A new bill is on the Hill, seeking to raise taxes on companies whose top executives are paid at least 50 times more than the average worker.
The Tax Excessive CEO Pay Act — introduced Jan. 18 by Sen. Bernie Sanders, I-Vt., and five Democratic members of Congress — would impose tax rate increases on companies with CEO-to-median-worker pay ratios above 50:1. Tax bumps would begin at 0.5 percentage points for companies whose CEOs make between 50 and 100 times more than the median employee, with the highest penalty doled to companies with a pay gap of at least 500:1.
In the case that CEOs are not the highest-paid employee, the executive with the largest paycheck would be used to evaluate the company. The union-backed bill would also require the Treasury Department to issue regulations preventing tax avoidance; for example, companies could not increase their use of contract labor rather than employee labor to skirt the law. And privately held companies would be required to report their CEO-employee pay gaps, just as publicly held companies are under the current regulations.
Wealth inequality is expected to worsen over the next decade, a Jan. 15 report from Oxfam International found; the world's billionaires are $3.3 trillion richer than they were in 2020, accelerating their wealth at triple the inflation rate. It's not a proportional trickle-down, as more than 60% of U.S. workers still live paycheck to paycheck. The typical American — regardless of political party — would limit CEO pay to six times that of the average worker, according to a Jan. 22 news release from Mr. Sanders' office.
"Millionaire and billionaire CEOs at massive corporations are cashing in larger and larger paychecks even as their workers — who make those profits possible — barely see their pay keep pace with rising costs," Sen. Chris Van Hollen, D-Md., said in the news release. "These obscene gaps are grossly unfair to workers and harmful to our economy as a whole."
The bill, if passed, is expected to raise about $150 billion in 10 years. If it had been effective in 2022, JPMorgan Chase would have paid $1.04 billion in taxes and Google would have paid $3.07 billion.
Dozens of healthcare companies, including Nashville, Tenn.-based HCA Healthcare and Long Beach, Calif.-based Molina Healthcare, would be subject to a tax increase based on their most recent pay reports.
If companies increased annual median worker pay to $60,000 and reduced their CEO compensation to $3 million, they would not owe any additional taxes under this plan, according to the news release.
Mr. Sanders' battle against high CEO pay is long-fought. He began crusading for higher taxes on companies with wide CEO-worker pay gaps as early as 2019, stating the legislation could end all medical debt in America.
In October, Mr. Sanders criticized hospitals' CEO pay. His Senate Health, Education, Labor and Pensions Committee issued a report analyzing 16 of the largest nonprofit health systems. For 2021 — the most recent year for which all the hospital chains had data available — the companies' CEOs averaged more than $8 million in compensation but largely faltered in charity care, according to the report.
Health systems have defended high CEO compensation packages amid record turnover in the role.