East Bay state Sen. Nancy Skinner’s latest attempt to raise taxes on corporations who pay astronomical compensation to their CEO was approved by its first legislative committee last week, keeping the bill alive as the Jan. 31 deadline quickly nears.
The bill authored by Skinner, and co-authored by East Bay Assemblymember Buffy Wicks, first introduced last April, but stalled in the state senate. The two-year bill has until the end of this month to pass in the senate.
If approved and signed into the law, Senate Bill 37, could be a windfall for the state treasury. A legislative analysis estimates the tax on CEO pay will generated more than $4 billion a year in new tax revenues.
Skinner’s bill would apply a progressive tax on corporations with at least $10 million in profit generated in California. Corporations in the state currently pay a tax rate of 8.84 percent.
Under Skinner’s plan, their tax bill would jump to 10.84 percent for corporations who have a CEO who is making up to 50 times more than their average worker’s pay. The rate gradually increases up to 14.84 percent for corporations who pay their CEO more than 300 times that of their average worker’s compensation.
Skinner said the impetus of the bill is discourage excessive CEO pay and return some of the earnings to workers. But it’s unclear whether this type of tax scheme will do the trick.
Portland enacted a similar tax tied to CEO pay in 2016, according to a legislative analysis of SB 37. While the tax generated new revenues, the jury is still out on whether the tax regimen has discouraged skyrocketing CEO pay.