Homelessness Gross Receipts Tax in San Francisco, CA


Proposition C, a 2018 voter-approved ballot measure, allows the Homelessness Gross Receipts Tax (HGRT) to go into effect January 1, 2019. The levy placed a permanent average 0.5 percent gross receipts tax on companies that make more than $50 million in a year to fund the city’s homeless relief efforts. The measure passed with 61.34% vote in favor of the proposition.

In 2016, Mayor Ed Lee established the Department of Homelessness and Supportive Housing (HSH) in an effort to help homeless residents permanently exit the streets and move into housing and services. A biennial survey, known as the Point-In-Time Count (PITC), is conducted to do a comprehensive count of the local population experiencing homelessness. The 2017 survey counted 7,499 individuals, reflecting a two percent increase between 2013 and 2017. The negative impacts of homelessness combined with the fact that those experiencing homelessness have an average life expectancy 25 years less than individuals with stable housing added to the urgency of addressing this issue. 

In 2017, HSH released a strategic framework to improve the lives of unhoused individuals in San Francisco by reducing chronic homelessness by at least 50 percent, ending homelessness for families with children, and housing and services for youth through new systems of coordinated services. Substantial change would require funding and although smaller budget campaigns were run every two years, the measures and budget savings were too small to address the massive problem of affordable housing.

That changed in 2018, which proved to be a historic year for San Francisco as voters passed an unprecedented number of taxes in one year. This came on the heels of federal tax reform in 2017, which lowered the corporate tax rate from 35 percent to 21 percent and doubled the number of businesses in the US that paid $0 in taxes in 2018. While the federal government provided cuts to corporations, the prevailing will of the people in San Francisco was to tax the rich and house the poor. The people of San Francisco wanted radical, systemic change and a more progressive tax structure that would force wealthy businesses to pay their fair share without burdening small businesses. 

Proposition C provided the solution to this problem in perpetuity, unless repealed on a future ballot. HRGT imposed additional business taxes to create a dedicated fund to support services for homeless people and prevent homelessness, including one tax of 0.175% to 0.69% on gross receipts over $50 million that a business receives in San Francisco, and another tax of 1.5% on certain administrative offices’ payroll expense in San Francisco. 

The levy was estimated to impact 300–400 of the 13,000 businesses at the time and expected to raise $250–300 million annually. In its first year it generated $490 million in revenue. The new tax does not apply to certain nonprofit organizations and businesses exempt from local taxation, such as banks and insurance companies, revenues that are exempt from the gross receipts tax and revenues from commercial rents that are subject to the city’s Early Care and Education Commercial Rents Tax.

The Board of Supervisors determines the distribution of funds while an advisory committee monitors the fund, which includes:

  • At least 50% ($125–150 million annually projected) to secure permanent housing for homeless people. This will pay for construction, rehab, prevention, and rental and operating subsidies of approximately 4,000 units of housing over the next eight years and mandates that families and youth are given priority.
  • At least 25% ($63–75 million annually projected) for mental health services specifically designed for homeless people with severe behavioral health issues, such as intensive wrap-around services, street-based care, treatment, drop-in services, residential facilities, and housing for people suffering from mental illnesses and substance use disorder.
  • Up to 15% ($38–45 million annually projected) for services for people who are at risk of becoming homeless by ensuring 7,000 households get legal assistance, permanent or temporary subsidies to stay in their housing, or other forms of help they need to stay housed, such as help with electrical or other bills.
  • Up to 10% ($25–30 million annually projected) to secure short-term shelter by paying for 1,075 new shelter and navigation center beds, fund drop-in hygiene programs including dignified bathrooms and showers for everyone



There was broad support from San Francisco groups and community-based organizations that supported Proposition C, including Affordable Housing Alliance, Coalition for San Francisco Neighborhoods, Mental Health Association of San Francisco, United Educators of San Francisco, Chinatown Community Development Center, GLIDE Foundation, San Francisco Tenants Union, SEIU 1021, the Coalition on Homelessness and more. 

The coalition did significant work to ensure that the campaign was grounded in the experience of individuals experiencing homelessness and their desire to see more permanent solutions. They took radical approaches to uplift the voices of unhoused individuals and individuals on the front lines addressing homelessness. The campaign hired 340 unhoused people to call 90,000 voters and to knock on 45,000 doors. Through these interviews, the coalition developed policy language prior to beginning collaboration with elected officials; they did this intentionally to prevent the erasure of the voices of the unhoused. Notably, they focused on inclusivity, targeting outreach efforts to reach both Chinese and Spanish speaking individuals.



The HGRT placed an emphasis on equity by providing dedicated funding to some of the most marginalized and vulnerable members of the community. The PITC survey addressed both sheltered and unsheltered individuals experiencing homelessness. Age, gender, sexual orientation and ethnicity demographics were collected to better understand who is experiencing homelessness. 

The 2017 Point-in-Time Count revealed that of the respondents, Black or African-Americans experienced a significantly higher rate of homelessness (34% compared to 6% of the general population).  While an estimated 14% of San Francisco’s total population identifies as LGBTQ, 30% of respondants identified as LGBTQ. Of that 30%, 46% reported a mental health condition, as opposed to 39% who did not identify as LGBTQ. 49% of respondents were under the age of 24 when they first experienced homelessness. This data overwhelmingly supports homelessness being an equity issue.



  • Preemption: There may be restrictions on ballot tax initiatives, assuming they are permitted in the respective state. For example, a 2017 ruling by the California Supreme Court changed the interpretation of whether tax initiatives need a supermajority to pass. The new interpretation was that only a simple majority was needed if an initiative was placed on the ballot by voters directly, thus making it far easier to pass legislation like Proposition C. For states that do not permit local ballot propositions, raising taxes to generate revenue is a commonly preempted action at the state level.
  • Local government dynamics: While the San Francisco Board of Supervisors is quite progressive, there are powerful interests in the city engaged on a range of issues, which often leads to the defeat of some relatively progressive legislation. By placing this measure on the ballot with voter signatures, the proposition only required a simple majority (50% of votes plus one) as opposed to the two-thirds supermajority that would have been needed if the legislation was placed on the ballot by local lawmakers.  
  • Policy impact: Municipalities are struggling with falling revenue while many of the largest businesses make significant profits and benefit from low tax rates. San Francisco is fortunate in that voters approved a measure that will generate significant additional revenue to address homelessness in the city over the next decade.


This case study was last updated: January 19, 2021.