In April of 2010, President Obama famously said, “I do think at a certain point, you've made enough money.”
The city of Portland, Oregon, has decided that Obama was right, and is going after companies whose CEOs earn more than 100 times what their employees earn.
CBC News notes that in addition to the current 2.2% tax rate levied on companies that do business in the city, companies whose CEOs earn more than 100 times what its employees earn will be hit with a 10% surcharge. Companies paying CEOs more than 250 times worker pay will be hit with a whopping 25% surcharge.
The city expects to rake in up to an additional $3.5 million in taxes from the companies that do business in the city, such as Wells Fargo, Walmart, and General Electric. The money is earmarked to help combat homelessness in Portland.
In a press release titled, “Portland City Council Combats High CEO Pay,” City Commissioner Steve Novick is quoted as saying:
“When I first read about the idea of applying a higher tax rate to companies with extreme ratios of CEO pay to typical worker pay, I thought it was a fascinating idea—the closest thing I’d seen to a tax on inequality itself.”
Novick, a self-described “Commissioner with a hard left hook,” continues on to reference “Capital in the Twenty-First Century,” a much-debated book centered around income inequality released in 2013 by French economist, Thomas Piketty. In lockstep-left fashion, he affirms Piketty's explanations for wider income inequality in the U.S., saying:
“Extreme economic inequality is—next to global warming—the biggest problem we have in our society. “The top 1%, and especially the top one-tenth of one percent, have a far larger share of wealth and income than they did forty years ago.”
Except, that both Piketty's data and conclusions have been called into question by numerous economists.
Mark Hendrickson, a Harvard-educated economics professor at Grove City College says that Piketty lacks even the most basic understanding of capitalism. Hendrickson's book, “Problems with Piketty: The Flaws and Fallacies in Capital in the Twenty-First Century," addresses several key problems with Piketty's explanations for income inequality.
George Mason University's Mercatus Center also published a critique of Piketty's ambitious tome, noting that his conclusion “consists of rough estimations and bold projections that do not withstand scrutiny.”
As an alternative for those companies who may not quite agree with a city government determining their pay structure, Texas Governor Greg Abbott would like to remind everyone that low-tax Texas is open for business:
As the saying goes: “A fine is a tax for doing wrong. A tax is a fine for doing well.”