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With New Tax, Portland Fires Opening Shot in Battle Against Extreme CEO Pay


#1

With New Tax, Portland Fires Opening Shot in Battle Against Extreme CEO Pay

Lauren McCauley, staff writer

The city of Portland, Oregon on Wednesday took a bold step towards addressing the national scourge of extreme pay inequality with the passage of a landmark tax penalty to be imposed on companies whose CEO makes more than 100 times the average worker's salary.

"This is as close as I've ever [come] to a tax on inequality itself," said outgoing commissioner Steve Novick, who proposed the tax, which was approved by the City Council 3-1.


#2

Yes, local and state action is needed. Proud of Portland. The federal cowards should have looked into this years ago before the Wall Street blast which harmed people around the globe. Let's hit Wall Street where it hurts- after all they got their golden parachutes on our dime. More equality, coops, worker shares in companies, and a raise for America in general and not just minimum either.


#3

It's me again- why would anyone who is a billionaire need to not pay taxes? Oh yes, the fraudster in chief has not even opened his tax returns probably because he doesn't pay them.


#4

Corporations have many options for accounting for everything from revenue to expenses, including employee compensation. They also have the funds to pay for the best accountants and attorneys money can buy to assure they are gaming the system to the max. Any of these peripheral regulatory effortst are wasted effort that will be feel good at best.

The architects of FDR's New Deal successfully created regulations that addressed the structure of business and the economy, making it nearly impossible for corporations to speculate to excess and otherwise game the system. CEOs are worth the big money only when there are lots of opportunities to game the system to increase company revenues. The New Deal diminished those opportunities. With nearly all New Deal regulations watered down or destroyed during the past four decades, attempting to regulate something as peripheral as CEO compensation will at best provide added revenue for the legal and accounting firms corporations hire.

Notice how many CEOs started working for zero or $1 salary subsequent to New Deal regulation demise ?


#5

I am so proud to be a citizen of Portland, what a great move. The likes of big corporations in Oregon spent millions to defeat measure 97 to raise corporate taxes on companies making over $25 million is sales taxed only on that over 25,000. I am a LLC w/$50,000 annual sales and pay the same tax as Wells Fargo in State Taxes, $150.00.


#6

It might not account for everything, but at least it is SOMETHING a small step in the right direction. I know that a founder does not start or own a business for charity, but if the firm is large enough and relies on workers to operate, they need to pay a fair wage. Another issue is what speciality the workers bring to the table eg education skills, licenses , talent etc.


#7

At least this is a start, and shows that there is some recognition rather than the under the table dealings that the last two administrations had with bailouts and tax payers paying for golden parachutes. I will have to look up new deal regulations. Of course that is when unemployment and social security started, so there were those taxes to consider as well. Many people do not give a thought to what the boss makes as long as they are paid fairly. It seems that unveiling of the credit card ( give employees a loan rather than a raise) also added to the wage gap that is so infamous ( at least 400x versus 20x in the old days).
Also as an added thought: it seems that so employment models are to have more managers and less workers, and the workers jobs are the ones that get cut or outsourced.


#8

Taxpayer funded bailouts and golden parachutes are on an upward trajectory until New Deal regulations are restored. Congress put US taxpayers on the hook for more than $20 trillion in bailout schemes for the five too big to fail banks when they crashed the economy in 2008. Those banks controlled 25% of US bank assets in 2008. Thanks to Dodd Frank and Congress those banks will control 50% when Trump takes office, resulting in exponentially larger bailouts the next time they crash the economy.


#9

Once again, this is another "feel good" law that will ultimately have little actual impact but will make upper-middle class progressives feel less guilty about themselves. For a real taste of reality, here's what the ultimate effects of the law will be:

  1. In states and localities that have similar laws, companies will reduce their footprint in those locations, either just enough to not have to pay the tax, or just abandon ship completely and only do business elsewhere. And they should. Why should they work in locations that have such a tax and make less money? That would be a pretty poor business strategy.
  2. If you think that we should just expand this law to the rest of the country, think again. You're not going to outsmart these companies. They are making millions or billions of dollars in revenue each year because they've hired people far more intelligent than most of us.

