This City Just Voted to Tax CEOs Who Make Too Much Money

Going into work every day knowing your CEO literally makes 100+ times what you do can be disheartening — and soon, in Portland, it may be taxable.

In a bold move to tackle income inequality head-on, Portland’s City Council approved a surcharge this Wednesday on companies whose CEOs make 100 times or more than what their lower-level employees earn. This ruling, the first of its kind, will likely go into effect in 2017 and could potentially impact up to 550 businesses currently operating in Portland.

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Here’s how it works: Any business whose CEO’s salary is at least 100 times that of the median employee pay will be required to pay an additional 10% of the business tax they already pay in Portland. And the wider the pay disparity, the greater the potential consequences. Companies whose CEOs make 250 times what the average employee does will be fined 25% of their current business tax.

Ultimately, this plan aims to narrow the disproportionate gap between what top executives and typical employees make, which has been growing substantially since the late 1970s. Glassdoor research indicates that this is a sore subject for employees — in our comprehensive look at What Makes a Great CEO, Chief Economist Dr. Andrew Chamberlain discovered that “higher CEO compensation is statistically linked to lower lowerCEO approval ratings on average,” although this effect is lessened if a company has a strong company culture. What does that mean? CEOs who make millions and millions, earn lower ratings from their employees.

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Whether or not this new ruling will directly impact the increasing gap between executives’ salary and the average worker’s remains to be seen, but one thing’s for sure — it is, if nothing else, a powerful statement that income inequality is alive and well, and it’s time to take concrete steps to address it.

TELL US: What do you think of the new ruling in Portland? Share on Facebook @Glassdoor

Source: Glass Door