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?