The City of Portland, Oregon is waging an epic battle against income inequality with the nation’s first ever tax for CEOs who earn drastically more than their companies’ rank and file. Under an ordinance passed Wednesday, publicly traded companies with CEOs who take home more than 100 times the median employee pay will pay a 10% surtax on top of the current 2.2% adjusted net income tax. For executives making 250 times more, it’s 25%.
"When I first read about the idea of applying a higher tax rate to companies with extreme ratios of CEO pay to typical worker pay, I thought it was a fascinating idea," said Commissioner Steve Novick. "[It was] the closest thing I'd seen to a tax on inequality itself."
There are around 500 publicly traded companies currently operating in Portland, including Wells Fargo, General Electric, and Walmart. The CEO of Wells Fargo earns 130 times more than the median wage of the company’s employees. The CEOs of General Electric and Walmart earn 202 and 209 times more respectively.
In addition to encouraging greater income parity, the City Council believes the ordinance will generate an estimated $2.5 million to $3.5 million in annual revenue.
Read more about the ordinance here.