'First of its kind' tax on CEO pay ratios to be voted on

CEOs that earn 100 times more than the average salary of their workers could see an increase in their corporate income tax.

The city council of Portland, Oregon, USA, will vote tomorrow on whether the proposed tax should be imposed.

The measure was put forward by Steve Novick, Portland City Commissioner, and will work alongside the new Securities and Exchange Commission rules that will require companies to disclose their pay ratios from 2017.

Speaking to The Guardian, Novick says: “To me, after global warming, income inequality is the biggest challenge we face in our society.

“It’s been absolutely frightful to see the divide between regular folks and the richest-of-the-rich. It’s economically destabilising, it’s politically destabilising, it’s unhealthy.”

His proposals are to increase corporate income tax by ten per cent if a company’s CEO has a ratio above 100:1 and by 25% if the ratio is above 250:1.

The commissioner has said he is "95% confident" he will secure the three votes needed to pass the measure through the five-person council.

Branko Milanovic, a professor at New York University who specialises in income inequality, also spoke to The Guardian: “What I find quite interesting is that it seems [to be] the first tax that targets inequality as such.

“It treats inequality as having a negative externality like taxing carbon emissions.”