Posted on 12/07/2016 6:59:31 PM PST by jazusamo
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 2017, with Novick hoping the money will help pay for homeless services.
"This is as close as I've ever (come) on 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 using the federal oversight reports as a basis for tax policy is misguided because, she said, the reporting rules are too lenient.
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.
Oh, they think they’ve cast a very large net. FedEx is HQ’ed in Memphis, but they do business delivering packages in Portland (just like every other city).
Therefore, if FedEx gives their CEO as much money as they think he/she should get, Portland gets to prove their Left-wing outrage by stealing their money.
In the US, the name of the game is "devolution". The Constitutional system was created to limit power at the highest level (Federal) at the cost of more power to the local levels (States and Counties and so on).
This is why we are the Land of the Free and the Home of the Brave...
“...the first incumbent tossed from city council in 24 years after an upset loss to housing activist Chloe Eudaly last month.”
I can’t wait for Chloe’s first news conference. Will probably go something like:
“This is why I won. Who would ever dream that paying taxes on over 100 times the average wage is fair!? Ludicrous. I will push that ANY amount over the average wage will be taxed, and any person that has more than one car will give one to those that don’t have any. Oh - wait - mass transit! Okay, nobody can use a car.”
[Novick said he also hopes the tax might discourage companies — well beyond Portland — from paying disproportionate salaries to their CEOs.]
Expect a great migration of PORTLAND businesses to other parts of the country.
This will ultimately result in a net loss of revenue - a significant amount - when these companies start to pack up and move out and companies that might have considered locating there decide not to do so.
I notice they aren’t including touring rock bands or professional athletes in this scam. Good luck getting Lebron James or Pearl Jam to come to town if they can make no more than 20K, 100 times the $200 or so the average roadie or concession worker makes.
“Therefore, if FedEx gives their CEO as much money as they think he/she should get, Portland gets to prove their Left-wing outrage by stealing their money.”
Like others have posted, FedEx will simply stop delivering packages to Portland. Or they will litigate Portland, and with their financial resources, they will bankrupt the city. Either way Portland will loose. This “Lucifer” form of government never works
I can see the average worker of these particular companies getting screwed over as their compensation stagnants as it will be they who pay the bulk of this tax. As will their customers in rising prices, especially from companies with minimal competition.
Hey, Portland! Your utopian ideals will drive businesses out of your city. But, of course, your brains are dead, so you cannot foresee this ever happening. Oh, and other businesses will choose not to locate in your liberal, insane city. So you must have other options, right??? /s
If only they had an example an example of how well this works in real life. Wait, they do. Somewhere around the year 2000 Ben and Jerry’s had a brainstorm about this kind of pay disparity and what to do about it. They held a contest declaring that anyone can be a CEO. The winner became CEO and was paid according to this fantasy scale. Within a year, they desperately needed a real CEO and had to get one at full market prices. They ended up proving their idea was a complete failure.
Must be the weather...
How stupid can you be...Portland leads the chase...
They won’t have anyone to tax after all businesses will move out of there to more business friendly places.
2.5 Million, I’m sure. What it will be is all publicly owned companies moving out and less gross receipts because of all the jobless.
Our cat decided to maul me w/ love in bed & my glasses tilted & I read the name as Stevie Nicks. I was stunned & thought, “Who knew?” I’m going w/ that image........
I agree with you. I was just pointing out how the Leftist minds in charge here think things will play out.
CEOs and other captains of business industry have always been overpaid (in many people’s opinion), but this isn’t going to stop it. Even communism didn’t stop it, because high ranking Party officials just became the new CEO class over time.
Hello, South Carolina...yes I’m John Smith with ABC industries and we are looking for a place to move our 2,000 employee manufacturing plant...what,.. you have low taxes and very few state regulations!! And I can buy an 10,000 sq. ft. home on the ocean for how much? And the re taxes are how much?
EXACTLY! The RATS are forever pi$$ing into the wind! The only problem is that they are able to exact a time penalty ( and some money too ) with their hair-brained, illegal schemes. When I think of the lost opportunities this country as a whole has missed out on over the past eight years for sure, and probably for all of this new century, I am saddened.
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