Photograph Source: Edgar Beltrán / The Pillar – CC BY-Sa 4.0
In his first interview since becoming the leader of the Catholic Church, Pope Leo XIV fielded a question about the polarization that is tearing societies apart around the world.
A significant factor, he said, is the “continuously wider gap between the income levels of the working class and the money that the wealthiest receive.”
Pope Leo appears to be particularly baffled by the Tesla pay package that could turn Elon Musk into the world’s first trillionaire.
“What does that mean and what’s that about?” the Pope asked. “If that is the only thing that has value anymore, then we’re in big trouble.”
We are indeed in big trouble. But we are not without solutions.
Senator Bernie Sanders and Representative Rashida Tlaib are spearheading an effort behind one particularly promising solution: hefty tax hikes on companies with huge gaps between their CEO and median worker pay.
Their recently introduced Tax Excessive CEO Pay Act would base the CEO-worker pay ratio on five-year averages of the total compensation for a firm’s highest-paid executive and median worker. The tax increases would start at 0.5 percentage points on companies with gaps of 50 to 1 and top out at five percentage points on firms that pay their CEO more than 500 times median worker pay.
Potential revenue from 10 leading corporations
How much might specific companies owe under the bill if they refuse to narrow their gaps? At the Institute for Policy Studies, we ran the numbers on 10 leading U.S. corporations with large pay ratios. We found, for example, that Walmart, with a five-year average pay gap of 1,091 to 1, would have owed as much as $929 million in extra federal taxes in 2024 if this legislation had been in effect.
Amazon, with an even wider gap of 1,995 to 1 and higher profits, would’ve owed as much as an additional $3.1 billion last year.
Source: Institute for Policy Studies analysis of compensation data in proxy statements and U.S. pre-tax income figures from 10-K filings.
Home Depot would have owed as much as $725 million more in 2024 taxes under this legislation. Like most of these companies, the home improvement giant can’t claim to be short on cash. Over the past six years, they’ve blown nearly $38 billion on stock buybacks, a maneuver that artificially inflates a CEO’s stock-based pay. With the money the firm spent on stock buybacks, Home Depot could’ve given every one of their 470,100 employees six annual $13,423 bonuses.
Musk’s trillion-dollar pay package
Senator Sanders pointed out that if Elon Musk receives the full $975 billion compensation package that Tesla’s board has proposed, Tesla could owe up to $100 billion more in taxes over the next decade under this legislation.
“The Pope is exactly right,” wrote Sanders in a social media post. “No society can survive when one man becomes a trillionaire while the vast majority struggle to just survive — trying to put food on the table, pay rent and afford health care. We can and must do better.”
“Working people are sick and tired of corporate greed,” Rep. Tlaib added in a press release. “It’s disgraceful that corporations continue to rake in record profits by exploiting the labor of their workers. Every worker deserves a living wage and human dignity on the job.”
