Taxing Companies By Executives Pay
Sacramento, CA — California is considering raising taxes on some of the country’s largest companies.
How much depends on the paychecks of the company’s top executives compared to the average salary of its workers. The larger the gap, the bigger the tax increase.
The proposal would apply to about 2,000 companies nationwide that do business in California, include Walt Disney Co. One surprise backer of the bill is the granddaughter of the company’s co-founder Roy Disney, Abigail Disney. Not surprisingly, many of the state’s business groups oppose it.
One quandary is whether the state should make money off the tax. Lawmakers could also use it as an incentive to pay better wages by rewarding companies that have smaller gaps between their CEO’s salary and the average pay of their workers.
The current measure is estimated to bring in up to $4.1 billion. Supporters argue the state should make money off the tax because the rising income inequality means more workers are relying on public assistance. Opponents say it will keep companies from coming to or doing business in the state.
While California would not be the first government in the U.S. to try this, it would be the largest. In 2016 Portland, Oregon approved a 10% tax on publicly traded companies that pay their CEOs 100 to 250 times the average worker.