PORTLAND, Ore. – The Portland City Council has approved a first-of-its-kind tax on public companies that pay their chief executives vastly more than they pay an average worker.
On Wednesday the council approved the plan, which targets publicly traded companies whose chief executives report salaries at least 100 times higher than the salary of a median worker, The Oregonian/OregonLive reported.
Under the ordinance, 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.
Officials expect the tax to raise $2.5 million year once it starts in January 2017. About 500 publicly traded companies in Portland will likely be subject to the tax, which will rely on compensation data the federal Securities and Exchange Commission will report beginning next year.
Commissioner Steve Novick said he hopes the tax will discourage companies from paying disproportionate salaries to their CEOs.
“This is as close as I’ve ever (come) to a tax on inequality itself,” said Novick.
Commissioner Dan Saltzman cast the lone vote against the proposal. He said he didn’t think it was the appropriate moment to enact such a tax.
“I don’t believe this is the right time, the right place or the right reason to address this,” Saltzman said.
Marion Haynes, of the Portland Business Alliance, a group that has opposed the measure since Novick first pitched it last summer, said the plan will not address income inequality.
“This is not something that can be dealt with at a local level,” Haynes said.
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