The growing gap between CEO and worker pay over the last 30 years has ushered in the creation of California Senate Bill 1372, which targets leaders at corporate companies by raising the corporate income tax. While the bill still has a long way to go before it reaches the governor’s desk, it cleared its first committee on Thursday with a 6-2 vote, according to ABC News 10/KXTV.
Former U.S. Secretary of Labor Robert Reich appeared before the California Senate Governance and Finance Committee hearing on Thursday to speak in favor of the bill, saying it will restore the middle class. The tax rate would be based on how much a CEO makes compared to their average worker.
In 2012, the average CEO pay in California was $5,054,959, while the median worker pay was $48,029. According to Bloomberg News, Wells Fargo CEO John Strumpf made $22.9 million in 2012, while his employees made an average of $48,317, making his salary almost 500 times greater.
Currently, the corporate tax rate is at 8.84 percent. If the bill is approved, that figure could jump to as high as 19.5 percent. Reich said, “If the CEO pay is 200 or 300 or 400 times the typical worker, a company’s going to pay more tax.”
California Taxpayers Association Vice President Gina Rodriquez spoke out against the bill. “We are recovering from a very difficult time in our economic lives and another tax increase just won’t help that recovery,” Rodriguez said. The California Chamber of Commerce has labeled Senate Bill 1372 a “job killer.