Washington, DC – As executive pay soars, U.S. Senator Sheldon Whitehouse (D-RI) and Representatives Barbara Lee (D-CA) and Alexandria Ocasio-Cortez (D-NY) have introduced the Curtailing Executive Overcompensation (CEO) Act, which would apply an excise tax on public and private companies that have at least a 50 to one CEO-to-median-worker pay disparity. In 2022, the CEO Act would have raised over $10.1 billion from the top 100 US companies alone.
“Year after year, superrich CEOs extract massive pay raises for themselves while many of the workers who keep their companies growing scrimp to make ends meet,” said Whitehouse. “There’s no justification for a CEO making hundreds of times what the average worker at their company is earning. It’s a sign of illness in society and a drag on our economy. Congress has to step in and correct the wretched excess of CEO self-dealing.”
“Right now, the average CEO makes in one day what the average worker makes in ten months,” said Lee. “After decades of this extreme, corrosive economic inequality, workers across corporate America are standing up and using their power to fight for greater equity. It’s only fair that we in Congress fight just as hard as those on the ground. I am proud to introduce this critical bill with Senator Whitehouse and Rep. Ocasio Cortez, and urge my colleagues to support it and stand in solidarity with workers.”
“The UAW strike showed that Americans overwhelmingly support closing the cavernous gap between CEO and worker pay,” said Ocasio-Cortez. “Over the last 2-3 years CEO pay has skyrocketed, driving prices higher than ever as workers’ real wages continue to fall behind. The CEO Act would incentivize fairer pay structures within companies and penalize those who increase income inequality.”
Since 1978, economic productivity has outpaced workers’ wages by more than four times. Meanwhile, executive pay has soared by more than 1,209 percent – over 18 times as much as productivity growth, and outpacing the growth of the stock market. In that same period, workers’ earnings increased only about 15 percent.
Today, unions across the country are striking for better pay and benefits while decrying the massive growth of CEO pay. The United Auto Workers strike focused attention on skyrocketing executive pay while workers’ wages have fallen dramatically. In 2022, General Motors and Ford Motor had CEO pay ratios of 362 and 281, respectively. Due to the striking workers’ efforts, UAW and the big three automakers have reached tentative agreements that will significantly boost workers’ pay over the next several years. The CEO Act builds on these efforts to incentivize raising worker pay in all sectors.
The Curtailing Executive Overcompensation (CEO) Act would apply an excise tax on both publicly traded and privately-held companies, which have at least a 50 to one CEO-to-median-worker pay disparity. The tax would apply only to large companies with over $100 million in gross receipts and $10 million in payroll. The tax rate imposed would be proportional to the size of the executive’s compensation (including salary, bonuses, and stock awards and options) and the degree the pay ratio exceeds 50 to one. The tax would be limited to one percent of a company’s gross receipts.
“For decades, it’s been the same story: the billionaires and corporate executives get everything, and the working class goes backwards,” said Shawn Fain, President of the United Auto Workers (UAW). “For one side it’s endless luxury, for the other side it’s deaths of despair. Poverty is now the fourth leading cause of death in this country, while the ultra-rich have more than they could ever need. We have to stand up and put an end to this immoral economy. Not just in our workplaces, but in Congress and the halls of power.”
“The Curtailing Executive Overcompensation (CEO) Act will help restore balance to our economy by addressing rampant economic inequality that has been fueled by runaway executive pay,” said Brandon Rees, Deputy Director of the Office of Investment for the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
“The extreme gaps that exist between CEO and worker pay demonstrate how companies exploit the contributions of their employees for the financial gain of their top executives,” said Dan Mauer, Director of Government Affairs of the Communications Workers of America. “It is imperative that we level the playing field and ensure that our tax code is encouraging companies to be more equitable in their compensation practices. The Curtailing Executive Overcompensation Act would help curb corporate greed by ensuring that companies are being held accountable when these massive disparities in income exist.”
“Our economy is rigged to favor wealth, not work, and it’s long past time working folks have a fairer shot at accessing the middle class, especially given that the average CEO to worker pay ratio is 399 to 1 and nearly 4 in 10 Americans cannot cover a $400 emergency,” said Randi Weingarten, President of the American Federation of Teachers. “An economy that makes it easier for the super-rich to get richer but makes it harder for working people to access livable wages, secure retirement and decent healthcare is unsustainable, and it’s time to take action to make it fairer and more just. Senator Whitehouse’s Curtailing Executive Overcompensation (CEO) Act would finally make companies that insist on overpaying their CEOs pay a price. For far too long our country’s tax code has rewarded or simply ignored ballooning CEO salaries, and it’s time our tax system actively encourages better pay for workers and curtails excessive CEO compensation. Extreme income inequality has never been inevitable, this critical piece of legislation recognizes that and does something about it.”
“There isn’t a single CEO in this country – not one – that deserves to be paid more than fifty times what the average worker they employ makes,” said Sean M. O’Brien, General President of the International Brotherhood of Teamsters. “It’s far past time that Congress recognize that.”
“CEO compensation has increased dramatically over the last couple of decades, all while compensation for workers has stagnated and inequality has increased,” said Matthew Biggs, President of the International Federation of Professional and Technical Engineers (IFPTE). “We applaud Sen. Whitehouse for introducing the CEO Act, which will realign incentives by applying an excise tax when the CEO pay to median worker pay exceeds a 50-to-1 ratio.”
“This legislation creates an incentive for corporations to both rein in CEO pay and lift up worker wages, all while generating significant new revenue for vital public investments,” said Sarah Anderson, author of more than 20 annual Institute for Policy Studies ‘Executive Excess’ reports and a co-editor of the IPS website Inequality.org. “The bill is an effective response to public outrage over extreme pay gaps that are unfair to workers — and bad for business, bad for our economy, and bad for our democracy.”
“When the average CEO makes roughly 400 times what the average worker is paid, you know the system is rigged,” said Jessica Church, Advocacy and Political Manager of Take on Wall Street. “This massive disparity perpetuates income inequality and the racial wealth divide. Workers are the backbone of our economy — not CEOs — and it’s long past time for our policy choices to reflect that. Take on Wall Street is proud to endorse the Curtailing Executive Overcompensation (CEO) Act because it would help rightsize the relationship between CEO and worker pay.”
“The fact that CEOs are paid millions of dollars a year while workers struggle to make ends meet is deeply unfair, and workers are fighting back,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund. “This includes striking UAW workers shining a light on the contrast between exorbitant automaker CEO pay and workers’ low wages. Enough is enough. We are proud to support the CEO Act, which would disincentivize such extreme inequality.”
The CEO Act is also endorsed by the American Federation of State, County, and Municipal Employees (AFSCME), Americans for Financial Reform, the Congressional Progressive Caucus, the Global Economy Project at the Institute for Policy Studies, Jobs with Justice, Labor Network for Sustainability, Main Street Alliance, NETWORK Lobby for Catholic Social Justice, Open Markets Institute, Oxfam America, Patriotic Millionaires, People’s Action, Public Citizen, Revolving Door Project, Social Security Works, The Value Alliance, and Unrig Our Economy.
A summary of the bill is available here; bill text is available here.
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Meaghan McCabe (Whitehouse), (202) 224-2921
Sean M. Ryan (Lee), (202) 713-7385
Lauren Hitt (Ocasio-Cortez), aoc.press@mail.house.gov
