Jagmeet Singh wants tax hikes at companies where CEO makes way more than workers
Jagmeet Singh, leader of the Liberal government-allied New Democratic Party, has proposed raising taxes for certain businesses.
Singh proposes that large corporate entities with a disparity in their CEO-to-median-worker pay ratio pay extra in the motion titled “Corporate Tax Rate Increase and Disclosure of CEO-to-Median-Worker Pay Ratio.”
In the context of this motion, initially placed in June, a CEO is defined as “the individual with the highest earnings in a corporate entity.” A “large corporation” could be any private or public corporation with over 500 employees or over $100 million in total revenue.
“The motion also precludes the use of contractors to bypass disclosing median-worker pay,” Canada’s Parliamentary Budget Officer (PBO) noted.
The math behind it all
On Wednesday, the PBO estimated that this measure would raise an additional $8,911 million over the fiscal year 2024-2025 to 2028-2029.
Officer of the Parliamentary Budget Officer
The proposed increase in the corporate tax rate would be a 0.5 percentage point increase if the CEO-to-median-worker pay ratio was between 50 and 100.
“This would incrementally grow to a five percentage-point increase if the ratio was 500 or more,” said the PBO.
Statistics Canada created the Canadian Employer-Employee Dynamics Database, and historical data from it was used to estimate the CEO-to-median-employee compensation ratio and the expected increase in the corporate tax rate and tax revenues.
The PBO’s corporate income tax forecast was then used to estimate tax increases. The full methodology can be found here.
What do you think of this plan? Should large corporations pay more tax if their CEOs are paid a lot more than the average employee at their firm?
Let us know your thoughts in the comments.