In an effort to curb excessive income inequality throughout the U.S., Sen. Bernie Sanders recently introduced the Tax Excessive CEO Pay Act. According to Sen. Sanders, the bill would raise roughly $150 billion over the next 10 years if current compensation trends continue.
Cosponsored by Reps. Lee (D-Calif.), Tlaib (D-Mich.), Schakowsky (D-Ill.), Grijalva (D-Ariz.), Norton (D-D.C.), Huffman (D-Calif.), Jayapal (D-Wash.), Khanna (D-Calif.), Thompson (D-Miss.), DeLauro (D-Conn.), Haaland (D-N.M.), Espaillat (D-N.Y.), Pressley (D-Mass.), Garcia (D-Ill.), Omar (D-Minn.), Takano (D-Calif.), Watson Coleman (D-N.J.) and McGovern (D-Mass.), the Tax Excessive CEO Pay Act seeks to impose a corporate tax rate increase on companies whose ratio of compensation of the CEO to median worker compensation is more than 50 to 1. Sanders noted that the typical restaurant employee at McDonald’s would have to work for more than 2,000 years to earn what the company’s CEO Chris Kempczinski received last year.
“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,” said Sanders.“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 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,” stated Congresswoman Barbara Lee. “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 1000 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.”
“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,” asserted Congresswoman Rashida Tlaib. “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.”
On Wednesday, nearly 30 major economic justice organizations sent a letter to members of Congress urging the legislators to endorse the Tax Excessive CEO Pay Act. The organizations endorsing the bill included 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.
In the letter, they wrote, “We write to strongly endorse the ‘Tax Excessive CEO Pay Act’ to be introduced by Senators Bernie Sanders, Congresswoman Barbara Lee, and Congresswoman Rashida Tlaib. We encourage you to become an original co-sponsor of this important legislation, which will be introduced on Wednesday, November 13.
“As you well know, while worker wages have largely stagnated, CEO pay has skyrocketed over the past several decades. In the 1950s, CEOs made 20 times more than their median employees. Last year, the average S&P 500 CEO made 287 times their median worker pay.”
The bill would also require the Treasury Department to issue regulations to prevent tax avoidance, including against companies that increase the use of contractors rather than employees. Pay-ratio data for privately held corporations would also be made public, just as publicly held corporations are required to make public under current law.