Van Hollen, Sanders, Colleagues Introduce Legislation to Combat Corporate Greed and End Outrageous CEO Pay
In the 1970s, CEOs of successful U.S. corporations received roughly 20-30 times the average pay of their company’s middle-class workers. Today, a CEO at the largest 350 U.S. publicly-owned firms makes close to 344 times the average pay of a typical worker.
U.S. Senators Chris Van Hollen (D-Md.) and Bernie Sanders (I-Vt.) with Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.), and Representatives Barbara Lee (D-Calif.) and Rashida Tlaib (D-Mich.), 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 typical 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 – 62% of Republicans and 75% of Democrats – favor capping CEO pay relative to worker pay.
“Millionaire and billionaire CEOs at massive corporations are cashing in larger and larger paychecks even as their workers — who make those profits possible — barely see their pay keep pace with rising costs. These obscene gaps are grossly unfair to workers and harmful to our economy as a whole. This legislation is an important step toward narrowing income inequality in America and building a more inclusive economy with more shared prosperity,” said Sen. Van Hollen.
“The American people understand that today we are moving toward an oligarchic form of society where the very rich are doing phenomenally well, while working families continue to struggle to put a roof over their heads, feed their families, and pay for the basic necessities of life,” said Sen. Sanders. “The American people are sick and tired of CEOs making nearly 350 times more than their average employees while over 60 percent of Americans live paycheck to paycheck. 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.”
“CEOs profiting off the backs of workers and making hundreds of times more than them is just plain wrong,” said Sen. Markey. “It’s more than time to rein in the millionaire and billionaire CEOS. The Tax Excessive CEO Pay Act puts an end to corporate greed, closes the income gap, and ensures that the wealthiest members of society pay their fair share.”
“New reports from Oxfam International indicate that if current trends persist, poverty will not be eradicated for another 229 years,” said Rep. Lee. “With the shareholder class raking in greater profits than ever in history, I refuse to accept this future. As elected officials, we have a moral obligation to address this corrosive inequality at the source. I urge my colleagues to support workers who are fighting for a fair share of the fruits of their labor by endorsing the Tax Excessive CEO Pay Act.”
“Corporate greed is a disease that has long afflicted our country. CEOs are now making 400 times more than their average worker,” said Rep. Tlaib. “It’s disgraceful that corporations continue to rake in record profits by exploiting the labor of their workers. Working families deserve to live with human dignity. I’m proud to join my colleagues in reintroducing the Tax Excessive CEO Pay Act to address the massive income and wealth inequality in our nation. It’s time for the rich to pay their fair share.”
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 in 2022:
- Walmart would have paid up to $754 million more in taxes.
- Google would have paid up to $3.07 billion more in taxes.
- Home Depot would have paid up to $840 million more in taxes.
- JPMorgan Chase would have paid up to $1.04 billion more in taxes.
- Nike would have paid up to $233 million more in taxes.
- McDonald’s would have paid up to $92 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 1,200 years to earn the $17.77 million in compensation that their CEO Chris Kempczinski was paid in 2022. A typical worker at Live Nation would have to work 5,414 years to earn the nearly $139 million the company’s CEO Michael Rapino made in 2022.
In 2022, Walmart’s CEO made $25.3 million – 933 times more than the median Walmart worker making $27,136 that year. The pattern continued in 2022. Jamie Dimon at JPMorgan Chase made $34.85 million – 393 times more than the median JPMorgan Chase worker’s pay of $88,730. Home Depot’s CEO made $14.62 million – 491 times more than the median Home Depot pay of $30,100. Nike’s CEO made $32.8 million – 975 times more than the median Nike employee’s pay of $33,646. Coca-Cola’s CEO made $22.82 million – 1,883 times more than the median Coca-Cola pay of $12,122.
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 the largest 350 U.S. publicly-owned firms makes close to $25.2 million per year – 344 times the average pay of a typical worker, according to research by the Economic Policy Institute.
The Tax Excessive CEO Pay Act 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 bill is endorsed by AFL-CIO, American Federation of State, County, and Municipal Employees (AFSCME), Americans for Financial Reform, Center for Popular Democracy, Coalition on Human Needs, Communications Workers of America, Institute for Policy Studies/Global Economy Project, International Brotherhood of Teamsters, Jobs With Justice, National Council of Churches, National Employment Law Project, National Health Care for the Homeless Council, NETWORK, Patriotic Millionaires, Public Citizen, Restaurant Opportunities Centers United, RootsAction.org, Service Employees International Union (SEIU), Strong Economy for All, Take on Wall Street, The Value Alliance, and United for Respect.
Joining Reps. Lee and Tlaib on the legislation in the House are Reps. Eleanor Holmes Norton (D-D.C.), Bonnie Watson Coleman (D-N.J.), Ro Khanna (D-Calif.), Jesús G. “Chuy” García (D-Ill.), James P. McGovern (D-Mass.), Ilhan Omar (D-Minn), Pramila Jayapal (D-Wash.), Cori Bush (D-Mo.), Jared Huffman (D-Calif.), Raul Grijalva (D-Ariz.), and Jamaal Bowman (D-N.Y.).
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