By Elisabeth Buchwald
Sen. Bernie Sanders is taking aim at the Americans who have made the most money during the economic downturn caused by the pandemic.
On Wednesday, Sanders, an independent from Vermont, unveiled legislation called the Tax Excessive CEO Pay Act, which would levy higher taxes on corporations “that pay their top executives at least 50 times more than the pay of a median worker.”
For companies that pay their top executives between 50 and 100 times more than their typical workers, their corporate tax rate would increase by 0.5%, according to a summary of the bill. The highest penalty, an additional 5% corporate tax rate, would kick in for companies that pay top executives over 500 times the median worker pay.
At these rates, Walmart (NYS:WMT) would have paid $854.9 million more in taxes last year, given that CEO Doug McMillon made 983 times more than the median Walmart worker making $22,484 that year, according to a memo circulated by Sanders ahead of a Senate Budget Committee hearing Wednesday on income inequality.
Walmart declined to comment on Sanders’ tax proposal.
“If companies increased annual median worker pay to just $60,000 and reduced their CEO compensation to $3 million they would not owe any additional taxes under this plan,” the memo states.
Sen. Lindsey Graham, a Republican from South Carolina, presented a different approach towards reducing inequality at the Wednesday hearing.
“If you can make your money legally and fairly good for you,” he said. But he suggested that the executives at Big Tech companies including Amazon (NAS:AMZN) , Facebook (NAS:FB) and Google (NAS:GOOGL) (NAS:GOOG) , which are subjects of a pending antitrust investigation, are not.
“Have we allowed these new technologies to become the modern version of robber barons of the last century?” he asked. Graham suggested that breaking up those tech companies would be one way to keep their CEO salaries lower. He said he supports offering tax incentives to companies like Amazon to encourage them to relocate to low-income neighborhoods and “increase wages by having better business opportunity.”
Since the onset of the pandemic last year, America’s 660 billionaires earned nearly enough money ($1.3 trillion) to foot the entire cost of the recently passed $1.9 trillion stimulus package.
That’s according to an analysis by the Americans for Tax Fairness and the Institute for Policy Studies, two left-leaning think-tanks, which drew on Forbes data.
Meanwhile, America’s poverty rate climbed from 15% before the pandemic to nearly 17.3% in August, according to estimates calculated by researchers at Columbia University’s Center on Poverty & Social Policy.
Food insecurity has also been rampant. More than 2.1 million U.S. households with children did not have enough food to eat over the course of a week, according to the latest household pulse survey published by the U.S. Census Bureau.
Tesla (NAS:TSLA) and SpaceX CEO Elon Musk gained the highest percentage of wealth (642.2%) from March 18, 2020, to February 19, 2021, among the country’s top billionaires. But Amazon CEO Jeff Bezos, who saw his wealth increase by 67.5% over that period, had the highest estimated net worth ($189.3 billion) as of Feb. 19, according to the analysis.
The average pay gap between big companies’ CEOs and typical worker pay has widened by more than eight times over the past 20 years compared to 1980, when the gap was 42 to one.
Over the past 20 years, the gap has averaged nearly 350 to one, said Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies.
“This is a systemic problem in corporate America,” she said at the Wednesday hearing, adding that “this growing pay divide is also a driver of gender and racial disparities.”
Sanders, who heads the Senate Budget Committee, invited Bezos to testify at the Wednesday hearing on income and wealth inequality — Bezos declined. Amazon did not respond to MarketWatch’s request for a comment. Amazon raised its minimum pay to $15 an hour in 2018 and Bezos said at the time he hoped other big companies would follow its lead.
Jennifer Bates, who works at Amazon’s Bessemer, Ala. fulfillment center, testified Wednesday and said that her $15-an-hour pay hardly compensates for the grueling conditions she’s experienced working there. Employees at the Bessemer warehouse are in the process of deciding whether to form a union.
“The shifts are long, the pace is super fast,” she said. “You’re constantly being watched and monitored — they seem to think you are another machine.”