But it doesn't take a rocket scientist to think of other ways to avoid this law. There are numerous ways to pay compensation to a CEO. There's salaries, dividends, warrants, and stock options, to name a few. If you raise the taxes on one form of compensation, a company can just shift pay to another source. Say, we taxed dividends at 80%. I'm pretty sure companies would stop paying dividends and would shift compensation to some other source. So if we tax CEO salary pay, they'll just pay out the equivalent through some other source.


Plus, I must add, the law is purely symbolic. How does it actually reduce income inequality? There is only one CEO at each company. If you force their pay to be reduced, how does that do anything to reduce overall income inequality across the entire country?


#10

Its not even a question of "bad business strategy", its the law. Corporations are required to act in the best interests of their stockholders or risk shareholder lawsuits that any judge or jury would rule in favor of the shareholders.

Corporations will do what they need to do to avoid the tax and avoid shareholder lawsuits.


#11

Every desired outcome requires a first step. This particular step is not strong, but it does at least start a process that is long over due. Inequality, tax avoidance and the 'normalization' of government ignoring the desires of the vast majority of its citizens is unsustainable.


#12

"Income inequality is real, it is a national problem and the federal government isn't doing anything about it..."

Well, there was someone that DID wanted to do something about it, but the DNC made sure he and his supporters were shut out. Apparently talking about income inequality is taboo in Washington.


#13

Once again, this is another "feel good" law that will ultimately have little actual impact but will make upper-middle class progressives feel less guilty about themselves. For a real taste of reality, here's what the ultimate effects of the law will be:
In states and localities that have similar laws, companies will reduce their footprint in those locations, either just enough to not have to pay the tax, or just abandon ship completely and only do business elsewhere. And they should. Why should they work in locations that have such a tax and make less money? That would be a pretty poor business strategy.
If you think that we should just expand this law to the rest of the country, think again. You're not going to outsmart these companies. They are making millions or billions of dollars in revenue each year because they've hired people far more intelligent than most of us.
But it doesn't take a rocket scientist to think of other ways to avoid this law. There are numerous ways to pay compensation to a CEO. There's salaries, dividends, warrants, and stock options, to name a few. If you raise the taxes on one form of compensation, a company can just shift pay to another source. Say, we taxed dividends at 80%. I'm pretty sure companies would stop paying dividends and would shift compensation to some other source. So if we tax CEO salary pay, they'll just pay out the equivalent through some other source.
Plus, I must add, the law is purely symbolic. How does it actually reduce income inequality? There is only one CEO at each company. If you force their pay to be reduced, how does that do anything to reduce overall income inequality across the entire country?


#14

Well you are a downer! You got to start somewhere. Are we just suppose to give up. There are only say 10,000 of them around the country and 150 million of us. Don't be so pessimistic. We can't stop fighting for human rights, community rights, consumer rights and protection, good education, decent food and drugs and prices.


#15

But the concept is only symbolic. Why steal from 10,000 CEO's just to symbolize that you care about income inequality? That sounds pretty ridiculous to me.

Instead of just making a few rich people poorer, why don't we attack poverty directly?


#16

I agree, and most progressive movements have started at the grassroots level.


#17

Absolutely, but so many rich people live in a bubble that sometimes they need a kick in the pants.


#18
  1. I have no idea what that means.
  2. Why is it immoral to be rich? You make it seem as if being rich is immoral and they need a change in their to become virtuous again. Seems like a pretty deplorable stance to take.

#19

Of course one does not give up.


#20

To expand on that : there are some generous rich people, but some people just do not "see" other people because they themselves only associate with other wealthy people, and no it is not immoral at all to be rich. Many people work hard and have become rich. However, when rich people purposely scam or scheme just so they can have MORE- that is what I am talking about. Like the behavior of the banksters, fraudsters, and CEOS who are making hundred of times what workers make, yet their wages remain flat.