Supervisor introduces legislation to end city taxation of stock-based compensation

Supervisor Farrell told the Board of Supervisors he will introduce legislation to permanently end San Francisco’s policy of taxing stock-based compensation.

Farrell said the city is “the only city in the United States” that taxes stock options and argued the levy is harming the technology sector’s ability to retain and attract companies and workers. He cited a report—commissioned by the board’s analysts—that found San Francisco unique in taxing stock options and said the first-year tax estimate for Twitter had been projected at more than $50 million.

Farrell said he hosted and attended meetings with technology leaders and the mayor and that many companies have indicated they could not continue to operate in San Francisco under the current tax regime. He said a council convened by the mayor is discussing solutions and that he believes the city needs a permanent fix rather than a temporary moratorium.

Why it matters: Tax treatment of stock-based compensation affects how technology firms structure compensation and locate operations; the supervisor framed the proposal as critical to preserving jobs and future economic growth in the city.

What’s next: Farrell said he would introduce legislation to eliminate the stock-option tax and asked colleagues for support; the measure will enter the regular legislative process and require further analysis from the city economist and comptroller, which President Chiu said he had asked to produce additional data.