U.S. Rep. Rashida Tlaib (D-Detroit) has teamed up with Sen. Bernie Sanders (I-Vt.) and U.S. Rep. Barbara Lee (D-Calif.) to reduce income inequality by taking aim at excessively paid CEOs.
Their bill introduced Wednesday, called the Tax Excessive CEO Pay Act, would impose a higher corporate tax rate increase on companies whose CEOs are paid disproportionately more than their workers; specifically, companies whose highest-paid employee earns more than 50 times that of its median-salary worker.
According to the legislators, a large portion of the country’s income inequality and wage stagnation issue can be attributed to extreme gaps between CEO and worker pay. Sponsors said the Tax Excessive CEO Pay Act, if implemented, could raise as much as $150 billion over 10 years by taxing companies with those significant gaps.
“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 said in a statement. “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 average Fortune 500 firm CEO is paid 200 to 300 times the average pay of a typical worker, according to AFL-CIO research cited in the press release.
The bill would impose graduated tax penalties, starting with a tax rate increase of .5 percentage points for a CEO/worker compensation ratio between 51 and 100 and rising to an increase of 5 percentage points for companies whose compensation ratio is more than 500.
The legislation also would require the Treasury Department to issue regulations to prevent tax avoidance, and require the pay-ratio data for privately held corporations to be made public. Currently, only publicly held corporations are required under law to do so.
“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.
Tlaib endorsed Sanders for president at a lively rally in Detroit last month, where the two lambasted income inequality and corporate greed.
The bill has 16 Democratic cosponsors from 12 states. Among those are U.S. Reps. Ilhan Omar (D-Minn.) and Ayanna Pressley (D-Mass.), fellow members of the “Squad” of progressive freshmen congresswomen along with Tlaib. More than two dozen organizations have endorsed the bill, including the National Federation of Federal Employees and the Service Employees International Union.