Portland votes to tax companies with high-paid CEOs...
Steve Novick's CEO tax wins close vote, putting Portland
on world map
By Jessica Floum on December 07, 2016 at 6:42 PM, updated
December 08, 2016 at 12:37 PM.
In a move that's drawn international headlines, Portland
will launch a first-of-its-kind tax on public companies that pay their chief
executives vastly more than they pay an average worker.
Portland City Council approved the controversial plan 3-1
Wednesday, making a statement about growing income disparity in the United
States while giving Commissioner Steve Novick a legacy piece in his final weeks
in City Hall.
The tax targets publicly traded companies whose chief
executives report salaries at least 100 times higher than the salary of a
median worker. Officials expect to raise $2.5 million a year starting in
January 2018, with Novick hoping the money will help pay for homeless services.
"This is as close as I've ever (come) to a tax on
inequality itself," said Novick, the first incumbent tossed from city
council in 24 years after an upset loss to housing activist Chloe Eudaly last
month.
Novick said he also hopes the tax might discourage
companies -- well beyond Portland -- from paying disproportionate salaries to
their CEOs. He cited French economist Thomas Piketty, who calls escalating pay
for top executives a major cause of the consolidation of wealth among the
world's top 1 percent of earners.
A similar measure, proposed by the California Senate in
2014, served as his inspiration, Novick said. The tax relies on compensation
data the federal Securities and Exchange Commission will report beginning next
year.
Mayor Charlie Hales thanked Novick before casting the
decisive third vote, joining Commissioner Amanda Fritz in saying yes.
"It falls to cities to do creative, progressive
policymaking," Hales said, "and this is exactly what this is."
Commissioner Dan Saltzman cast the lone vote against the
proposal. Commissioner Nick Fish was absent, but his chief of staff, Sonia
Schmanski, said he also would have voted no.
Saltzman said he didn't think this was the "right
time" to pass this kind of tax increase. He should wait for a "true
emergency." He pointed to 2003, when City Council hiked business license
fees to raise $20 million for Portland Public Schools.
"I don't believe this is the right time, the right
place or the right reason to address this," Saltzman said.
Under Novick's tax plan, 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.
Novick estimates there are more than 500 publicly traded
companies in Portland that will be subject to the tax.
The Portland Business Alliance has opposed the measure
since Novick first floated it last summer, while he was still battling Eudaly.
Novick, at the time, took the unusual step of agreeing to schedule a vote until
after the fall election.
Marion Haynes, the business group's lobbyist and vice
president for economic development, said Novick's plan will fail at addressing
income inequality.
Haynes argued tax policy should not rely on the federal
oversight reports because, she said, the federal rule is designed to give
companies flexibility in how they calculate their compensation ratio and
therefore won't provide the best data.
Haynes would not say why the tax would be ineffective or
how the numbers might be misused.
"This is not something that can be dealt with at a
local level," Haynes said.
-- Jessica Floum
Comments
Post a Comment