The dream is still alive in Portland.
While leftists across the US are licking their wounds after November’s election, progressives in the gently mocked city in Oregon have a plan to stick it to the man. On Dec. 8, the city council will vote on adding a surtax for companies that pay their CEOs 100 times more than their median employees, an effort to slow the rise of wealth inequality.
The tax would increase the city tax on adjusted net income for any publicly traded company licensed to do business in Portland by a further 10% for companies with a CEO-to-worker pay ratio between 100-to-1 and 250-to-1, and increase it by 25% for companies with pay ratios greater than 250-to-1. The city would rely on new compensation data the SEC is expected to begin releasing next year.
Introduced by councilman Steve Novick, the Harvard-educated son of a union organizer, the draft ordinance relies on the writings of French economist Thomas Piketty and his book, Capital in the Twenty-First Century, to make the case that rising CEO pay is a major driver in increased inequality.
CEO pay has climbed 941% since 1978, compared to 10% for the average worker, and chiefs of the 350 largest firms now receive 276 times the pay of a typical employee, according to the Economic Policy Institute.
Attention to wealth inequality has increased in recent years, thanks in part to Piketty and the bitter aftertaste of the financial crisis, but there’s been little progress in slowing its rise. Efforts to boost the US minimum wage, led by the Fight for $15 movement, gained traction in the last election—four states passed wage hikes—but any hope of slowing the growth of CEO pay was likely dealt a blow by the election of Donald Trump. Not surprisingly, conservatives and business interests have lined up against Novick’s tax plan, with the Wall Street Journal’s opinion page warning it could backfire if companies lay off their lowest-paid employees to comply with the ratio (paywall).
Novick thinks the tax will raise $2.5 million a year, which would go toward low-income housing. A similar measure failed to pass in the California state legislature in 2014, where it needed a supermajority. In Portland, Novick only needs two more council votes to pass his ordinance.
While a win would give progressives a shot in the arm, it’s unlikely to have much impact unless other cities and states follow suit. And Portland tends to do its own thing.