To address the growing chasm between CEO and worker pay, progressive New Jersey Democrat Lisa McCormick is supporting the Tax Excessive CEO Pay Act, a groundbreaking piece of legislation introduced by Senators Bernie Sanders, Elizabeth Warren, Ed Markey, and Chris Van Hollen, along with Representatives Barbara Lee and Rashida Tlaib.
The proposed legislation aims to tackle corporate greed head-on by imposing higher taxes on companies that pay their top executives at least 50 times more than the average worker.
McCormick, who recently issued a declaration of war against the corporate aristocracy, believes that such measures are essential to bridging the ever-widening income inequality gap in the United States.
According to a nationwide survey, a staggering 62% of all Americans, including 62% of Republicans and 75% of Democrats, favor capping CEO pay relative to worker pay. The sentiment echoes the widespread discontent over the dramatic increase in the CEO-to-worker pay ratio over the past few decades.
“The gap between CEO and worker pay has grown dramatically in recent decades, even though there is no evidence that higher CEO pay leads to better company performance,” remarked Lisa McCormick. “This pay gap is particularly large at companies with low wages, perpetuating income inequality and hindering economic growth.”
Under the Tax Excessive CEO Pay Act, companies with significant CEO-to-worker pay gaps would face higher federal corporate tax rates. The legislation seeks to incentivize companies to raise worker pay and reduce CEO compensation, discouraging extravagant bonuses that can lead to excessive risk-taking.
“The bill would also discourage the outrageous CEO bonuses that give executives an incentive to take excessive risks,” McCormick stated. “Instead, the bill would encourage fair pay practices that are good for the bottom line.”
Senators and Representatives supporting the legislation emphasize the urgent need to address income and wealth inequality in the nation.
“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,” said Sanders.
If enacted, these measures are expected to raise approximately $150 billion over the next decade.
“New reports from Oxfam International indicate that if current trends persist, poverty will not be eradicated for another 229 years,” said 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 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 proposes tax rate increases on companies with CEO-to-median worker ratios above 50 to 1, with penalties escalating based on the level of disparity. The highest penalty would kick in for companies that pay top executives over 500 times worker pay.
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.
“CEOs profiting off the backs of workers and making hundreds of times more than them is just plain wrong,” said 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.”
“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 Van Hollen.
Lisa McCormick urged Congress to support the legislation, emphasizing its potential to ensure that workers receive a fair share of the profits they help generate. She stated, “This bill would help to ensure that workers get a fair share of the profits they help to create.”
If passed, McCormick said the Tax Excessive CEO Pay Act would mark a significant step toward creating a more equitable economy and addressing the deep-rooted issue of income inequality in the United States.