In the Media
Costly CEOs May Saddle Companies With Tax Under Biden
In the Media
Costly CEOs May Saddle Companies With Tax Under Biden
April 14, 2021
Winston & Strawn Attorney Ruth Wimer recently spoke with Law360 about the proposed Tax Excessive CEO Pay Act, which would raise taxes on companies whose executives make at least 50 times more than their workers, with the highest tax reserved for places where higher-ups earn at least 500 times more than employees.
Companies could avoid the tax hike by reducing CEOs’ pay to $3 million and upping workers’ salaries to $60,000, lawmakers said last month when announcing the proposal, but the chance of companies actually doing this is slim, those who watch compensation trends say. Past federal attempts to change corporations’ CEO pay practices have fizzled, with companies opting to just take on the tax penalty rather than reduce the C-suite’s salaries.
“Someone equated it to a flea trying to stop an elephant,” said Ruth Wimer. “These executives are able to command these types of salaries. They’ll keep doing it.”
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