The City of Portland has just enacted an ordinance imposing a 10% surcharge to the annual city business license tax paid by publicly traded corporations whose CEOs earn compensation when compared with the median worker pay is a ratio of 100:1 or more. The surcharge increases to an additional 25% of the city business tax if the ratio of CEO compensation to median worker compensation is 250:1 or greater.
The ordinance rationalizes the surcharge as a noble response to what it claims is growing economic inequality in America. The ordinance pompously announces that:
“If other jurisdictions follow Portland’s lead in enacting policies based on the Securities and Exchange Commission disclosure, shareholders may realize that extreme chief executive officer to median worker pay ratios reduce their profits and, with this result in mind, make changes to their pay structure.”
The ordinance also discussed the shortage of “affordable” housing and the belief that “. . . huge disparity in income allows high income people moving to Portland to drive housing costs out of reach of middle class Portlanders.”
The ordinance ignores the legal restrictions on construction of new housing outside of an arbitrarily defined “urban growth boundary” which creates an artificial scarcity of land available for residential construction. The ordinance also disregards the fact that there are very few publicly traded corporations with main corporate offices in either Portland or Oregon; due in part to city and state tax policies which already punish capital formation and investment.
Despite its words of concern about affordable housing and the multiplication of the homeless population on Portland’s streets, the ordinance specifically deleted an earlier provision which would have dedicated the anticipated revenue from the surcharge to support the Joint Office of Homeless Services but, instead, chose to direct those funds to the City’s general budget.
More on the ordinance at Oregon Live.