Portland’s CEO tax is a major move to create income equality between employees and the boss. The city council voted to enact a surtax for any company’s CEO earning a whopping 100 times the median pay of those workers who make the corporation run. But it gets even better.
Portland will force any CEO earning 100 times employees’ median to pay 10 percent in taxes. CEOs earning more than 250 times the median have to pay even more — a 25 percent surcharge, according to the New York Times.
Steve Novick came up with the idea. He is a former environmental lawyer and a Portland Democratic city commissioner since January 2013; Novick said:
‘When I first read about the idea of applying a higher tax rate to companies with extreme ratios of C.E.O. pay to typical worker pay, I thought it was a fascinating idea. It was the closest thing I’d seen to a tax on inequality itself.’
Chief executives’ pay has leaped to the top of the bean pole, because the median pay for the top 200 highest-paid executives is $19.3 million. Just five years ago, the median was $9.6 million, yet they are ever on the hunt for more money.
A 2014 study by Lawrence Mishel and Alyssa Davis at the Economic Policy Institute in Washington found chief executive pay in 1965 was 20 times the employees’ median pay. But in 2013, CEO’s monstrous pay raced to nearly 300 times the median.
Professor at the Paris School of Economics and an authority on income inequality Thomas Piketty wrote the book Capital in the Twenty-First Century. He said Portland was a good first step:
‘This is certainly part of the solution, but the tax surcharge needs to be large enough; the threshold “100 times” should be substantially lowered.’
Portland Democratic Mayor Charlie Hales said:
‘Income inequality is real, it is a national problem and the federal government isn’t doing anything about it. We have a habit of trying things in Portland; maybe they’re not perfect at the first iteration. But local action replicated around the country can start to make a difference.’
Oh, this is too good.
To read the entire study about CEO pay, click on this link:
Check out this Top Ten Richest CEO’s video below:
Featured Image: Getty Images.
H/T: New York Times.