Bernie Sanders fired another salvo at big business Monday with a plan to raise taxes on companies where there are “exorbitant” pay gaps between top executives and workers.
Under Sanders’ “Income Inequality Tax Plan,” companies where the CEO salary is 50 to 100 times greater than the pay of the median worker would be required to pay an additional 0.5 percentage point in corporate taxes. The tax penalties would increase on a scale as the disparities get greater, with a cap of 5 percentage points for gaps of 500-to-1 or more.
“The American people are sick and tired of corporate CEOs who now make 300 times more than their average employees, while they give themselves huge bonuses and cut back on the health care and pension benefits of their employees,” Sanders said.
Both Sanders and his fellow progressive Elizabeth Warren are emphasizing income inequality and higher taxes on the rich as the main themes of their campaigns.
Last week, Sanders released a wealth tax plan that would levy an additional 1 percent to 4 percent on the top 0.1 percent of U.S. households. Warren has a plan for a 2% levy that would kick in on the assets of fortunes worth more than $50 million.
Sanders is currently averaging at 17.5 percent, in third place behind former Vice President Joe Biden and Warren.
Sanders’ new policy on CEO pay applies to privately and publicly held corporations that earn an annual revenue of over $100 million. The Sanders campaign said the tax would raise $150 billion over the next decade. Revenue would go toward paying off medical debt.
The Sanders campaign said companies could avoid the tax increase by raising median worker pay to $60,000 and reducing CEO compensation to $3 million. About 190 firms in the S&P 500 currently fall below that threshold for worker pay, based on figures disclosed in their securities filings. Among them are many retailers and fast-food companies, which rely heavily on temporary and part-time workers.
“Tax penalties on extreme CEO-worker pay gaps build on the living wage movement by encouraging corporations to lift up the bottom and bring down the top of their wage scales,” said Sarah Anderson, global economy director at Institute for Policy Studies, a non-partisan progressive think tank.
While median worker pay tends to remain relatively consistent, CEO compensation can fluctuate significantly from one year to the next. Corporate leaders at the biggest firms get about two-thirds of their pay in stock, and boards aren’t always consistent in how they grant such awards.
In a statement, the Sanders campaign said that if its plan had been in effect last year, Walmart Inc. -- whose CEO Doug McMillon received about $23.6 million compared to the $21,952 earned by the median worker -- would have paid up to $793.8 million more in taxes. JPMorgan Chase & Co. would have paid up to $991.6 million. The bank’s CEO Jamie Dimon received roughly $30 million and the median employee $78,923.
-- Emma Kinery, Bloomberg News
