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Reich visits Capitol on CEO pay, oil extraction tax

By Josh Richman
Thursday, April 24th, 2014 at 10:13 am in economy, education, state budget, taxes.

It’s Robert Reich day at California’s State Capitol.

No, there hasn’t been an official proclamation. But the former U.S. Secretary of Labor, now a UC-Berkeley public policy professor, will be under the dome Thursday to speak on behalf of two bills introduced by Bay Area lawmakers.

Reich is doing a news conference with state Sen. Mark DeSaulnier, D-Concord; state Sen. Loni Hancock, D-Berkeley; and California Labor Federation Executive Secretary-Treasurer Art Pulaski in support of DeSaulnier’s SB 1372, which would create a new corporate tax table that increases taxes on businesses with big disparities between the salaries of their workers and their CEOs. The bill is being heard Thursday morning by the State Governance and Finance Committee.

“For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent,” Reich wrote on his blog Monday. “On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee, the tax rate goes to 9.5 percent; 400 times, to 13 percent.”

“Pushing companies to put less money into the hands of their CEOs and more into the hands of average employees creates more buying power among people who will buy, and therefore more jobs,” he wrote. “For the last thirty years, almost all the incentives operating on companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It’s about time some incentives were applied in the other direction.”

And, Reich will testify to the Senate Public Education Committee in favor of SB 1017 by state Sen. Noreen Evans, D-Santa Rosa, which would create an oil extraction tax to fund higher education, health and human services, state parks and more.

Reich endorsed a similar student-organized ballot measure effort last year, saying that using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The California Chamber of Commerce this month put both bills on its list of “job killers,” arguing they create barriers to economic development.

“The economic recovery is still the number one issue for Californians,” Chamber President and CEO Allan Zaremberg said when announcing the list. “These bills pose a serious threat to our economy and, if enacted, would dampen job growth in the state.”

Of Evans’ bill, Zaremberg said “an oil extraction tax will drive up consumer prices, push jobs away and upset a fragile economy that is showing strong signs of life.”

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  • Elwood

    Good God, is there no end to the hubris of the dimmiecrats? Marky Mark’s taxation bill will be found unconstitutional so fast Marky Mark’s fat head will spin.

    The oil lobby will see to it that the other bill is DOA at it’s first hearing.

  • Marga

    Sounds great, but could a corporation get around it by just hiring its CEO as an independent contractor rather than an employee?

  • Guest

    Nice work by Mark DeSaulnier and Loni Hancock. I was reading the other day the ex-CEO of Yahoo – who flopped after a 15 month try out on the job – got a 58 million dollar paycheck for this 15 months! When you are a CEO even when you stink you get rewarded like sultan, it has gotten so out of hand this legislation is clearly needed.

  • JohnW

    Runaway top exec compensation, which often has no relationship to job performance (often just the opposite) is a real issue. But what is proposed is a stupid idea.

  • Pingback: 2014 MISSOURI TAX TABLE News

  • RRSenileColumnist

    Gotta hand it Reich. He’s positioning himself to head Treasury when Senator Warren, leading Cherokee pol, becomes prez.

  • http://www.ibabuzz.com/politics Josh Richman

    The Senate Education Committee approved the bill on a 5-3 vote yesterday.

  • JohnW

    SB 1027 oil extraction tax – “using oil severance tax revenue to fund higher education, health and human services, state parks and more.”

    In other words, whatever we choose to spend the money for — especially for pensions.

  • Elwood

    I assume you’re talking about Evans’ bill which got out of committee. My bad.

    Hey Josh, refresh my memory please. Can the leg. raise taxes with a simple majority vote?

    Due to a series of misfortunes the dimmiecrats no longer own 2/3 of the Senate.

  • Josh Richman

    This would need a 2/3 vote.

  • RRSenileColumnist

    If Reich had his way, we would be paving the road to socialism. (See Hayek’s Road to Serfdom. It’s a quick read)

  • JohnW

    Hayek, the Tea Party’s favorite Austrian economist. I’ve not read him. I wonder how many of them have.

    He wrote Road to Serfdom in the 1940′s. Even then, he made statements in favor of things the Tea Party folks wouldn’t agree with — environmental regulation, workplace safety laws and social safety nets.