A California bill that would increase taxes on companies proportional to the pay gap between the CEO and employees has passed its first committee hearing on Wednesday, meaning it will go to the California Senate for a vote on January 31, reports Fox Business.
Under the bill’s proposed tax rules, companies that make over $10 million in taxable income in the state would be liable for higher tax rates based on the pay disparity between the company’s regular employees and its CEO. As Fox Business points out, “The bigger the gap, the bigger the tax increase.”
The bill has found a big-name ally: Abigail Disney, granddaughter of Roy Disney. Disney has frequently criticized the disparity between Disney CEO Bob Iger’s pay and the average pay a Disney employee makes. This bill would make closing that pay gap more attractive to large companies—or at the very least help ensure the public makes more tax income from enormous CEO pay packages.
As Disney told lawmakers on Wednesday: “At the happiest place on Earth, they are paid so poorly that they rely on food banks, sleep in cars, or live so close to the bone that even a small problem could send them into a death spiral.”
Fox Business says Bob Iger’s pay package in 2018 amounted to $65 million—1,400 times the median pay of a Disney employee.
Because the bill targets only companies that operate in the state that make over $10 million in taxable income, smaller businesses would not be subject to the tax. Democratic state Senator Nancy Skinner, who is sponsoring the bill, says it would affect about 2,000 of the largest companies in the state. It’s estimated the bill could bring in an additional $4.1 billion in annual revenue.
Update, Friday, 1:05 p.m. ET:
A Disney spokesperson sent the following statement:
“The truth is, Disney has made significant investments to provide for the upward mobility of our employees, starting with our commitment to a minimum wage of $15 an hour, quality health insurance for as little as $6 a week, childcare subsidies, and an initial investment of $150 million to fully pay for hourly employees’ college, post-graduate or vocational degrees through the Disney Aspire program; and to date, more than 12,000 employees have enrolled in classes.”