Faced by inaction on national and state level, San Francisco has decided to go it alone and tackle huge wealth gap that's lead to 'shocking inequality'.
San Francisco voters overwhelming backed a new law that will levy an extra 0.1 percent tax on companies that pay their chief executive more than 100-times the the median of their workforce. The surcharge increases by 0.1 percentage point for each factor of 100 that a CEO is paid above the median, up to a maximum of 0.6 percent.
Tim Cook, Apple's CEO, was paid $134m in 2019, more than 2,300 times the firm’s median pay of $57,600. At Google’s parent company, Alphabet, Sundar Pichai’s $86m was 'only' 350 times the median of $246,804.
The salaries of US chief executives have increased by an average of 940 percent since 1978, compared with a 12 percent increase in workers’ pay, according to the Economic Policy Institute thinktank.
San Francisco’s new tax is estimated to bring in an extra $60m-$140m a year, revenue that will be spent on improving the housing and healthcare provision for the city’s poorest people. The tax will come into force in next year and will be collected from all companies operating in the city, not just those headquartered there.
While the city desperately needs more money, the tax is also designed to encourage companies to pay the lowest paid more or cut their executives’ huge pay. Hopefully, the new law will set an example for other cities, states and even countries to follow suit and try and help tackle inequality worldwide.