WASHINGTON (AP) — Democratic presidential candidate Bernie Sanders announced Monday an “income inequality” plan calling for steep tax increases on companies that pay CEOs far more than their workers’ median salaries.
The Vermont senator’s proposal would raise taxes 0.5 percentage points on companies paying top executives more than 50 times the median salaries of workers. Tax penalties would rise from there, up to a maximum of 5 percentage points for firms whose highest-paid official earns 500-plus times median worker pay.
It marks a policy contrast with Sanders’ chief rival for the Democratic party’s most-liberal wing, fellow presidential hopeful and Massachusetts Sen. Elizabeth Warren. She has also decried skyrocketing top executive pay, but has proposed legislation that would bar CEOs from selling company shares for five years after receiving them or three years after a stock buyback — while also letting workers elect 40% of the board at large corporations.
Warren’s campaign notes that her proposal would combat the underlying causes of rising executive pay since CEOs are often compensated with company stock and work to boost its short-term value. Warren has also pushed for stricter rules requiring companies to divulge discrepancies in pay between their executives and rank-and-file workers. She has stopped short of proposing higher taxes for companies with such large pay gaps, as Sanders is doing.
Both Sanders and Warren have also proposed sweeping plans to increase taxes on the fortunes of some of America’s wealthiest families, proposals that would affect CEOs outside their corporations.
Sanders says his newly-unveiled income inequality tax plan would apply to all private and publicly held corporations with annual revenues of $100 million. His campaign estimates that it would raise $150 billion over the next decade, which could be used to eliminate medical debt nationwide.
“At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes,” Sanders said in a statement. “It is time to send a message to corporate America: If you do not end your greed and corruption, we will end it for you.”
Sanders said that if his plan were in effect last year, it would have forced McDonald’s to pay more than $110 million in additional taxes, increased Walmart’s taxes by nearly $795 million and meant over $990 million in tax increases for JPMorgan Chase.
CEOs for big companies routinely make 150 times or more what their typical workers do. Last year, the typical top boss at companies in the S&P 500 index, which includes everything from Apple to Zoetis, made about 158 times what their median worker did, according to data analyzed by Equilar for The Associated Press’ annual CEO compensation study.
And that gap is widening. In 2017, it would have taken the median worker 151 years to make what their CEO did, seven years less than last year’s pace.
AP Business Writer Stan Choe contributed to this report from New York.