A coalition of labor, community groups and advocates Wednesday launched a signature-collection campaign for a proposed ballot initiative to impose a business tax on large corporations that pay CEOs more than 50 times their median workers.
Supporters say the tax would generate more than half a billion dollars per year for the city. Critics argue the proposal is an overreach and say it will harm the city’s economy by driving businesses away.
“Today, we are launching the Overpaid CEO Tax,” Kurt Peterson, UNITE HERE Local 11 co-president, said during a news conference outside the Tesla Diner in Hollywood.
“Our goal is simple: collect 140,000 signatures from Los Angeles voters to put this initiative on the November ballot, so Angelenos can decide whether overpaid CEOs should pay their fair share,” Peterson said.
UNITE HERE Local 11 is part of the Fair Games Coalition, which is backing the tax initiative. Other supporters consist of UTLA, SEIU 721, UFCW 770, LAANE and CLUE, among others.
Coalition members emphasized Los Angeles is one of the least affordable cities in the world, pointing to soaring housing costs, skyrocketing grocery prices and broken street infrastructure like sidewalks and streetlights.
Meanwhile, in 2024, CEOs at the nation’s largest companies earned an average of 281 times more than their typical workers, effort leaders said.
Marriott and Hilton’s CEO earns $6,000 an hour; Starbucks’ CEO earns $7,000 an hour; and Delta, the largest Olympic Games sponsor, pays its CEO $16,000 an hour, according to the coalition.
With Los Angeles preparing to host the World Cup, a Super Bowl in 2027, and the Olympic and Paralympic Games in 2028, the coalition argues big corporations will reap even greater windfalls.
“If you work in Los Angeles, you should be able to afford to live in Los Angeles,” Peterson said. “That’s what the Overpaid CEO Tax does. If a corporation chooses to pay its CEO more than 50 times its median worker earns, it pays more taxes — and the bigger the gap, the higher the tax.”
“A fair Olympics requires a fair economy — and the Overpaid CEO Tax is part of that deal,” Peterson added.
The tax initiative would increase the gross receipts tax paid for companies. Companies with 1,000 or more workers, and above a 50:1 CEO worker pay ratio would be taxed, according to the ballot language.
Revenue generated from the tax would go toward four specific accounts supporting housing, sidewalks, after-school care and grocery stores.
The Howard Jarvis Taxpayers Association criticized the proposed tax initiative.
Voters placed taxpayer protections in the state constitution with Proposition 13 in 1978 and Proposition 218 in 1996. These require local taxes for a special purpose to be approved by two-thirds of voters.
Beginning in 2017, state courts carved a loophole that said the constitution does not apply to “citizen initiative tax increases,” according to the association.
“The result: special interest groups can write their own tax increases, direct all the money to benefit themselves, collect signatures to place these on the ballot, and then evade the requirement for a two-thirds vote,” the Howard Jarvis Taxpayers Association said in a statement.
The association said similar events unfolded with Measure A, a half-cent sales tax in Los Angeles County, approved by voters in November 2024. Measure A repealed and replaced Measure H, a quarter-cent sales tax to generate funding for homeless and housing initiatives.
“The city of Los Angeles has already seen businesses flee because of high taxes that other local jurisdictions do not impose,” the Howard Jarvis Taxpayers Association said in a statement.
“This reduces the revenue that would otherwise come into the treasury to fund essential services. Increasing the gross receipts tax for any reason is a terrible idea if the goal is to have more funding for city services or anything else,” the statement continued.
Services Employees International Union-United Healthcare Workers West proposed a separate but similar so-called “billionaire tax” at the state level through the ballot initiative process.
The proposal would impose a one-time 5% tax on any resident worth more than $1 billion, and 90% of the revenue generated would support healthcare with the remaining 10% going toward food assistance and education.
SEIU-UHWW says the initiative comes in the wake of federal spending reduction on Medicaid, Affordable Care Act subsidies and food assistance programs.
Gov. Gavin Newsom has opposed the billionaire tax. He expressed concerns about impacts to the state’s tech sector and the economy.
In December, The California Legislature’s Nonpartisan Fiscal and Policy Advisory group released a joint review with the governor’s Department of Finance, warning that the tax could provide billions of dollars in one-time revenue. However, the risks could trigger millions in recurring losses if billionaires leave the state.
Rob Lapsley, president of the California Business Roundtable, also criticized the initiative. He previously said such a tax “would undermine our economy, decimate the state budget, drive investment out of the state and ultimately make everyday life more expensive for working families.”