An effort to incentivize fair pay and reign in the growing disparity between CEO and worker pay by Senator Mark DeSaulnier (D-Concord) and Loni Hancock (D-Oakland) is headed to the Senate floor after passing the Senate Appropriations Committee today on a 5-2 vote.
SB 1372 creates a new corporate tax table that decreases taxes for employers with sensible differences between CEO and worker pay, and increases taxes on companies with large disparities between CEO and worker pay. The unprecedented bill has sparked a national conversation about skyrocketing CEO compensation.
“Supreme Court Justice Louis Brandeis warned that we may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both,” Senator DeSaulnier said. “SB 1372 begins to address the growing concentration of wealth at the very top. Out of control income inequality is a direct threat to American democracy.”
“Almost everyone recognizes CEO pay is wildly out of control,” Senator Hancock said. “As former Labor Secretary Robert Reich has pointed out – the growing divergence between CEO pay and that of the average worker isn’t just unfair, it is bad for the economy. The average worker has less purchasing power now than 30 years ago. SB 1372 provides an incentive for responsible corporate behavior.”
Under SB 1372, taxes would decrease for companies in which the CEO makes no more than 100 times of the median salary of workers. Taxes would increase on companies that pay CEO’s 100-400 times more than workers.
According to the AFL-CIO’s Executive Pay Watch, in 2012, the CEO of an S&P 500 Index company received an average compensation of 354 times more than the median US worker.
In 2012, the average CEO pay in California was $5,054,959, while the median worker pay in California was $48,029.
Additionally, SB 1372 imposes a penalty on corporations that shift their employment practices to contract employees.
Website of Senator Mark DeSaulnier: http://sd07.senate.ca.gov/
LEGISLATIVE COUNSEL’S DIGEST
Digest Key
Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO
Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 23151 of the Revenue and Taxation Code is amended to read:
23151.
(a) With the exception of banks and financial corporations, every corporation doing business within the limits of this state and not expressly exempted from taxation by the provisions of the Constitution of this state or by this part, shall annually pay to the state, for the privilege of exercising its corporate franchises within this state, a tax according to or measured by its net income, to be computed at the rate of 7.6 percent upon the basis of its net income for the next preceding income year, or if greater, the minimum tax specified in Section 23153.
If the compensation ratio is: | The applicable tax rate is: |
Over zero but not over 25 | 7% upon the basis of net income |
Over 25 but not over 50 | 7.5% upon the basis of net income |
Over 50 but not over 100 | 8% upon the basis of net income |
Over 100 but not over 150 | 9% upon the basis of net income |
Over 150 but not over 200 | 9.5% upon the basis of net income |
Over 200 but not over 250 | 10% upon the basis of net income |
Over 250 but not over 300 | 11% upon the basis of net income |
Over 300 but not over 400 | 12% upon the basis of net income |
Over 400 | 13% upon the basis of net income |
(A)
(B)
(ii)“Contracted full-time employee” means an individual engaged by the taxpayer to provide a specific set of services established pursuant to the terms and conditions of a written employment contract that delineates the length of employment, the salary and bonuses (if any) to be paid, and the benefits that accrue to that individual.
(iii)
(iv)
SEC. 2.
This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.
3 comments
More jobs heading out of California. How do people like this Senator keep their seats??? Like I said before, he’ll fit right in in Washington DC. WAKE UP PEOPLE
People wake up and get rid of these type politicians. Desaulnier is not working for you.
I agree with above. Why eliminate banks and financial institutes? Weren’t they cause of this last recession.
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