On Thursday, the Huffington Post's Hayley Miller reported, "The progressive city (of Oregon) is ramping up its fight against income inequality while increasing annual revenue by as much as $3.5 million."
She went on to report:
"In an effort to combat income inequality, Portland, Oregon, on Thursday became the first jurisdiction to adopt a tax penalty on companies with excessive CEO-worker pay gaps.
"Under the new law, companies doing enough business in Portland to pay the city’s business fee will be taxed an additional 10 percent if their CEO makes 100 times what median workers earn ― and an additional 25 percent if they make 250 times more.
“This is meant to be a signal that these kinds of ridiculous [pay] ratios are unacceptable,” Portland’s city commissioner Steve Novick told The Huffington Post. “You do not do better as a company because you decide to pay outrageous salaries to your CEOs.”
"The law will go into effect next year, and Novick said the tax could generate up to $3.5 million in annual revenue for the city.
"Sarah Anderson, co-editor of Inequality.org at the Institute of Policy Studies, believes the legislation could “spread like wildfire” to other cities across the nation."
Ms. Miller also reported. "Still, an op-ed by the Wall Street Journal editorial board last month warned the legislation could encourage businesses to abandon Portland, but Anderson “can’t imagine” that would happen."
The New York Times weighed in on Portland's CEO tax in a story on Wednesday, December 7, by Gretchen Morgenson, who wrote:
"Criticism of how much chief executives are paid has risen in recent years as their compensation has grown substantially. In 2015, the median compensation for the 200 highest-paid executives at public companies in the United States was $19.3 million, up from $9.6 million five years earlier.
"Comparing such compensation with how much lower-level employees earn is likely to show a very wide gulf. A 2014 study by Alyssa Davis and Lawrence Mishel at the Economic Policy Institute, a liberal-leaning advocacy group in Washington, found that chief executive pay compared with the earnings of average workers had surged from a multiple of 20 in 1965 to almost 300 in 2013.
"Thomas Piketty, a professor at the Paris School of Economics and an authority on income inequality who wrote “Capital in the Twenty-First Century,” said he favored the Portland tax as a first step.
"“This is certainly part of the solution,” Mr. Piketty wrote in an email, “but the tax surcharge needs to be large enough; the threshold ‘100 times’ should be substantially lowered.”
She concluded with a response from a business alliance, writing:
"Among those objecting to the new tax was the Portland Business Alliance, a group of 1,850 companies that do business locally. Alliance officials have predicted that the measure would not have the desired result of reducing income inequality.
“We see it as an empty gesture,” said Sandra McDonough, the alliance’s president and chief executive, in a telephone interview. “We think they’d be far better off trying to work with business leaders to create more jobs that will lift people up and improve incomes.” Publicly traded companies, she added, are “an easy group to pick on.”
"Mr. Hales conceded that the pay ratio is “an imperfect instrument” with which to solve the problems of income inequality. “But it is a start.”
Fortune magazine also reported on Portland's new CEO tax. In a report on Thursday, Polina Marinova wrote, "The chief executive compensation tax is more symbolic than practical," adding, "Portland, Ore., is on a crusade to solve income inequality, even if only in its mind." In concluding, she wrote:
"Finally, though Portland’s “symbolic” tax on CEO pay will doubtfully make a material difference to the businesses it targets, it could drive away new business and investment.
“Companies feel that being in a specific location, they’re always on the defensive. That’s not helpful,” McDonough said. “It could impact decisions on business investment and expansion.”
Progressive trying to do good. What can go wrong?
Thanks goodness that Virginia is a Dillon Rule state. Otherwise, can you imagine all the "good" that Arlington County's progressives could do. We talked about the Dillon Rule when we growled about Portland CEO tax on November 20.
UPDATE (12/12/16): Jazz Shaw opened a post today at Hot Air, writing:
"Despite the popular revolt which seemed to characterize the 2016 elections, it seems to me as if some of you still just don’t get it. And by “you” in this case, I mean the city council in Portland, Oregon. You see, guys, the idea is to encourage companies to grow and hire more people. It’s not to drive them away. And yet we see new laws being passed such as this." (italics in the original)
She concluded it this way:
"This isn’t how you build an economy, guys. It’s how you crater one. No wonder you’re so proud of the phrase, Keep Portland Weird. Put down the bong, folks. You’re supposed to be creating jobs and wealth."