Reps. Rashida Tlaib and Barbara Lee teamed up with Sen. Bernie Sanders to introduce legislation Wednesday aimed at curbing the disparity in pay between CEOs and rank-and-file employees.
The Tax Excessive CEO Pay Act would impose tax penalties on companies that pay their CEOs more than 50 times the median salary of their employees.
The legislation, introduced in the Senate and House, comes as the pay gap between CEOs and workers continues to widen. Nearly 80 percent of CEOs for S&P 500 companies received more than 100 times the pay of the median employee in 2018, according to a study by the Institute for Policy Studies.
A typical employee at the 50 publicly traded companies with the highest pay gaps would have to work at least 1,000 years to earn what the CEO makes in a year, the study found.
The legislation calls for imposing graduating tax penalties starting at 0.5 percent and rising to 5 percent for companies that pay their CEOs more than 500 times the rate of their workers.
“Corporate greed is a disease that has long inflicted this country — income inequality and the pay gap between CEOs and their employees are just two of its symptoms that are harming everyday people,” Tlaib, of Detroit, said in a news release. “In 2018, for example, General Motors’ CEO made nearly 300 times more than the median income of an employee there. We have had enough. The Tax Excessive CEO Pay Act will help ensure there is more fairness in the workplace when it comes to wages. It’s common sense legislation on the path toward justice for all.”
Many of the companies with widening pay gaps rely on taxpayer support to help full-time employees who are below the poverty line.
“In America today, ordinary workers at some of the richest corporations are making poverty wages. Meanwhile, we’ve got a class of corporate CEOs who make hundreds — sometimes thousands — of times more than their employees,” Sanders said in the new release. “The last time I checked, corporations got by just fine when CEOs made a million bucks a year — one-tenth of what they make now. All around the world today, large, successful businesses manage to be profitable while treating their workers with dignity and not handing out obscene pay packages to their CEOs. If America’s corporate boards can’t understand the absurdity of paying their CEO friends — in one year — more than their workers will earn in a lifetime, then the Tax Excessive CEO Pay Act will help them figure it out.”
In the 1970s, CEO salaries averaged about $1 million a year, or 20 to 30 times more than the average pay of their employees. Today, the average annual pay of a CEO at a Fortune 500 company is about $20 million, or 200 to 300 times the average pay of an employee, according to research by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
“In the last four decades, inequality has ballooned in our nation and more and more wealth is going to those at the top while workers’ wages, especially for workers of color, have remained stagnant,” Lee said in the news release. “It is unjust and unacceptable that the CEOs of major corporations are making an average of 287 times more than their average worker — with some CEOs making upwards of 1,000 times more. The Tax Excessive CEO Pay Act will incentivize companies to reduce the CEO-worker pay gaps and pay their workers the wages they deserve. Because if companies can afford to pay their CEOs tens of millions of dollars, they can afford to raise wages for their employees.”
If the current pay trends continue, the legislation would raise roughly $150 billion in new taxes over the next decade.
The Tax Excessive CEO Pay Act is endorsed by the AFL-CIO, Americans for Democratic Action, Campaign for America’s Future, Center for Popular Democracy, Communications Workers of America, Coalition on Human Needs, EPI Policy Center, Franciscan Action Network, Institute for Policy Studies/Global Economy Project, International Brotherhood of Teamsters, International Federation of Professional & Technical Engineers, Jobs With Justice, National Council of Churches, National Federation of Federal Employees, National Health Care for the Homeless Council, NETWORK, Other98, Our Revolution, People’s Action, People Demanding Action, Public Citizen, Restaurant Opportunities Centers United, Service Employees International Union (SEIU), Social Security Works, Strong Economy for All, Take on Wall Street, and the Working Families Party.
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