The bigger the wage gap, the bigger the tax increase.
California is moving to raise taxes on some of the country’s largest companies to fight income inequality and the wealth gap.
A bill by Democratic state Sen. Nancy Skinner passed out of its first committee hearing on Wednesday, keeping it alive a head of a Jan. 31 deadline to pass the Senate.
“Excellent! My income inequality bill, #SB37, won approval today on a 4-2 vote from the Senate Governance and Finance Committee!” she tweeted. The bill is “designed to incentivize big corporations to start paying workers a fair wage.”
She added in a subsequent tweet: “We must shrink the obscene gap between what wealthy CEOs make these days and what the average worker takes home.”
The size of the tax increase would depend on how much companies’ highest-paid executive makes compared to its employees.
California Labor Federation, which represents more than 2.1 million workers in 1,200 local unions across the state, added in a tweet that it’s proud to stand with leaders and fight against corporate greed: “It's pretty simple. Big corporations aren't paying their fair share. Schools, safety, infrastructure and other priorities suffer as a result.”
As written, state officials estimate the legislation could bring in up to $4.1 billion. Skinner said it’s reasonable for the state to make money off the tax because the rising income inequality means more workers are relying on public assistance.
“California’s taxpayers are basically paying the cost for the services that employees then turn to because they don’t have a wage that can provide their families’ needs,” Skinner said.
California would not be the first government in the U.S. to try this, but would be the largest. In 2016, city officials in Portland, Oregon, approved a 10 percent tax on publicly traded companies that pay their CEOs 100 to 250 times the average worker.
The proposal would only apply to companies that post at least $10 million of taxable income from business conducted in California. That would apply to about 2,000 companies nationwide, including the Walt Disney Co., headquartered in Burbank.
Heiress Abigail Disney, granddaughter of Roy Disney — the brother of Walt and one of the company’s co-founders — supports the bill. She has no formal role at the company, but she has been advocating for higher wages for the company’s workers.
“At the happiest place on Earth, they are paid so poorly that they rely on food banks, sleep in cars or live so close to the bone that even a small problem could send them into a death spiral,” Disney told state lawmakers on Wednesday.
Abigail Disney’s comments about the company’s workers stem from a visit she made to some Disneyland employees at an offsite union office in Anaheim.
Walt Disney Co. CEO Bob Iger received more than $65 million in 2018, according to media reports. That salary was more than 1,400 times the median pay of a Disney employee, according to a study from Equilar.
A spokesman for the Walt Disney Co. said the company committed to a minimum wage of $15 an hour, health insurance for a little as $6 a week, childcare subsidies and an initial investment of $150 million to fully pay for college degrees of hourly workers.
“The truth is, Disney has made significant investments to provide for the upward mobility of our employees,” according to a statement from the company.
Skinner said public employees in California “by and large ... have a very decent wage,” saying most of them do not face “the types of problems our low-wage workers are facing.”
Abigail Disney told lawmakers the issue was a problem of corporate culture “50 years in the making.”
“If your entire reputation as a company relies on the idea of its clean floors, you had better be willing to pay your workers enough to do the job well and with dignity,” Disney said. “Because dignity is not a perk.”
The Associated Press contributed to this report.