California Senate Kills Bill to Increase Taxes for Companies With High Pay Ratios...Again
September 4, 2014
In May of this year the Center
reported on a bill introduced in
the California state
senate which would have raised the state corporate tax rate on a sliding scale
from the state's base rate of 8.8% up to 13% for companies with a pay ratio
exceeding 400 while reducing the rate for companies with a ratio of less than
25:1. However, despite making a splash in the national news cycle, the bill was decisively defeated falling far short of the
two-thirds vote needed for it to proceed forward. Interestingly, last
week California Democrats revived the bill, albeit with a slight change which
shifts any revenue from the bill into a state program which would offer tax
credits to businesses planning on relocating or expanding in California.
Even with the change, the bill was killed once again less than a week
after it was reintroduced, earning one less supporting vote than it did the
last time around.
To date, none of the efforts by state
localities to provide preferential tax or state contracting treatment to
companies with lower pay ratios have been successful. All the efforts
have been defeated in rather decisive fashion and have generally been
characterized as bad policy by Republicans and Democrats alike.