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A weekly update on our grand divides
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October 17, 2016
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This Week
Sayonara, John Stumpf! As you know, we've been going after the Wells Fargo CEO for some time over his obscene pay. Last week Stumpf stepped down amid the uproar over the bank's massive customer account scam. Time will tell if his retirement outfit will include a pair of iron bracelets.
On a positive note, we're excited to report on a pending proposal in Oregon that would set a landmark precedent for cracking down on excessive CEO pay. The Portland City Council is considering a surtax on companies with extreme gaps between CEO and worker compensation.
Inequality.org co-editor Sarah Anderson will be testifying at the October 26 City Council hearing on this historic pay-ratio proposal. We have more on the new Portland move in this week's issue — and details on what you can do to lend your support.
Your support could really make a difference here. To really reverse inequality, remember, we need to be working at every level — from global to local — and all of us have an important role to play!
Chuck Collins, Director, Program on Inequality
and the Common Good, Institute for Policy Studies
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Inequality by the Numbers
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The Inequality Nerd
wants you to know...
A new report on China tallies 594 billionaires in the Middle Kingdom — 59 more than in the United States. But none of the Chinese deep pockets rank in the global wealth top 20.
The Inequality Nerd Bob Lord practices tax law in Phoenix.
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Faces on the Frontlines
Taking the CEO Pay Fight Local
Steve Novick, a member of the Portland City Council in Oregon, has just introduced a proposal that would place the nation's first-ever surtax on companies with wide gaps between their CEO and worker pay.
Novick's proposal builds on a new federal disclosure rule that will require publicly traded companies to report the ratio between their CEO and median worker pay, starting with their 2017 pay figures.
"I want Portland to be among the first local governments in the country," Novick explains, "to begin using the new data about CEO and worker pay to address growing income inequality."
The new Novick pay-ratio plan would add a surtax on the city's existing business license tax for firms that pay their CEOs more than 100 times what their workers receive. The city estimates that this surtax would raise $2.5 to $3.5 million annually, new revenue that Novick wants to see go toward homeless services.
| Portland is opening a new front in the struggle against CEO pay excess. |
Portland's reform would not by itself, of course, close our nation's vast economic divide. But, Novick notes, the surtax "would send a powerful message that our community is ready to take a stand against the extreme inequality that harms all of us."
"And if other local and state governments, as well as Congress, begin to use the SEC information to drive policy," he adds, "we will see change."
A new piece of federal legislation mirrors the basic idea of the Portland proposal. Rep. Mark DeSaulnier of California and Rep. Bonnie Watson Coleman of New Jersey have just introduced the CEO Accountability and Responsibility Act (H.R. 6242), a bill that would boost tax rates on companies with over a 100:1 CEO-worker pay ratio — and give a slight tax rate break to firms with ratios below 50-to-1.
Read more about Portland's cutting edge CEO pay reform proposal.
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Take Action
on Inequality
The Portland City Council will be holding a hearing on October 26 on an innovative proposal to apply a tax penalty to firms with extremely wide gaps between their CEO and worker pay. This reform would set an important precedent for reining in CEO pay that could inspire other localities and states — and maybe even the U.S. Congress — to take similar action.
You can lend your support by submitting written testimony to members of the Portland City Council. You can also check out the debate over the plan by watching a webcast of the City Council hearing that will air at 2 p.m. Pacific time October 26. City Council members will likely vote on the proposal December 7.
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Must Reads
The Tabloid Takedown of Bernie Sanders
Swat Team: The media's extermination of Bernie Sanders, and real reform
Thomas Frank
Harpers, October 13, 2016
 To the hundreds of thousands of supporters who flocked to his overflowing stadium rallies — and to millions of voters in the Democratic primaries — Bernie Sanders rated as an exceptionally serious and viable candidate for President.
The senator from Vermont would end up winning 23 state contests and revolutionizing small-dollar online fundraising. He raised more money from modest donors than any primary candidate in U.S. history.
But to the elite media pundits of the nation's chattering class, Sanders and his message of economic and social justice amounted to little more than an annoyance that needed to be swept snappily aside.
Now we have — from long-time political analyst Thomas Frank — the evidence of that sweeping. Frank has sifted through some 200 or so editorials, op-eds, and blog posts on Sanders this past spring in the Washington Post, "the publication that defines the limits of the permissible in the capital city." Frank's final tally: The negative on Sanders in the Post's punditry outweighed the positive by a whopping five-to-one margin.
