War On Rich: Portland To Tax Companies For CEO Salaries If New Measure Passes

Portland, Oregon, could become the first city to tax companies in the city with CEOs earning exorbitant compensation. The five-member city council is expected to decide Wednesday on imposing the tax for CEO pay greater than the median salary of his or her workers by a ratio of 100-to-one, the Guardian reported.

The decision will come ahead of a new Security and Exchange Commission rule requiring businesses to publicly release their CEOs’ pay ratios being implemented in 2017.

The level of income inequality in the U.S. was “the biggest challenge facing our society” after global warming, said Portland City Commissioner Steve Novick, who proposed the additional tax. The proposal would also raise by 25 percent taxes on corporations with CEOs who are paid at a ratio greater than 250-to-one.

Novick said he was “95 percent confident” the measure would acquire the three votes needed to pass the additional taxes.

“It’s been absolutely frightful to see the divide between regular folks and the richest-of-the-rich. It’s economically destabilizing, it’s politically destabilizing, it’s unhealthy,” Novick said.

The gap between the median amount of workers’ and their CEOs’ incomes has grown exponentially since the 1960s, when the average ratio was roughly 20-1. The level of wealth disparity has risen to more than 200-to-one, according to Glass Door, a group of economists and data scientists who conduct research on the status of the current labor markets. Glass Door found the company with the highest ratio of CEO pay to median worker salary was Discovery Communications, whose CEO David M. Zaslav made $156 million in 2014. The median pay of Discovery workers was $80,000.

The measure acts along the lines of a failed proposal in California from 2014 in which companies whose executives’ salaries were 200 times greater than the median pay of its workers would have had their state tax rates increased by more than 1 percentage point to 10 percent. If the ratio was 300-to-one, a company's tax rate would have been raised by 3 percentage points. If the ratio was greater than 400-to one, its tax rate would have been increased by 4-percentage points to nearly 50 percent, the Los Angeles Times reported on April 26, 2014.