Bernie Sanders Proposes Inequality Tax on CEOs
Bernie Sanders, who’s vying to run for President as a Democrat in the upcoming 2020 US presidential elections, has proposed implementing a so-called inequality tax targeting CEOs who make more than 50 times that earned by the average employee.
Under Sanders’ Income Inequality Tax Plan, the IRS would impose a levy on “companies with exorbitant pay gaps between their executives and typical workers.”
In a statement, Sanders said: “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 healthcare and pension benefits of their employees.”
“They want corporations to invest in their workers, not just dividends, stock buybacks and outrageous compensation packages to their executives,” he added.
According to Sanders’ team, this plan would raise close to 150 billion dollars during the next decade with the proceeds being used to reduce the country’s medical debt.
As explained by Markets Insider, this proposal “would increase the tax rate by 0.5 percentage points for companies whose ratio falls between 50-to-1 and 100-to-1, up to a 5-point increase for companies whose pay ratio is more than 500-to-1,” and it “would apply to all private and publicly held corporations with annual revenue of more than $100 million.”
Furthermore, writes Carmen Reinicke for Markets Insider, “Companies would not owe any additional taxes under the plan if they increased annual median worker pay to $60,000 and curbed CEO compensation to $3 million.”
Apple would be one of any companies affected by this sort of policy.
Megan Henney of FOX Business explains that, based on publically available information, Apple’s “median worker compensation in 2018 was $55,426, compared to CEO Tim Cook’s $15,682,219 paycheck — a ratio of 283 to 1,” which “would result in an extra $1.4 billion payout” for the tech giant.
Additionally, the proposed tax plan, if it had been in effect last year, would have accrued $110.9 million more in taxes from McDonald’s, $793.8 million from Walmart, $991.6 million from JPMorganChase, $538.2 million from Home Depot and $18.8 million from American Airlines.
Generally speaking, according to an AFL-CIO labor federation study and as reported by Vox’s Tara Golshan, “an average American CEO at a S&P 500 company earned $14.5 million in 2018, the same year an average worker made $39,888.”
However, Golshan explains, “Over the last decade, CEOs’ average pay has increased by $5.2 million,” and “the average American worker’s pay hasn’t even increased by $10,000.”
Left & Right Opine on Bernie Sanders’ Income Inequality Tax Plan
Sarah Anderson, who works for the Institute of Policy Studies and previously helped Bernie Sanders during the 2016 presidential elections, called the proposal a “sin tax.”
“You are hoping to reduce harmful behavior. We see these gaps as harmful to society at large...but we think that it’s likely that some companies are so wedded to this idea that they have to pay their CEOs 100 times more than their workers —then they have to pay more in taxes,” Anderson said.
Industry leaders, nevertheless, believe this sort of tax would ultimately harm the American economy.
Tom Quaadman of the US Chamber of Commerce said in a statement: “Putting forward proposals that create barriers for businesses to attract and keep world-class talent will only hurt growth and job creation. Candidates should instead work with the business community to create policies that will grow the economy and opportunities for all Americans.”
Furthermore, Chris Edwards, who’s in charge of tax policy at the conservative Cato Institute, said, “Bernie Sanders makes it sound like CEO pay comes at the expense of workers, but that can't be true because CEO pay is typically only a tiny fraction of corporate revenues.”
“Sanders complains about Walmart CEO pay of $24 million, but that's only a tiny cost compared to the company's sales of $500 billion a year.”
“Bringing low prices to hundreds of millions of consumers is such a huge responsibility that it makes sense for Walmart to pay a lot to get the best possible CEO," Edwards concluded.
Conservative pundits, writes Vox’s Golshan, generally believe such plans “would push companies to cut lower-wage jobs, prevent them from hiring highly-paid talent, send jobs overseas, or replace workers with contractors.”
Any thoughts on this radical tax proposal?