Bernie Sanders wants to tax companies that pay their CEOs way more than their workers

Democratic presidential candidate, Sen. Bernie Sanders (I-VT) visits striking United Auto Workers union members as they picket at the General Motors Detroit-Hamtramck Assembly Plant on September 25, 2019 in Detroit, Michigan. Bill Pugliano/Getty Images

The average CEO of an S&P 500 company made 287 times more than their median employee last year, and Sen. Bernie Sanders wants to force them to change that — or pay for it.

Sanders’s presidential campaign unveiled its latest proposal to curb inequality in the United States Monday: An “Income Inequality Tax” on companies with massive pay disparities between the executive suite and the median worker.

The plan calls for increasing the corporate tax rate by half a percent on companies that pay their chief executives 50 times more than their median employee, and progressively hike up the corporate rate the bigger the inequality. The current corporate tax rate is 21 percent — the result of President Donald Trump’s corporate tax cut.

Under Sanders’s proposal, if a CEO makes more than 100 times the median employee, their corporate tax rate increases 1 percent, to 22 percent; more than 200 times the median employee, the company pays an additional 2 percent on the corporate tax rate, and so on, up to a 5 percent increase to the corporate tax rate for companies that pay their CEOs more than 500 times the median employee.

“It’s a sin tax,” said Sarah Anderson, with the progressive think tank Institute for Policy Studies, who previously worked with Sanders’ Senate office on similar policy. “You are hoping to reduce harmful behavior. We see these gaps as harmful to society at large. but we think that it’s likely that some companies are so wedded to this idea that they have to pay their CEOs 100 times more than their workers —then they have to pay more in taxes.”

This idea isn’t new. Portland, Oregon has implemented a similar tax on a local level which fully went into effect last year. San Francisco plans to vote on a CEO tax measure next year, and similar proposals have been considered in Connecticut, Illinois, Massachusetts, Minnesota, and Rhode Island. Federally, Reps. Mark DeSaulnier (D-CA) and Bonnie Watson Coleman (D-NJ) introduced a bill proposing national CEO-to-worker pay ratio tax on publicly held companies in 2016. It has the backing of former Secretary of Labor Robert Reich, as well as several leading economists on income inequality, like Thomas Piketty.

Sanders’ team, however, is expanding on the idea, lowering the ratio companies would have to meet to avoid the tax, and extending it to both public and privately held companies with an annual revenue of more than $100 million. The campaign estimates the tax would raise $150 billion in revenue over 10 years, which Sanders wants to put toward his plan to eliminate $81 billion medical debt.

“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 in a statement.