Portland to vote on taxing companies if CEO earns 100 times more than staff

[demmiblue]

Source: The Guardian

The city council of Portland in Oregon will vote on Wednesday whether to impose a tax on companies whose CEO’s pay exceeds the median salary of their workers by a ratio of more than 100-to-one.

The measure, which was proposed by Portland city commissioner and former environmental lawyer Steve Novick, will take advantage of the fact that new Securities and Exchange Commission (SEC) rules will require companies to disclose their executive pay ratios for the first time beginning in 2017.

If it passes, experts said the tax would be the first of its kind.

Novick said that he was inspired by a similar measure proposed by the California state senate in 2014, which failed to reach the supermajority needed to make changes to the state tax code. He was also inspired by reading French economist Thomas Piketty’s book Capital.

“To me, after global warming, income inequality is the biggest challenge we face in our society,” Novick said. “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.”

Read more: https://www.theguardian.com/us-news/2016/dec/05/portland-ceo-salary-tax-vote-wealth-inequality

[RFKISNEEDED]

1. I Think This is a Great Idea!!

Go Portland!

[hueymahl]

2. Great idea - will NEVER work

So many ways to get around it. Including companies just telling Portland to fuck off and move out of the city limits. If they have no presence there, there is no jurisdiction for Portland to collect this tax.

Only feasible way to make this work is to have it nation-wide (or at least state-wide).

[LanternWaste]

8. Much as was prophesied when bars and taverns were denied inside cigarette smoking

"just telling Portland to fuck off and move out of the city limits..."

Much as was prophesied when bars and taverns were denied inside cigarette smoking by new safety regulations. Yet those same municipalities still seem to proffer both bars and taverns sans smoke.

[hueymahl]

9. Hope you are right! NT

[PoindexterOglethorpe]

11. Oh, yes. I remember all too well

the anguished cries that bars and restaurants would go out of business almost entirely.

Has anyone noticed any problem finding open restaurants to eat in?

[mdbl]

20. The tax policies used to support this thinking until Ronnie Raygun screwed it up

Tax rates on over-paid CEO's was higher up until then. Somehow, St Ronald made the idiot poor voters think these poor rich guys were being treated unfairly and here we are today. Same game, different year and it's only getting worse and more idiotic.

[hueymahl]

23. Agreed - tax policies can make this more effective.

That requires national action. My "never work" comment was really aimed at local communities trying to effect something and expecting it to work as designed instead of having massive unintended consequences.

Not to get off on too much of a tangent, but for this to really be effective, you also need to close the offshore loopholes which allow companies to play games with intellectual property, licensing revenue and foriegn "income" tax rates. We are talking trillions of dollars over time. There is so much gaming of taxes going on.

[Turbineguy]

3. Imagine....

The minimum wage at a CVS store pegged at $114.28 per hour......

[JudyM]

4. Yes! Please. Shareholders of companies need to step up, too, to make this happen. Even just

the fact that this will get some press, even if it doesn't pass, is a step in the right direction.

[mdbl]

21. The shareholders aspect presents other problems

Now, as a country we have successfully forced retirement accounts into servitude to the overpaid CEO's through 401k's, IRA's etc. There is no decent savings interest rates and no guaranteed pensions anymore. This makes it difficult for shareholders to make decisions that are socially responsible. They want that extra dollar. Who cares how they got it. For a few savvy investors, that kind of system is ok, but for the other 98% of us, it makes us patsies. So with shareholders, how do you present socially responsible issues at their annual meetings that have any chance of passing? I haven't seen it yet.

[onlyadream]

5. Great start

This should be done nationally, and it should be done as a percent of the total CEO pay (including bonuses) so that they can't just make it under the wire to be exempt. Companies are too busy trying to make stock holders happy (and rewarding CEOs) to the detriment of the worker. Little to they realize, that if the masses were making a decent living, there would be more customers. A few at the top aren't going to spend what the entire working class would.

[yallerdawg]

6. A "greed tax."

We used to do that as a nation.

[Travis_0004]

7. The business will just raise prices 1-2%

Problem solved.

[TheFrenchRazor]

18. how will that make any difference? nt

[Travis_0004]

19. The tax wont make a difference to the company

Raise prices to pay for the tax, and portland is happy since its getting its sales revenue.

[lark]

10. Wow, maybe we should move to Oregon?

This is such an awesome idea. Wonder how long it would take repug congress to make this illegal?

[ksoze]

12. Let the market sort it out - it usually does over time

If the CEO can command astronomical pay and the company can pay it and employ staff - so be it. Not sure about dictating private business pay scales leads anywhere good for anyone over time.

[TheFrenchRazor]

16. it's not dictating pay scales, it's dictating tax scales. big difference. nt

[mdbl]

22. Laissez faire only works for a few

It also guides business practices to unscrupulous ends. Look at what runs your government. Those same CEO's that you say we should leave alone, and we already do that, call the shots in every state government - and look where it lead our Federal govt. We as a people will to have to force the issue of socially responsibility on them as we did in the past because they usually won't do it themselves.

[metalbot]

13. The unintended consequence

Is that it incentivizes companies to outsource their lowest paying jobs and use contractors

[TheFrenchRazor]

17. fine, the contractors will be subject to the same requirements. nt

[BSdetect]

14. Should be 3 times more than staff

[ProfessorGAC]

15. That's Too Far, BS

That would apply to nearly every small company over a few million in revenue.

Median of $60k and the CEO makes $185k and is liable. If you have a bunch of money tied up in the success of the company, $185 is not an exorbitant salary. Won't be buying one's own jet with that.

The 100x is strong because if the staff is making a median of $60k, justifying more than $6 million is much harder to do.

[hughee99]

24. Does Portland actually have any such companies,

Or is this just a symbolic gesture?

[demmiblue]

25. UPDATE: the measure passed.

Moving to address income inequality on a local level, the City Council in Portland, Ore., voted on Wednesday to impose a surtax on companies whose chief executives earn more than 100 times the median pay of their rank-and-file workers.

The surcharge, which Portland officials said is the first in the nation linked to chief executives’ pay, would be added to the city’s business tax for those companies that exceed the pay threshold. Currently, roughly 550 companies that generate significant income on sales in Portland pay the business tax.

Under the new rule, companies must pay an additional 10 percent in taxes if their chief executives receive compensation greater than 100 times the median pay of all their employees. Companies with pay ratios greater than 250 times the median will face a 25 percent surcharge.

The tax will take effect next year, after the Securities and Exchange Commission begins to require public companies to calculate and disclose how their chief executives’ compensation compares with their workers’ median pay. The S.E.C. rule was required under the Dodd-Frank legislation enacted in 2010.

Portland’s executive-pay surcharge will be levied as a percentage of what a company owes on the city’s so-called business license tax, which has been in place since the 1970s. City officials estimated that the new tax would generate $2.5 million to $3.5 million a year for the city’s general fund, which pays for basic public services such as housing and police and firefighter salaries.

http://www.nytimes.com/2016/12/07/business/economy/portland-oregon-tax-executive-pay.html