Let’s Stop Subsidizing Economic Inequality

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The Washington Post

Let’s Stop Subsidizing Economic Inequality

(photo: flickr / cc / Tax Credits)

Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, recently asked in a speech at the New Populism Conference in Washington, “Why should our tax dollars subsidize economic inequality?” Why must you and I foot the bill, via our taxes, for the callousness of Wal-Mart or Domino’s?

The chasm between C-suite pay and minimum wage may be wider than ever before — in 2013, according to the AFL-CIO, CEOs of Fortune 500 companies made 774 times as much minimum wage workers — but, as Anderson points out, many people have grown tired of waiting for a solution to emerge from the maw of Washington and are instead taking the initiative themselves. “Just like on the minimum wage,” Anderson told the conference, “people aren’t waiting for Washington to lead on CEO pay. We’re seeing an unprecedented explosion of bold creative action outside Washington.” In Sacramento, Providence and other capitals, state-level activism and legislation are taking care of business that the House and Senate have chosen to ignore.

In California, Senate Bill 1372, introduced by state senators Mark DeSaulnier and Loni Hancock, lets the state raise the corporate tax rate, currently 8.84 percent, to as high as 13 percent for companies whose highest-paid executives earn more than 100 times what their typical employees earn. Companies with a CEO-to-typical-worker pay ratio below 100 to 1 would get a tax cut, down to as low as 7 percent. “Under the bill,” Inequality.org reports, “all firms with a ratio under 100-to-1 would end up with a tax cut, all above with a hike.” And California corporations that might be eyeing an end-around via outsourcing would see their tax rate increase by 50 percent if they exhibit a decrease in full-time employees and an increase in “contracted and foreign full-time employees.”

Also in California, the Service Employees International Union (SEIU) is working on two ballot initiatives that will rein in executive pay in the health-care industry. SEIU is looking to cap at $450,000 the salaries of executives at not-for-profit hospitals. That’s more than President Obama’s salary. “Executive pay at nonprofit hospitals is out of control,” explains the union, pointing out that in 2010, the CEO of San Francisco-based Blue Shield of California earned $4.6 million in compensation. (A 2014 survey revealed that Blue Shield ranked last in customer satisfaction among providers in California.)

The Massachusetts Nurses Association is working on an initiative similar to those in California that would limit the pay of hospital CEOs to 100 times that of their lowest-paid employees. They’ve presented the secretary of state with 100,000 signatures; if the state legislature fails to come through, MNA says it will collect 11,000 more signatures—enough to turn the proposal into a ballot initiative—and take the issue directly to voters this November.

And in Rhode Island, Senate Bill 2796 would allow the state to give preferential treatment in awarding state contracts to companies whose CEOs earn no more than 32 times more than their lowest-paid employees.

Another industry that’s seeing local demonstrations — and some local success — against pay inequality is the fast food sector, which happens to be the most unequal industry in the United States. Earlier this month, Salon reported on a trove of leaked documents from the National Restaurant Association that indicated that the world’s largest food-service trade organization is monitoring social media and an activist’s book signings to keep tabs on local protests and organizing movements. The Nation’s Lee Fang has investigated the reach of the “other NRA” into anti-union and other reactionary activities. Fast food lobbyists know that there’s no way for these companies to emerge from these public demonstrations against greed and injustice with anything other than egg on their faces. Just as the Coalition of Immokalee Workers was successfully able to leverage their activism with consumer outrage (and effective journalism), then, to “remake” the tomato industry, so too can organizations like Fast Food Forward draw oppressed employees, angry consumers and dedicated reporters together to bring equality to the industry.

On more and more issues, we’re discovering that activists — and voters — have a louder voice at the state and local levels than they do in Washington. It’s time for citizens across the country to make demands. There are fifty state legislatures and countless municipalities that are beholden to their constituents; it’s high time to get local and to get vocal. “Why should our tax dollars subsidize economic inequality?” asked Anderson. The simple answer is that they shouldn’t. And the road to reform runs right through your state capitol, county courthouse or city hall.

Katrina vanden Heuvel

Katrina vanden Heuvel is editor of The Nation.

 

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