Sanders introduces legislation to tax excessive CEO pay
Sen. Bernie Sanders, I-Vt., teamed up with Rep. Rashida Tlaib, D-Mich., and Barbara Lee, D-Calif., to introduce legislation Wednesday in the Senate and the House to raise the federal corporate income tax rate on companies that pay their CEO more than 50 times as much as their average employee.
The Tax Excessive CEO Pay Act would impose tax penalties on large public and privately held U.S. firms that overpay their top executives at the expense of their employees. The extra tax would add 0.5 percentage points to the federal corporate income tax rate on companies with gaps of 50 to 1, and increase gradually, topping out at five percentage points on companies that pay their CEO more than 500 times median worker pay. In cases where the CEO doesn’t earn the company’s largest compensation, the ratio calculation would be based on the highest-paid executive.
“Today, I am proud to introduce the Tax Excessive CEO Pay Act with @RepBarbaraLee and @RepRashida,” Sanders tweeted. “If corporations can’t understand why it’s absurd to pay their CEOs more in a year than their workers will earn in a lifetime, then maybe this bill will help them figure it out.”
A recent report from the Institute for Policy Studies found that 80 percent of S&P 500 companies paid their CEO over 100 times their median employee pay last year. At 50 publicly traded companies, employees would have to work at least 1,000 years to make as much as their boss made in just one.
“The pay gap between major corporations' executives and their workers is beyond unjust,” Lee tweeted. “There is no reason for the CEOs of @McDonalds, @Walmart, and @Disney to earn upwards of 1000x more than their average employee. It's time to #TaxCEOs. The average CEO in 1970 made 20 to 30 times more than their average employees, but today that number has ballooned to upwards of 300 times more. This is outrageous! It's time to #TaxCEOPay and ensure everyone earns a fair wage.”
The pay gap between major corporations' executives and their workers is beyond unjust. There is no reason for the CEOs of @McDonalds, @Walmart, and @Disney to earn upwards of 1000x more than their average employee. It's time to #TaxCEOs. https://t.co/8N8Zai2WVM— Rep. Barbara Lee (@RepBarbaraLee) November 13, 2019
Researchers at the Institute of Policy Studies have found that if the bill’s proposed tax penalties had been in place last year, S&P 500 companies with pay ratios above 100 to 1 would have owed as much as $17.2 billion more in federal taxes.
“These extreme gaps aren’t just obscenely unfair,” said Sarah Anderson, the lead author of 26 annual IPS Executive Excess reports. “They also lower employee morale, which is bad for business, and put us all at risk by encouraging reckless CEO behavior.”
A group of labor unions and progressive organizations, including the AFL-CIO and the Communications Workers of America, wrote a letter in support of the bill on Wednesday. “The more corporations channel into executives’ pockets, the less they have for wages and other investments,” they wrote. “By putting a tax penalty on corporations with extreme pay gaps, the bill would give corporations an incentive to narrow their divides by lifting up the bottom and bringing down the top of their pay scale.”
The Institute for Policy Studies also pointed to efforts to impose tax penalties on excessive CEO pay in some cities and states. Portland, Oregon became the first jurisdiction last year to begin collecting revenue from a CEO pay gap tax, and San Francisco voters will find a proposal for such a tax on their ballots next March. Policymakers in seven state legislatures have also introduced similar proposals. The new legislation builds on a plan the Sanders presidential campaign unveiled in September.