The Portland, Oregon, City Council just struck a direct blow at inequality, passing a path-breaking law that will slap a surtax on large corporations that pay their chief executives more than 100 times what they pay their typical worker.
Cynics immediately scorned the act both as mere symbol and as likely to drive business out of the city. In fact, the law is far more likely to generate similar measures in cities across the country. Donald Trump has trumpeted that Republican control of Congress will enable him to cut taxes, roll back regulation and overturn all things Obama-related, including signature health-care and climate-change reforms. Portland’s act suggests Trump’s biggest opposition may come from cities and from blue states across the country.
Portland’s surtax goes after one of the greatest sources of inequality: corporate America’s perverse rewards structures, which let chief executives pocket more and more of the rewards of growth while workers get stiffed. In 1965, CEOs of Fortune 500 companies made about 20 times more than the typical worker; now they rake in more than 335 times as much, reports the AFL-CIO’s Executive PayWatch. In 2018, one of the Dodd-Frank reforms will require publicly held companies to publish their chief executive-worker pay ratio. Using that calculation, Portland will tax corporations with voracious chief executives extra, penalizing extreme inequality and raising real revenue for investment in the city—as much as $3.5 million per year in Portland’s case. Trump, of course, has broadcast his plans to cut corporate taxes drastically. Portland suggests one way cities and states can recoup some of that money for their own coffers.
Read the full text of Katrina’s column here.