It appears that at least some California state legislators are attempting to address the problem of income inequality. They seem to understand that it has become a serious problem in the last couple of decades. They would like to pass legislation that would help to reduce this ever widening gap (between the rich and the poor). And they are listening to some wiser voices, such as Prof. Paul Krugman and Prof. Robert Reich.
From Salon.com:
Everybody is talking about inequality, it seems, but now legislators in California are trying to actually do something about it. On April 24, they took the first committee vote on a bill, SB 1372, that would put corporate taxes on a sliding scale, from 7 percent up to 13 percent, rewarding companies who pay their CEOs more reasonable compensation packages, while charging higher rates for those who pay their CEOs exorbitantly, compared to their average workers. (Rates are 2 percent higher for financial institutions.)
The bill, co-authored by state senators Loni Hancock and Mark DeSaulnier, has already drawn the support of former Secretary of Labor Robert Reich, who spoke at a press conference [video] before the vote, saying, “I’m here to testify on behalf of this bill, because I think it begins the process of shifting incentives on corporations back toward the kinds of incentives we had 30 or 40 years ago, when CEOs were paid, on average, 30 times what the average or median worker in their corporations were paid.” Washington Post columnist Harold Meyerson chimed in and argued that “Congressional Democrats should emulate their California counterparts” with a similar proposal.
The bill passed the Senate Governance and Finance Committee in a 5-2 party-line vote, with Democrats in favor and Republicans opposed. But as Meyerson noted in his column, the divide was actually not that sharp:
All the Democrats voted for it, but even the two Republicans who voted against it were muted in their criticism. Republican Sen. Steve Knight, a Tea Party stalwart, acknowledged that executive compensation is “out of whack” and called the plan “not a bad idea” before before saying it’s not the government’s responsibility to address the problem.
Under SB 1372, there would be nine rates, starting with a 7 percent tax rate on companies with a CEO-to-average-worker ratio of 25 to 1 or less, all the way up to the top rate of 13 percent assessed on companies with a ratio of 400 to 1 or more. California currently has a corporate flat tax rate of 8.84 percent, except for financial institutions, which pay 2 percent more—a difference that would be carried over into the new rate structure as well. Not only does it make sense as policy, it’s politically savvy as well, since it favors the vast majority of smaller businesses, which have not seen such wild explosions of pay differentials. Not coincidentally, DeSaulnier was a small business owner himself, as well as being a union member when he was young.
There is much more in the article on Salon. Please check it out if this topic interests you. A video about this bill is below the fold, along with comments from Prof. Robert Reich.