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Marketing Portland CEO

Portland becomes first city to address income inequality with CEO tax


By Kyle O'Brien | Creative Works Editor

December 9, 2016 | 3 min read

Portland, Oregon city commissioner Steve Novick didn’t have much time left in office, and he wanted to make a statement about income inequality before he moved on.

With a 3-1 vote of the city council, Portland approved an ordnance to impose a surtax on companies whose CEOs earn more than 100 times than the median pay of the average worker, according to stories in The Oregonian, The New York Times and several other news outlets.

The Oregonian stated that under Novick’s new tax plan, a company with a CEO-to-worker ratio of at least 100-to-1 will pay a surcharge equal to 10% of the amount it pays for the Portland business tax. Companies with a 250-to-1 ratio or greater will pay a 25% surcharge.

It’s a bold move, and one that will no doubt create controversy. But if successful, the tax could raise $2.5 million in a year, once it begins in January 2017, with over 500 publicly traded companies in Portland that will be subject to the tax.

Novick has been fighting for more equal pay since last summer, and he hopes his efforts will discourage companies from paying hugely disproportionate salaries to their CEOs. It’s his last effort before leaving office, since he was upset in the recent election to a housing activist.

"This is as close as I've ever (come) to a tax on inequality itself," said Novick to the Oregonian. He was inspired by a similar measure proposed by the California senate in 2014, and cited French economist Thomas Piketty, who stated that higher and higher pay for top executives is a major cause of wealth consolidation among the world’s top one per cent of earners.

Outgoing mayor Charlie Hales was the decisive third vote and he called the ordnance “creative, progressive policymaking,” which he said cities need to do.

One city commissioner, Dan Saltzman, cast the vote against, stating that he didn’t think it was the right time to pass the tax increase. The Portland Business Alliance is against it as well, saying it will fail to actually address income inequality, since the federal oversight reports used to determine the tax give companies flexibility in determining pay ratio and won’t provide the most accurate data.

If this tax proves effective, it could incentivize other cities to do the same, though enacting something like this on a state or federal level, especially those with a pro-business stance, may prove quite difficult, especially when it comes to recruiting companies to move states or cities.

Marketing Portland CEO

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