Van Hollen, Sanders, and Colleagues Introduce Legislation to Combat Corporate Greed and End Outrageous CEO Pay
U.S. Senators Chris Van Hollen (D-Md.) Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), and Ed Markey (D-Mass.), along with Reps. Barbara Lee (D-Calif.), and Rashida Tlaib (D-Mich.) on Wednesday introduced the Tax Excessive CEO Pay Act to take on corporate greed by raising taxes on companies that pay their top executives at least 50 times more than the pay of a median worker.
Americans across the political spectrum are outraged by the extreme gaps between CEO and worker pay. According to a nationwide survey, the typical American would limit CEO pay to no more than 6 times that of the average worker. About 62% of all Americans – 52% of Republicans and 66% of Democrats – favor capping CEO pay relative to worker pay.
“Millionaire and billionaire CEOs at massive corporations are cashing in larger and larger paychecks while their workers’ wages barely keep up with the rising cost of living,” said Sen. Van Hollen. “This bill establishes incentives for corporations to narrow the obscene gaps between CEO compensation and employee pay. We must meaningfully address income inequality in our nation, and I look forward to working with my colleagues on this critical issue.”
“The American people understand that today we are moving toward an oligarchic form of society where the very rich are doing phenomenally well, and working families are struggling in a way that we have not seen since the Great Depression,” said Sen. Sanders. “At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve. That is what this legislation will begin to do.”
“Corporate executives have padded their pockets with hefty paychecks and over-the-top compensation packages, while American workers, who helped generate record corporate profits, have hardly seen their wages budge," said Sen. Warren. “We need to take dramatic steps to address wealth inequality in this country and discouraging massive executive payouts is a good place to start.”
“Something is fundamentally broken when we still debate a federal minimum wage but CEOs pay minimum taxes,” said Sen. Markey. “CEOs are being paid hundreds of times more than their average worker, whose wages haven’t changed in years. It is a national disgrace. I am proud to join Sen. Sanders to co-sponsor the Tax Excessive CEO Pay Act. It is past time we reform our tax code in ways that ensure the wealthiest members of our society pay their fair share.”
“It is unjust and unacceptable that for decades, billions of dollars have gone to those at the top while workers’ wages, especially for workers of color, have remained stagnant,” said Rep. Barbara Lee. “As millions of families struggle to keep food on the table during a global pandemic and economic crisis, it is more important than ever that we close the CEO-worker pay gap and ensure that companies pay their workers the wages they deserve. I’m proud to partner with Sen. Sanders to reintroduce the Tax Excessive CEO Pay Act to make ultra-wealthy CEOs pay their fair share.”
“Corporate greed is a disease that has long afflicted this country—but the COVID-19 pandemic highlighted the gross income inequality and pay gap between CEOs and their employees in a way it never has been before,” said Rep. Rashida Tlaib. “Amid this crisis, Amazon’s profits more than tripled as sales soared and its warehouse workers risked their lives to make that possible—without hazard pay. Enough is enough. Our neighbors cannot afford to continue to wait for CEOs to do the right thing. The Tax Excessive CEO Pay Act will help ensure there is finally more fairness in the workplace when it comes to wages and I couldn’t be prouder to join my colleagues in reintroducing it at a time when it is more important than ever.”
The Tax Excessive CEO Pay Act would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1. If the CEO did not receive the largest paycheck in the firm, the ratio will be based on the highest-paid employee. The tax penalties would begin at 0.5 percentage points for companies that pay their top executives between 50 and 100 times more than their typical workers. The highest penalty would kick in for companies that pay top executives over 500 times worker pay.
These rates, if current corporate pay patterns continue, would raise around $150 billion over 10 years. If the Tax Excessive CEO Pay Act had been in effect last year:
- Walmart would have paid up to $854.9 million more in taxes;
- Home Depot would have paid up to $550.8 million more in taxes;
- JPMorganChase would have paid up to $172.8 million more in taxes;
- Nike would have paid up to $147.7 million more in taxes.
