Taxing companies that pay their chief executive officers high salaries or taxing high-income households are two ways that cities are using or considering in order to generate revenue.
Portland, Ore., in December passed a first-of-its-kind ordinance that imposes a 10 percent surtax to the business license tax on publicly traded companies that pay their chief executives more than 100 times what a median worker earns annually. The ordinance imposes a 25 percent surtax on CEO pay that is 250 times more than what a median worker earns.
In Rhode Island, Rep. Aaron Regunberg (D) introduced a bill (H. 5141) that was similar to the Portland law. The Rhode Island bill would impose a 25 percent surtax on CEO pay that is 250 times more than what a median worker earns and a 10 percent surtax on CEO pay that is 100 times, but less than 250 times, more than a median worker’s income.
A law similar to Portland’s is in the drafting stages in San Francisco, a city official told Bloomberg BNA. Details of the law are to be determined.
The success of a CEO tax is dependent on the implementation of a final rule adopted by the Securities and Exchange Commission that requires public companies to disclose the ratio of CEO compensation to the median compensation of employees.
Although the rule requires employers to provide disclosure of pay ratios for first fiscal year starting Jan. 1, 2017, or later, the agency in February decided to reconsider its implementation because some companies experienced unanticipated compliance difficulties that may prevent them from meeting the reporting deadline.
If the Trump administration eliminates or significantly limits the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the pay-ratio reporting, cities may not have the data necessary to figure the tax.
The Seattle City Council unanimously approved a resolution May 1 to pass by July 10, 2017, a progressive income tax ordinance targeting high-income households. Still to be determined are tax rates, the types of income that would be taxed and the threshold above which income would be taxed.
Take a free trial of Bloomberg BNA’s Payroll Decision Support Network, your one-stop resource for reliable, up-to-date guidance and analysis in every area of payroll administration and compliance.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)