Rep. Jones, Sen. Lamar introduce legislation to combat corporate greed, lift worker wages
CEO Pay Disparity Tax would discourage corporations from paying starvation wages supplemented by government assistance programs
NASHVILLE — Rep. Justin Jones (D-Nashville) and Sen. London Lamar (D-Memphis) are introducing legislation called the CEO Pay Disparity Tax to discourage billion-dollar companies from paying wages so low that their full-time employees qualify for government assistance.
“When a big corporation has a huge disparity in pay between workers and the CEO, it’s Tennessee taxpayers who pay for health and food assistance for their workers,” Rep. Jones said. “We are subsidizing some of the biggest and most profitable corporations in the history of our nation and it would be completely unnecessary if these companies respected their workers and paid a living wage.”
The Nashville representative will introduce House Bill 747 to the House Government Operations Committee on Monday.
Helping make his point, Rep. Jones cites a 2020 report, “Millions of Full-time Workers Rely on Federal Health Care and Food Assistance Programs,” that found 5.7 million Medicaid enrollees and 4.7 million SNAP recipients who worked full-time for 50 or more weeks in 2018 earned wages so low that they qualified for these federal benefits.
Researchers sent questionnaires to state Medicaid and SNAP agencies and analyzed data from 15 such agencies across 11 states, including Tennessee. Each agency reported the 25 most common employers of Medicaid enrollees and SNAP recipients. Among the 15 agencies, Walmart was in the top four employers of program beneficiaries in each and every one.
In Tennessee, the top companies employing workers who qualified for assistance were: Walmart, McDonald’s, FedEx, Dollar General, Kroger and Amazon.
“The CEO Pay Disparity Tax begins to reform our broken state tax code by ensuring that large, successful corporations either pay their workers or pay a fairer share of taxes,” Rep. Jones said.
Under the CEO Pay Disparity Tax Act, companies that pay their top executive at least 100 times more than the pay of a median worker would be required to pay an additional excise tax.
Today, a cashier at Walmart in Nashville would have to work more than 823 years to earn what the company’s CEO Doug McMillon was paid last year. Similarly, a crew team member at a McDonald’s in Nashville would have to work 865 years to earn what the company paid its CEO Chris Kempczinski in 2021.
“Tennesseans on both sides of the aisle are appalled by the extreme disparity between CEO and worker pay,” said Sen. Lamar. “Wealthy, corporate executives keep doing better no matter what, while working families in Tennessee, who helped produce the profits and paid their fair share of state taxes, are struggling to afford health care, pay rent, and put food on the table.”
The CEO Pay Disparity Tax Act would impose a surcharge on any corporation conducting business in Tennessee with CEO to median worker ratios above 100 to 1. A tax penalty of a tenth of a percent would be added to the standard state excise tax on the company’s net yearly earnings.
For instance, if companies increased annual median worker pay to just $50,000 and set their CEO compensation at $5 million, no additional taxes would be owed under this plan.
“We’re not telling any corporation how much they should pay their top executives,” Rep. Jones said. “What this legislation says is that your company will pay a tax if you’re contributing to inequality in Tennessee.”
According to a 2022 report from the Economic Policy Institute, the ratio of CEO-to-typical-worker pay soared to 399-to-1 in 2021 under EPI’s realized measure of CEO pay, the highest ratio on record, up from 366-to-1 in 2020 and a massive increase from 59-to-1 in 1989.