Washington, D.C. – Today, Representatives Mark DeSaulnier (CA-11) and Bonnie Watson Coleman (NJ-12), members of the Oversight and Government Reform Committee, introduced legislation in response to the Mylan hearing at which the CEO acknowledged that salary for the position increased 600 percent in less than a decade, and other reports that companies like Wells Fargo pay its CEO nearly 500 times the rate of its average employee.
The CEO Accountability and Responsibility Act (H.R. 6242) would increase corporate tax rates on publically traded companies that exploit workers and pay CEOs astronomically high salaries.
“America has a problem, as we see company after company come before Congress to apologize for bad behavior. One would ask, what has happened to our business culture? Too many executives at the top are incentivized to put profits before people by catering to shareholders and padding pockets on the back of consumers. Corporations should have a moral and social responsibility to workers, consumers, and American democracy. This bill sets the stage to stop fueling excessive income inequality,” said Representative Mark DeSaulnier.
“It seems like every day we see a new story about another company taking outrageous steps to maximize their profits – insane increases on lifesaving drugs to fund flights on private jets, sky-high salaries for CEOs who oversee severe and possibly criminal mishandling of consumer information,” said Representative Bonnie Watson Coleman. “If we’re serious about bringing back a thriving middle class, we need to lift up the companies who are investing in their workers at every level, not just lifting their leadership higher into the 1-percent. The companies responsible for recent CEO pay trends are wreaking havoc. It’s time we hold them accountable.”
On average, CEOs of the largest companies in the U.S. earn three times more than they did 20 years ago and at least 10 times more than 30 years ago. In fact, between 1978 and 2014, inflation-adjusted CEO pay increased by almost 1,000 percent, while the typical U.S. worker saw their pay increase by only 11 percent during that same period. Today, we see the pay disparity between the average American CEO and average worker is 303-to-1.
“Corporations that pay their top executives vast multiples of the typical worker’s wage should face higher taxes than corporations whose top pay is closer to the typical worker’s. The CEO Accountability and Responsibility Act is an important and necessary step,” said Robert B. Reich, Chancellor’s Professor of Public Policy, University of California at Berkeley and former U.S. Secretary of Labor.
The CEO Accountability and Responsibility Act would increase corporate tax rates on companies with larger than a 100-to-1 ratio of pay between CEOs and their average workers. At the same time the bill would reward companies whose CEO to worker ratio fell below that threshold, demonstrating that corporate social responsibility is an essential practice in American business.