Sen. Bernie Sanders and a group of Democratic lawmakers are pushing to raise taxes for companies that pay their chief executives at least 50 times more than their typical worker’s salary, saying the bill was needed to limit corporate greed.
The union-backed proposal, which could impact some of the nation’s biggest companies and largest employers, would also require Treasury Department guidelines to prevent companies from avoiding the tax by using contractors rather than employees, the senators said in a statement on Monday.
The bill could generate $150 billion in US revenue over 10 years, while companies could avoid the tax hike by raising workers’ pay and reducing CEO salaries, they added.
Walmart, Alphabet’s Google, Home Depot, JPMorgan Chase, Nike and McDonald’s could all face millions more — in some cases billions more – in taxes, the group said.
“Americans across the political spectrum are outraged by the extreme gaps between CEO and worker pay,” the group said. Sanders, an independent, generally caucuses with Democrats.
The bill would need 60 votes to clear the Senate, which Democrats narrowly control 51-49. It also likely faces an uphill battle in the Republican-controlled House, which would also have to pass the measure in order to send it to President Biden to sign into law.
US elections on the horizon in November could also further complicate any effort to pass such a bill with the economy looming large in Biden’s bid for re-election.
Representatives for the US Chamber of Commerce, the largest US business lobby, did not immediately respond to a request for comment on the Tax Excessive CEO Pay Act, which was introduced last week.
The measure would raise the tax rate on companies whose CEO-to-worker salary ratio was above 50 to 1, starting with a 0.5 percentage-point increase when the top executive earns 50 to 100 times more than the company’s average worker, according to the proposed legislation.
Companies that pay their top executives more than 500 times what a typical worker makes would face a maximum tax penalty of 5 percentage points.
If the CEO did not receive the largest paycheck in the firm, the ratio would be based on the highest-paid employee, the senators said. CEO-to-worker pay data for privately held companies would also be made public, they added.
