Portland’s city council Wednesday approved a first-of-its-kind tax aimed at lessening income inequality. Assessed on public companies whose chief executives are paid vastly more than their average worker, Oregon Live explains the “CEO tax” means “a company with a CEO-to-worker ratio of at least 100-to-1 will pay a surcharge equal to 10 percent of the amount it pays for Portland’s business tax. A company with a 250-to-1 ratio or greater would pay a 25 percent surcharge. If a company ordinarily owes $1 million in taxes to Portland, it would have to pay an additional $100,000 or $250,000.”
The council vote was 3-1 in favor, with Mayor Charlie Hales, who cast the third “yes” vote, saying “It falls to cities to do creative, progressive policymaking, and this is exactly what this is.”
Officials expect the new tax could raise $2.5 million a year.
“This is as close as I’ve ever [come] to a tax on inequality itself,” said Commissioner Steve Novick, who pushed the plan. He said it was based on a similar measure proposed by the California Senate in 2014 that failed.
He estimates more than 500 publicly traded companies in Portland will be subject to the tax, which will rely on compensation data reported by the federal Securities and Exchange Commission.
The “no” vote was cast by Commissioner Dan Saltzman, who said he thought the city should have waited for a “true emergency” to pass a tax increase of this kind.
The Portland Business Alliance opposed the measure too. Marion Haynes, the group’s lobbyist and vice president for economic development, said the use of SEC data is problematic because reporting rules are too lenient. She also said the plan will fail to address income inequality but did not provide specifics. “This is not something that can be dealt with at a local level,” she said.
In September 2015, during his campaign, now President-elect Donald Trump told CBS News that huge CEO salaries are “a total and complete joke,” but that, “it’s very hard if you have a free enterprise system to do anything about that.”