Walmart would have paid up to $794 million more in taxes last year under a tax plan from Senator Bernie Sanders, according to the Institute for Policy Studies.
The Vermont senator and presidential candidate on Monday published a plan to decrease income inequality by raising taxes on companies that have large gaps between CEOs and average workers. Companies with CEO-worker pay gaps over 50-to-1 would be subjected to new taxes, and businesses bigger CEO-worker pay gaps would face a higher tax rate. The plan would apply to both public and private corporations with annual revenue over $100 million.
The proposal would mean that many major American companies would pay hundreds of millions of dollars more in taxes each year.
Walmart, whose CEO earned 1,076 times more than an employee with a median salary did last year, would face a five percent increase. Walmart paid $3.2 billion in federal corporate income taxes last year, according to CNBC.
The proposal included the amount that other companies, including McDonald's and Home Depot, would have to pay in additional taxes. JP Morgan Chase, whose CEO earned 381 times more than the median employee compensation, would have paid up to $991.6 million more in taxes last year.
"The revenue generated from this income inequality tax will be used to pay for Bernie's plan to eliminate medical debt," the proposal says. "But the goal of this income inequality tax is not just to raise more revenue. It is to send a message to corporate America: stop paying your workers inadequate wages while CEOs make outrageous compensation packages."
The plan aligns with Sanders' focus on income inequality centers attention on the growing gulf between employee and CEO pay. CEO compensation is 278 times larger than that of employees at the country's top 350 public firms, a report from the Economic Policy Institute said last month. While employee compensation increased 12 percent between 1978 and 2018, CEO compensation rose 940 percent.
Sanders' proposal builds on existing national efforts to rein in the gulf between CEOs and employees, which is driven by performance pay packages.
Portland, Oregon, has already implemented a law to tax companies with a vast CEO-employee pay gap. Lawmakers in seven state legislatures have proposed bills to tax companies with large CEO-employee pay gaps. In Connecticut, a bill has also been introduced to prevent companies whose highest-compensated employee receives 100 times more than its median worker from receiving state subsidies and grants.
A report released Monday from the Institute for Policy Studies reiterated the extent of the CEO-worker pay divide. The report found that at the 50 publicly traded firms with the widest pay gaps, CEOs were given over 1,000 times more compensation than the typical employee.
