California leads the way, as usual

Robert Reich reports on an interesting proposal. California, as usual, is on the forefront with a new Bill, SB 1372. It bases corporate tax rates on the ratio of CEO to average worker pay. The higher the ratio the higher the tax and vice versa. This ratio used to be 30:1 but is now 280:1 and 354:1 in big corps. As Picketty astutely noted, this is not at all tied to CEO performance but on how they rig compensation committees in circle jerks. Remember when these masters of the universe crashed the economy? Their compensation did not fall one bit but rather was increased for failure.

Opponents claim it kills jobs and imposes undue procedural burdens, both of which are not based on any evidence. To the contrary, addressing this inequality motivates higher worker pay who in turn spend more money, thereby spurring further job growth. The only jobs CEOs create is said stacking of compensation committees with other over-paid execs. Plus the Dodd-Frank Act already requires corps to publish such pay ratios so no extra work is involved.