Tuesday, November 8, 2011

Pay gap drives 99% movement & the Wisconsin Income Equity Act

In our struggling economy, the poor and the middle class are hit disproportionally worse than the wealthy.

Don't take my word for it. Just look at several prominent studies.

The Institute for Wisconsin's Future recently released an interesting report that articulated the very wage gap that has people protesting all over the country.

The study, which tracked CEO pay from four prominent Wisconsin companies, compared their CEO Pay to that of the average Wisconsin worker. The study found that the average CEO pay amongst the four companies studied jumped from $2.3 million to $6.9 million over the past decade. Not bad. Meanwhile, the average Wisconsin worker saw their wages, adjusted for inflation, increase by just $1,000 per year. Not good.

Not only did the study show that the rich are getting richer while the corporations aren't proportionately increasing the pay of their workforce, it showed these companies spend a lot of time trying to exploit every single tax loophole the legislature has created for them. In fact, almost none of the companies paid any state income tax. I guess this goes to show you that investing in a good accountant trumps investing in the middle-class.

And nationally it isn't any better - it's even worse. According to BusinessWeek Magazine, in 1980, CEO pay equaled 42 times the average blue collar workers' salary. According to www.paywatch.org, CEO's now make 343 times more than the average worker, giving America one of the largest wage gaps in the world. I believe we must learn from our nation's mistakes. Yes, American history includes worker exploitation. However, I believe we must move beyond that dark shadow and strive to achieve the American Dream for everyone.

If we are going to create a level playing field where everyone can achieve the American Dream, we must change the way we do business in America. Recently, the Congressional Budget Office articulated the wage gap. Since 1979, according to the CBO, income for the richest one percent has risen 275 percent, compared to 18 percent for the remaining 99 percent of Americans.

That isn't right. And I didn't think this was right in 1999, when I was a freshman in the State Assembly. That's when I first introduced the Wisconsin Income Equity Act, a bill based on federal legislation. My bill, which is also a bill before Congress (HR 382), would limit government tax deductions to corporations with inflated CEO pay if that company doesn't also fairly compensate the little guy too.

Currently, corporations can deduct up to $1 million of a CEO's pay from their income tax. Meanwhile, the janitor at most of these companies pays more in taxes than the company does. My bill would cap the corporate tax deduction for CEO pay at 25-times the salary of the lowest full-time employee at the company.

If you pay the lowest paid employee $20,000, you can still deduct $500,000 of salary - 25 times the lower amount. This is fair and just, and provides a real incentive to pay workers better.

I'm not saying corporations can't pay an executive what they want. I just don't think the 99% of us should have to subsidize excessive executive pay.


  1. I think this bill could work, but only if the American people fight for it. Part of the problem is that even if it passed, the system is too corrupt to enforce it. That's why Occupiers are creating a new government.

  2. Exceptional idea. People don't realize that this massive wage inequality will correct itself if we cannot find the political will to do it ourselves. The difference is that a collapse and overshoot correction will cause worldwide economic disintegration.