Now that public companies must publish the CEO-median worker wage ratio, cities and states can tax the most unequal firms


#1

Originally published at: https://boingboing.net/2018/03/19/manpower-2483-to-1.html


#2

I have no problem with CEOs making a thousand or even a million times what the median employee makes. As long as those employees are already making a kickass wage and are being treated like people who actually matter.


#3

to pay a 10% surcharge on gross earnings.

That would bankrupt a lot of companies. Many run below a 10% profit margin. In effect, this will force them to lower CEO pay, but I anticipate a lot of loopholes, like overfunded life insurance, NQDC’s, etc. I wonder how comprehensive the law is?


#4

so when do the workers get to see this tax money?


#5

Possible loophole #1: If the pay ratio is based on a particular title, then what’s to stop a company from shifting responsibilities and pay to a different title?

Or is there language to take care of this? In which case, why are we calling it the CEO:median wage ratio?


#6

The term is probably “officer.” Even if you call him Chief Grumpy Cat, he’s still a corporate officer.


#7

when you incorporate you have a charter and it will describe key positions. it’s kind of a pain to chance them, and if you point out a few at the top, regardless of name, that should be sufficient.


#8

But here is the thing…as a corporate associate I don’t have any issue with a top Exec being compensated more than me via additional benefits. Higher profit sharing, more company stock, additional retirement savings to a non qual plan, etc etc. What kills me is when I see average associates making 100k and then a CEO making $30 million AND getting those additional benefits. My perspective has always been…one or the other.


#9

Or… encourage companies to pay more to their employees by lowering their overall tax rate, thus freeing up money for expansion and hiring.

If a local jurisdiction enacts any kind of tax that can be avoided with geographic change, they’ll do it. And they’ll take the jobs with them.


#10

Except for the bit that we know, as a fact, from both theory and practice, that it doesn’t ever work that way. The extra money goes to management compensation/shareholders, not to workers. Expansion and hiring is driven by increased demand. That anyone would repeat the trickle-down fantasy, despite the fact that’s it provably wrong, just shows the power of propaganda (and the sad state of education), I guess.


#11

"Kimberly-Clark— the maker of Huggies and Kleenex — is cutting up to 5,500 jobs.

The company said it would use savings from the new Republican tax plan to fund the layoffs and restructuring."


#12

Yeah, I’ve read about another company or two that are explicitly pointing to the tax cuts as giving them the money to “restructure” or automate (and fire a lot of workers). I’m just surprised they admit it.


#13

Question: how does the tax make workers lives better? It either lowers the compensation of one person or throws money into the public coffers. How does that help workers?


#14

If you click through the Business Insider article to the New York Times article to the actual announcement, it’s clear it was an announcement to shareholders trying to boost confidence in their financial prowess.


#15

Really, you have to ask? The tax makes it more likely you’ll pay your workers better. Money in public coffers = more services (you know, for workers), and a decrease in pay disparities has all sorts of benefits. The most prosperous period in US history, with a concurrent booming of the middle class, not coincidentally happened at the same time as some of the highest marginal tax rates.

Yeah, the other admissions were in that context, too - I’m still surprised that, even there, they would do so. They must know that would get out, with the potential to bring flack down on them from all sides (I mean, they directly contradicted the trickle-down fantasy).


#16

Executive pay has to come at the expense of median worker pay - where do you think the money comes from, if not general revenues? The only place what you’re advocating is possible is in industries (like health care) where the entire industry is earning super-profits and has the rest of the economy over a barrel.

Never mind the moral implications (certain people are inherently more valuable than everyone else).


#17

Or I decide to pack up my company and move across a state line where there aren’t these restrictions.

And just to be “that guy,” if high marginal rates are good, why not just raise them to 100%? That would have the impact of not only creating more money for services, but also an effective “cap” on compensation. Because after all, there is a point where you’ve made enough money.


#18

I think you are referring to a “straw man” as no one is talking about raising taxes past the maximum on the Laffer Curve (https://en.wikipedia.org/wiki/Laffer_curve).


#19

Fine. Make me CEO, pay me $10/hr. Those options? Those go to a trust. Car, jet, house, those are leased to Dioptase LLC. We can also set up a consulting gig through Dioptase Inc, a Delaware corp for a couple million a year.

What a bargain! You get a CEO for $20k/yr! All that other stuff? That’s not CEO compensation. That’s contracts, 3rd party compensation, etc with consultants.

Again, I’m saying if you link the formula to a title, you get shenanigans. There’s also possible deferred compensation (i.e. vestiture after you leave) and shell companies (i.e. Everyone paid more than X is in Company A. Everyone paid less is in wholly owned subsidiary Company B.)


#20

You may be surprised to learn the lawyers are way ahead of you. Like, decades ahead.