at the Board of Supervisors, where moderates currently hold a majority. It would also show signs that San Franciscans might be turning toward more populist sentiments as economic disparities and the housing crisis worsen. 

Lurie explained Monday why he had not included the potential $300 million windfall from D in his June budget proposal. 

“We all know that if [Prop. D] were to pass, that money wouldn’t be seen here at the city until about 18 months from now,” he said. “We have to be fiscally disciplined now. We can’t wait another year and a half. It’s what’s gotten us into trouble by spending money that we don’t have, and so we’re going to be a city that spends what it has, and not, you know, on future potential ballot measures.”

Correction: This story has been updated to reflect Mayor Daniel Lurie’s position on Prop. C.