New Economic Study Finds Gross Receipts Tax on Top 2% of Big Businesses Will Prevent Collapse of Bay Area Public Transit Agencies

FOR IMMEDIATE RELEASE
Wednesday, July 2, 2025

CONTACT: 
Ryan Williams
(510) 590-2782‬
[email protected]

Analysis shows a gross receipts tax will generate nearly 1 1/2 times more funds annually than a regressive sales tax, which polls poorly

SACRAMENTO, CA – Today, Bay Area Forward released a new economic analysis that shows Bay Area public transit can be fully funded by a gross receipts tax on only the top 2% of Bay Area businesses.

Local transit agencies are facing at least $800 million in an annual operating deficit beginning next year that could lead to massive service cuts, widespread congestion and delays, and layoffs of highly-skilled transit workers.

The economic analysis, conducted by Blue Sky Consulting Group, estimates only 18,180 Bay Area establishments in Alameda, Contra Costa, San Mateo, and San Francisco counties – or 2.4% of local businesses – will pay into the gross receipts tax. Together, these 18,000 businesses generate $591 billion in gross receipts with the average qualifying business generating about $32.5 million. Under the proposed average tax rate of 0.136%, a business with $32.5 million in gross receipts would pay just $37,290.

Because the tax includes an exception for small businesses with under $5 million in gross receipts, about 98% of Bay Area businesses will pay nothing.

“The vast majority of businesses will not be affected by this gross receipts tax due to the five million dollar exemption,” said Ryan Williams, Board Member of Bay Area Forward. “The Trump-era corporate tax cuts that these top two percent of businesses received far outweigh the less than one percent tax they will pay to save Bay Area public transit and our local economy.”

Senate Bill 63 currently would allow a sales tax measure to be placed on the 2026 ballot to support transit agencies in the Bay Area. But a study by MTC, the Metropolitan Transportation Commission, shows that a sales tax will raise only $560 million annually, leaving a gaping hole in Bay Area transit agency budgets.

Bay Area Forward is working with the Legislature to amend SB 63 to replace the regressive sales tax with a gross receipts tax on big businesses. This would shift the financial burden from working people and small businesses onto big corporations to raise $800 million per year in stable, long-term funding for Bay Area transit operations.

“With a sales tax, many small businesses will see their tax liability increase, along with local residents already paying some of the highest sales tax rates in the country,” said Laurel Paget-Seekins, Senior Policy Advocate at Public Advocates. “According to this analysis, a gross receipts tax is the most effective revenue source to solve the funding crisis for Bay Area transit without asking working families, seniors, students, and small businesses to pay more.”

The economic analysis can be viewed here.

Last week, at a Bay Area Forward press conference, Senator Scott Wiener announced a budget deal that preserved $750 million in the budget for vital “bridge funding” for Bay Area public transit until a ballot measure can be passed in 2026. While the new funding provides much-needed relief for transit agencies, it must be repaid to the State – underscoring the importance of passing a 2026 regional ballot measure that fully addresses ongoing budget gaps.

Multiple polls indicate weak support for a sales tax with the cost of living a top concern. But a recent Bay Area Forward poll on a regional transit measure showed that a gross receipts tax garnered more than 60% support among likely 2026 voters

For more information on Bay Area Forward, please visit BayAreaForward.com.

###

Bay Area Forward is dedicated to strengthening and modernizing our public transportation system in the Bay Area and making it more equitable, affordable, safe, and reliable so that Bay Area residents, businesses, the environment, and the economy can thrive.

The founding member organizations of Bay Area Forward include AFSCME Council 57, AFSCME Local 3993, AFSCME Local 3916, Amalgamated Transit Union Local 1555, Amalgamated Transit Union Local 192, Service Employees International Union 1021, SMART – Transportation Division, Transport Workers Union Local 250A, United Auto Workers (UAW) Region 6, and dozens of community groups that are part of the Voices for Public Transportation coalition, including Transform.