Two policy experts debate the merits of hiking taxes on CEO salaries

Oh Robert just said maybe this isn't the way to do it do you think this is the way to do it I think it's the second best way to do it I think it's better if you can have a higher level of government administer this type of attacks but the fact that it's a point one percent tax against a relatively narrow base gross receipts within the city of San Francisco if you actually look at the research on the kinds of taxes that push companies out that make them relocate they're much more aggressive than that and I was glad that Robert mentioned the Portland tax because that one is somewhat similar to this it's a surcharge on profits and we haven't seen any down side effects from that it's raising the revenue that it's supposed to raise so but Jarrod I want to make a point on the portlet X and you just said it yourself it probably won't be a significant tax in Portland its raised somewhere between two and a half to three and a half million don't you have the rest of the state which even relative to the Portland City budget is a drop in the bucket so is it really just symbolic as opposed to economically meaningful no it is I would say it's economically meaningful because it's as small as you say I think it's actually administratively meaningful because the earmark dollars here are going to pay for the mental health services that the taxes is constructed for and I think we said it was gonna raise somewhere between one and one hundred and fifty million something like that with an M not one forty is the estimate yeah yeah we're talking we're talking m's here not bees and you know apparently that's about what it would cost to pay for these services so I actually think it's a good small-bore idea but we'd be better for administer at a higher level Jarrod Walt's a guy Wells that guy I imagine you think there's a terrible idea my question is what would you do to fix the problems in San Francisco if this is not the right answer serious problems in San Francisco there's a homeless problem it's a very significant one in San Francisco a lot of that has to do with things other than tax it's almost impossible to build in San Francisco zoning ordinances are tough they want you to build single occupancy homes detached homes in a city that has a huge housing shortage so there's a lot of things that you should be doing in San Francisco and hey revenue may be part of that but you have to consider what this is doing because this tax is not going to change CEO compensation CEOs are not necessarily the most sympathetic population but no one's going to change CEO compensation around this what they may do is change their employment patterns within the city because it's your median San Francisco employee so you drop some of the lower it compensated employees you push them out of the city and then you don't have to pay the tax or don't pay as much and I'd push back on one point the idea this is on a narrow base this is on grocery seats now grocery seats are all of the receipts of the company that are attributed to San Francisco there's a much broader base than profits that's why gross receipts taxes tend to have way lower rates than corporate income taxes this is a pretty significant tax and more than that if you're headquartered in San Francisco the top rates not point six it's two point four percent but what we've seen in Portland and the speculation about San Francisco is the types of companies that would face this tax would really be banks and retailers because they have highly paid CEOs but the local workforce is not as well paid you look at the tech companies and everyone says none of them would get hit because the median pay in San Francisco is so high that's right yeah I mean a couple of things so first of all my understanding is that it's gross receipts within San Francisco so don't consider that so I considered that a pretty narrow base but also I mean I think Jarrod makes two makes makes one good point unquestionable I think the very good point that we should all listen to from the other Jarrod is is this idea that at Route housing is such a significant problem in it and it intersects with mental illness as well and I think economists on both sides of the aisle would love to see loosening restrictions on zoning that's not going to happen in San Francisco anytime soon so they're faced with a mental illness serious situation now so they have to do something the other thing that I would push back on is this notion that somehow you're going to end up laying off low lower paid workers I mean hypothetically perhaps you might end up lowering CEO pay you might end up raising meeting pay there's zero evidence as far as I know Jericho correct me if I'm wrong there's zero evidence for the phenomenon that he is is it's concerned about it it's a possibility but it's certainly not anything I've seen Isis receptacle question what's the chances this actually happens well it's gotta pass a two-thirds vote by the general public in the spring most of the general public in San Francisco like we saw with proposition C supports higher taxes on the wealthy and companies because they're not paying so the this the political analysts and pollsters in San Francisco say it has a very high chance of passing I don't know what the to Jerrod's think of that but once it passed the Board of Supervisors they said it's pretty much are they're expected legal challenges to ensue if it does absolutely and that's the issue we saw with Proposition C which also passed and seemed fairly clear-cut remember this is the the tax that Marc Benioff came out in favor of other tech companies were against it it is tied up in court all that money is still tied up in court so it can't be used for anything and that's expected to happen here is you know they try to tax to pass attacks like this in 2014 and I believe it did not pass him in California but this is San Francisco right I suspect it will Jack Jared Bernstein just quickly at the national level CEO pay compared to medium worker has gapped up a lot over the last two or three decades what do you think's driven that and should it be adjusted for by some kind of federal rule and now it's disclosed that's the big change the SEC required it to be disclosed what that gap is so now you can actually target it with a tax yeah you know I think we should at least throw out this number it used to be 30x top comp to medium pay now it's somewhere between 300 and 400 X so you're right it's really exploded and I think the reason has to do with a lot to do with the just the inequality story for which there are many explanations we've had relatively stagnant median pay and you know just excessive increases at the very top of the scale one place you've seen that a lot is tech and finance and that takes you right back to San Francisco you you

Maurice Vega

7 Responses

  1. I mean, I probably wouldn't do that myself even if I get a chance, but even if someone does it, I don't think that's a huge problem, because somewhere down the line, all of that money is used for consumption or investment. This can always be taken care of by competition. For example, I'd rather choose to have a larger workforce or better perks to attract topmost talent. The real problem is that most of these CEOs believe in left wing fascism and the existence of the elite overlord. That's exactly why California has become a feudal state. I'd rather let competition take care of that. So, I agree that this is not the best solution, but might work.

  2. tax not affecting operating cost of company because its on compensation of CEO. there should be no layoffs

  3. Sorry but making 400x your employees with raises annually is regarded compared to the rest of the world. THey can easily afford a tax of less than 1% lol

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