- McDonald’s would have paid up to $69.5 million more in taxes;
- American Airlines would have paid up to $22.6 million more in taxes.
If companies increased annual median worker pay to just $60,000 and reduced their CEO compensation to $3 million they would not owe any additional taxes under this plan.
Today, a typical restaurant employee at McDonald’s would have to work for more than 2,000 years to earn what the company’s CEO Chris Kempczinski was paid last year. A retail worker at Gap Inc. would have to work for more than 3,000 years to receive the annual compensation of Gap’s former CEO Art Peck. Peck’s pay was increased by 33 percent in 2018, even after he presided over years of declines in sales and stock prices.
In 2019, Walmart’s CEO made 983 times more than the median Walmart worker making $22,484 that year. The pattern continued in 2019: Jamie Dimon at JPMorganChase made 393 times more than the median JPMorganChase worker’s pay of $80,431; Home Depot’s CEO made 481 times more than the median Home Depot pay of $22,652; Nike’s CEO made 550 times more than the median Nike employee’s pay of $25,386; and American Airlines’ CEO made 189 times more than the median American Airlines pay of $61,143.
In the 1970s, the average middle-class American worker could raise a family and save for retirement with their pay. CEOs of successful U.S. corporations in the 1970s received about $1 million annually—roughly 20 to 30 times the average pay of their company’s middle-class workers. At present, a CEO at a Fortune 500 firm receives about $20 million per year—200 to 300 times the average pay of a typical worker, according to research by the AFL-CIO.
The bill also requires the Treasury Department to issue regulations to prevent tax avoidance, including against companies that increase the use of contractors rather than employees. Pay-ratio data for privately held corporations would also be made public, just as publicly held corporations are required to make public under current law.
The Tax Excessive CEO Pay Act is endorsed by 32 academic leaders and policy analysts, as well as the AFL-CIO, Americans for Financial Reform, American Sustainable Business Council, Americans for Democratic Action (ADA), American Federation of State, County and Municipal Employees (AFSCME), Campaign for America's Future, Center for Popular Democracy (CPD), Coalition on Human Needs, Communications Workers of America (CWA), Consumer Action, Economic Policy Institute (EPI), Franciscan Action Network, Greenpeace USA, Institute for Policy Studies (IPS), International Brotherhood of Teamsters, International Federation of Professional and Technical Engineers (IFPTE), MO Jobs with Justice, National Council of Churches, National Federation of Federal Employees, National Health Care for the Homeless Council, National LGBTQ Task Force Action Fund, NETWORK Lobby for Catholic Social Justice, Our Revolution, Patriotic Millionaires, People Demanding Action, People's Action, Public Citizen, Service Employees International Union (SEIU), Social Security Works, Strong Economy for All Coalition, The Other 98%, Take on Wall Street, United for a Fair Economy (UFE), United for Respect (UFR), and the Working Families Party.
The bill was cosponsored by Representatives Rashida Tlaib (D-Mich.), Jan Schakowsky (D-Ill.), Eleanor Holmes Norton (D-D.C.), Bonnie Watson Coleman (D-N.J.), Mondaire Jones (D-N.Y.), Ro Khanna (D-Calif.), Jesús G. “Chuy” García (D-Ill.), Ayanna Pressley (D-Mass.), Mark Takano (D-Calif.), Alexandria Ocasio-Cortez (D-N.Y.), Adriano Espaillat (D-N.Y.), James P. McGovern (D-Mass.), Alcee L. Hastings (D-Fla.), Steven Lynch (D-Mass.), Ilhan Omar (D-Minn), Pramila Jayapal (D-Wash.), Cori Bush (D-Mo.), Jared Huffman (D-Calif.), and Raul Grijalva (D-Ariz.).
Read the FAQ here.
Read the letter of support by 32 academic leaders and policy analysts here.
Read the letter of support by 35 major economic justice organizations here.
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