Shocking inequality: why San Francisco voted for ‘overpaid executive tax’

On Matt Haney’s stroll to work at San Francisco metropolis corridor he passes the luxurious homes of some of the richest US tech billionaires, in addition to tons of of the nation’s most determined folks residing in tent encampments on the road.

The “extreme, shocking inequality” he and the opposite 900,000 residents are compelled to navigate every single day led Haney, a member of the San Francisco Board of Supervisors, town’s legislative physique, to suggest a brand new “overpaid executive tax” designed to assist sort out the issue.

San Francisco voters overwhelming backed a new law that may levy an additional 0.1% tax on corporations that pay their chief executive greater than 100-times the the median of their workforce. The surcharge will increase by 0.1 share level for every issue of 100 {that a} CEO is paid above the median, as much as a most of 0.6%.

Many of the largest and best-known US corporations would simply fall into the best bracket. For instance, Elon Musk, the chief executive of Tesla and the world’s third richest person, was paid $595m (£449m) final yr, virtually 10,000 instances the agency’s median wage of just below $60,000.

Elon Musk was paid $595m final yr, virtually 10,000 instances the median pay at Tesla. Photograph: Odd Andersen/AFP/Getty Images

Tim Cook, the chief executive of Apple, was paid $134m in 2019, greater than 2,300 instances the agency’s median pay of $57,600.

At Google’s mother or father firm, Alphabet, Sundar Pichai’s $86m was solely 350 instances the median of $246,804. Unlike Tesla and Apple, Alphabet doesn’t function excessive road shops, which brings down common pay.

Sundar Pichai, the chief executive of Alphabet and Google, was paid 350 time the median pay of his employees.
Sundar Pichai, the chief executive of Alphabet and Google, was paid 350 time the median pay of his staff. Photograph: Tsering Topgyal/AP

The pay ranges of US chief executives have elevated by a mean of 940% since 1978, in contrast with a 12% improve in employees’ pay, according to the Economic Policy Institute thinktank.

San Francisco’s new tax is estimated to usher in an additional $60m-$140m a yr, income that will probably be spent on bettering the housing and healthcare provision for town’s poorest folks. The tax, which comes into power in 2021, will probably be collected from all corporations working within the metropolis, not simply these headquartered there. The pay ratio will probably be calculated evaluating CEO pay with the median of employees within the metropolis, not worldwide.

Haney stated that whereas town desperately wants extra money, the tax can also be designed to “encourage companies to pay the lowest paid more or cut their executives’ huge pay”. He hopes the brand new regulation will set an instance for different cities, states and even international locations, just like the UK, to comply with to try to assist sort out inequality worldwide.

“San Francisco has some of the most extreme inequality anywhere in the world, and many of the best-known companies growing here have some of the largest gaps between executive pay and worker pay,” stated Haney, in an interview over Zoom as he walked to work this week.

Haney, who represents District 6, which incorporates the Tenderloin, Mission Bay and South of Market, added: “The contrasts are especially stark in my district where I represent some of the richest parts of San Francisco – and the country – and some of the poorest parts with huge numbers of homeless people without access to healthcare.”

The tents set up by homeless people in the Tenderloin district of San Francisco.
The tents arrange by homeless folks within the Tenderloin district of San Francisco. Photograph: Shannon Stapleton/Reuters

He stated the coronavirus pandemic had exacerbated San Francisco’s inequality downside, which had already created “a city of extreme suffering” that drained native authorities of sources.

“The heath system was already very strained, and the pandemic has exposed it even more,” Haney stated. “It has shown how stark the inequality is, poor people could not afford to shelter and people of colour and essential workers bore the burnt of the pandemic.

“At the same time the richest have gotten much richer [from the pandemic] it shows the fundamental flaw of our economic system. A small number of people continue to make massive profits at a time when almost everyone else was suffering more than ever.

“The only way to solve inequality in San Francisco, is to make those making making huge profits to share it,” he stated.

“There is a very dangerous imbalance here, people don’t like where we are going. We want to live in a city where we and our neighbours are doing OK, are healthy and safe, when you have a city so unequal it is very hard to keep everyone health and safe.

“It is the 0.001% of society who are causing the problem, there has to be a reckoning or we will see more suffering and poverty and it is a concern to all of us – our health and quality of life. The pandemic has shown us how we are all connected, and when some people are unable to take care of themselves it can put us all at risk.”

Haney stated that within the face of inaction from the nationwide and state authorities, town had determined to behave by itself. “It is a twofold goal, to address inequality and bring in new resources to allow us to response to the biggest emergency,” he stated.

Haney hopes San Francisco might act as a template for others to comply with. Portland, Oregon, launched an analogous however extra restricted levy in 2018 and anticipated to gather about $3m from roughly 150 corporations.

“The overwhelming victory here will lead other cities and states to follow,” Haney stated.

“San Francisco is a modern day version of a A Tale of Two Cities everywhere you look, we can’t have a nation that turns into that.”

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