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Wealthy Businessman Pushes Bill Tying Corporate Taxes to CEO Salaries

Until the 1980s, corporate CEOs were paid 30 times the amount the average worker received, but today, according to some conservative estimates, they make about 330 times that.

Until the 1980s, corporate CEOs were paid 30 times the amount the average worker received, but today, according to some conservative estimates, they make about 330 times that. What if, Silberstein proposed, state corporate taxes were tied to a company’s annual CEO compensation relative to its employees’ wages? DeSaulnier liked what he heard and so, earlier this year, he and State Senator Loni Hancock (D-Berkeley) introduced Senate Bill 1372, which embodied Silberstein’s concept.

The bill, which was drafted with Silberstein’s help, is designed to reward corporations that reduce their CEO-to-worker pay ratios, while punishing companies that exacerbate those differences. For example, if the chief executive at a company doing business in California makes 100 times more than a typical worker in the same firm, the company’s corporate tax rate would be reduced to eight percent from the current 8.84 percent. At a company where the chief executive makes only 25 times as much as a typical worker, the tax rate would be reduced to seven percent. But at a company where the CEO’s compensation is 400 times as much as the median worker’s, the tax rate would increase to 13 percent.

SB 1372 won the California Chamber of Commerce’s “job killer” seal of disapproval yet did surprisingly well on the Senate floor last May, receiving 19 “yes” votes to 17 “no” votes. However, California tax code requires approval by two-thirds of the legislature, rather than a simple majority, and so the measure did not pass.

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