New York, NY –U.S. Senator Kirsten Gillibrand today stood with community advocates and workers and called on Congress to reject the GOP’s tax overhaul that protects corporate profits and the wealthiest Americans, and urged her colleagues to pass her legislation to close tax loopholes that force taxpayers to subsidize massive CEO compensation. Gillibrand’s legislation, the Stop CEO Excessive Pay Act would put taxpayers first by closing the tax loophole that allows companies to deduct part of the amount they spend on executive compensation. Gillibrand’s bill would give shareholders more oversight in determining whether CEOs should receive substantial raises or bonuses. Under the current system, companies can get a tax deduction for excessive CEO pay and pay CEOs massive amounts of money with little input from shareholders.
“We need to simplify our tax system, but we need to do it in a way that rewards work and not just profitable corporations and their CEOs,” said Senator Gillibrand. “A good place to start is by closing loopholes that let corporations deduct excessive CEO pay from their taxes as a business expense. Even while the middle class has been shrinking and workers’ wages have hardly budged, corporations have been paying their CEOs higher and higher salaries – in some cases more than 300 times higher than regular employees. This is unacceptable, and it would not be fixed by the tax plan Republicans are moving to pass, which I urge all of my colleagues to reject. We need to start rewarding work again in this country, and ending taxpayer subsidies of CEO pay is a good start.”
“Corporate greed in this country has led to unacceptable levels of income inequality. Corporations should not be allowed to take advantage of tax laws that force working men and women to subsidize exorbitant CEO pay. It’s outrageous that the same hardworking employees, responsible for making their employers profitable in the first place, struggle to get by, while CEOs receive 347 times what they earn on average. I want to thank Senator Kirsten Gillibrand for spearheading this legislation, which is a positive step toward addressing these inequalities and making profitable companies pay their fair share,” said Mario Cilento, President of the New York State AFL-CIO.
“As the Republicans push a tax plan that will hurt everyday New Yorkers, Senator Gillibrand is taking a proactive approach to bring fairness to our tax system and put people before profits,” said Jessica Wisneski, Deputy Director of Citizen Action of New York. “Our current system perpetuates inequality by rewarding unjust corporate practices. When the average CEO makes 800 times what their front line worker makes, it’s clear that something is very wrong. We stand with the Senator in calling on corporations and the exorbitantly wealthy to start paying their fair share.”
“Public policy should not encourage excessive CEO pay. Instead it should help businesses engage in broadening well being. Responsible business people know that economic inequality hurts society and they see the benefits of lifting up all employees. They do their part in their own companies, and want public policy to stop encouraging irresponsible behavior by other businesses,” said David Levine, CEO and Co-founder, American Sustainable Business Council.
“The Republican tax plan is a massive giveaway to billionaires and Wall Street. Senator Gillibrand’s Stop Excessive CEO Pay Act gets at the root of the problem. CEOs and Wall Street should not operate with a different set of rules that allows them to reward themselves, over their own workforces,” said Jonathan Westin, Executive Director of New York Communities for Change.
Specifically, the Stop CEO Excessive Pay Act would do the following:
- Close the executive compensation loophole by eliminating a company’s tax deduction on executive compensation that is “excessive,” defined in this legislation as more than 25 times the median income of their employees or more than $1 million, whichever is less;
- Require that a public company may only pay “excessive” amounts if a majority of shareholders vote to approve the compensation within 18 months of the compensation being paid; and
- Require that if a company does not receive the majority vote, the Securities and Exchange Commission can issue a non-tax-deductible fine for the amount of excessive compensation.