WASHINGTON (CBS NEWS) — In a step to address the country’s rising income inequality, Sen. Bernie Sanders is proposing a new tax on large companies whose chief executives earn far more than their workers.
The proposal, which the Vermont independent and Democratic presidential candidate said would raise $150 billion over a decade, targets companies whose CEOs are paid more than 50 times the median annual income of their employees. That would hit corporations with lavish executive compensation — for example, JP Morgan Chase and Walmart would pay up to $992 million and $794 million under the proposed tax, respectively. The tax would be applied to corporations with more than $100 million in annual revenue.
For instance, companies where CEOs earn between 50 to 100 times their median worker’s pay would be taxed at 0.5 percentage points. The tax would gradually rise until it hits 5% for companies that pay their chiefs more than 500 times a typical worker’s annual pay.
The proposed tax comes amid worsening inequality in the U.S. The gap between rich and poor is at its highest level in at least 50 years, with the trend worsening even as the economy extends the longest expansion in the country’s history, according to recent Census data. Between 1978 and 2018, CEO pay soared 940% — by comparison, over that period most American workers saw their pay rise a total of 12%.
“The American people are sick and tired of corporate CEOs who now make 300 times more than their average employees, while they give themselves huge bonuses and cut back on the health care and pension benefits of their employees,” Sanders said in a statement.
In 2018, CEOs earned $278 for every $1 a typical worker earned, according to a recent study from the left-leaning Economic Policy Institute. In 1965, top corporate chiefs earned $20 for every dollar a typical worker earned, the study found.
Tesla, Abercrombie & Fitch
The U.S. company with the biggest gap between its CEO and median employees pay is Tesla, with Elon Musk earning more than 40,000 times what its typical worker takes home in a year, according to a report released Monday by the left-leaning Institute for Policy Studies. Median worker pay at the electric car maker stands at about $56,000, while Musk took home $2.2 billion last, due largely to a lucrative stock option award.
Abercrombie & Fitch ranked second, according to IPS. CEO Fran Horowitz-Bonadies earned about 3,660 times the typical worker, the think tank found. Abercrombie is among the 14 retailers on the list, partly because of low pay in the retail sector, the report said.
Walmart, a retailer that’s often at the center of the debate over worker pay, has a pay gap of 1,076 to 1, the IPS study found. Under Sanders’s plan, it would have owed an additional $794 million in federal taxes in 2018. Walmart, however, is far from having the largest CEO-to-worker pay gap in the study, ranking only 46th out of the 50 companies cited by IPS.
More headlines from CBS17.com:
- FBI worker’s death in NC mountains is called ‘suspicious’
- Changes to Green Beret course draw scrutiny as troops are tested in NC woods
- Woman killed in her home as police fire through window, family seeks answers
- 10-year-old girl dies after she’s ‘ejected’ from fair ride in New Jersey
- 3-year-old girl kidnapped from birthday party, Amber Alert issued
For more stories like this that matter to you, click here to download the CBS 17 News app for free.
Watch live newscasts, get breaking news and sign up for push alerts – download now