What explains the Post's disdain? In this 6,000 word essay, Frank looks closely at the impact class had on the journalists tasked with covering the progressively populist Sanders campaign. These journalists — mostly prosperous Ivy Leaguers who relish their roles as insiders — ended up functioning as "the house organ of a meritocratic elite."
Read our full review here.
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Reports and Retorts
CEOs in the United States make double and more the pay of top execs in other nations. But the latest Harvard Business Review annual ranking of the world's top-performing chief execs has only one U.S. CEO in its top ten. The Harvard ranking takes into account long-term financial performance and tracks enterprise sustainability.
Social mobility in the United States may be as much as 20 percent less than previous research has shown, concludes a massive new study that tracks generations of Americans back to 1910.
A new Oxfam study is highlighting the stunning inequality of Hong Kong, a city with more Rolls Royces per person than any other place on earth and 300,000 kids living in chronic hunger.
Some of America's highest-paid tech CEOs are grabbing huge local and state government subsidies for their data centers, details a newly published Good Jobs First study.
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A commentary on excess and inequality by Sam Pizzigati
Getting Beyond the 'Buffett Rule'
In 1944, the year billionaire investor Warren Buffett first paid income tax, Americans 'soaked the rich' — and benefited mightily from the soaking.
Warren Buffett, the third-richest man in America, has always been a bit of a traitor to his class. The super rich, Buffett holds, ought to pay income taxes at a higher rate than average Americans because they have the capacity — and good fortune — to contribute significantly more to our national well-being.
Current tax law, Buffett goes on to explain, lets the really rich routinely avoid that responsibility. In fact, as Buffett has famously declared, his secretary pays taxes at a higher rate than he does.
Buffett believes in tax fairness. Donald Trump, on the other hand, most certainly does not.
The Donald has personally lobbied Congress for tax breaks that ease the tax bite on wealthy real estate developers like himself. And his latest White House campaign tax proposal, the Center for Budget and Policy Priorities points out, would if adopted "raise after-tax income for those with annual incomes of over $1 million by 14.3 percent."
| The rich of Buffett's teens paid two-thirds of their incomes in taxes. |
White House hopeful Trump doesn't just pay taxes at a lower rate than his secretary. At his debate last week with Hillary Clinton in St. Louis, he essentially acknowledged he regularly pays no federal income taxes at all.
Trump's brand of in-your-face tax dodging simply — on philosophical grounds — outrages Warren Buffett. But at the St. Louis debate Trump gave Buffett's outrage a personal twist. The GOP nominee publicly charged that the Omaha billionaire has claimed even "bigger deductions" than he has.
Buffett shot back at Trump the next day.
Read the full Too Much column.
Institute for Policy Studies associate fellow Sam Pizzigati co-edits Inequality.org. His most recent book: The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900–1970. Follow him on Twitter @Too_Much_Online.
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Around the Web
David Cay Johnston, Who Else Doesn't Pay Taxes? Investopedia, October 11, 2016. The number of Americans making over $1 million who paid no federal income tax in 2014: 444.
Adair Turner, The Skills Delusion, Project Syndicate, October 12, 2016. Why education alone is not going to narrow our economic divide.
Nick Galasso, Should we be ashamed of privilege? Oxfam America, October 12, 2016. And would that remedy inequality if we were?
Lucinda Shen, Read Elizabeth Warren's Tweetstorm on Wells Fargo's CEO, Fortune, October 13, 2016. A bank CEO should not be able to oversee a massive fraud and simply walk away to enjoy his millions.
James Stewart, How to Fix the Tax Code and Close Donald Trump's Loopholes, New York Times, October 13, 2016. The specific reforms needed.
Alan Rusbridger, Panama: The Hidden Trillions, New York Review of Books, October 27, 2016. An excellent review of recent literature on the global tax evasion of the super rich.
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This Week’s Last Glance at Greed
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Annals of Avarice
Never too early to start thinking about the upcoming gift-giving season. What's available this year for that affluent who has nearly everything?
How about a $15.3-million iPhone case made of solid 24K gold with a home button that features a 26-carat black diamond?
If that's a little too high-tech for your list, you can always try the world's most expensive hammock, a $32,000 leather affair from Louis Vuitton.
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