Congresswoman Barbara Lee Introduces Income Equity Act
For Immediate Release
March 20, 2009
Contact: Nicole Y. Williams
(202) 225-2661
Washington, D.C. – This week, Congresswoman Barbara Lee (D-CA) introduced the Income Equity Act which would limit the tax deductibility of executive compensation packages. The tax code already limits the deductibility of wage income at $1 million, which is exactly why complex compensation packages of stock options, housing allowances, cars and drivers and private planes have risen dramatically. This legislation seeks to close the loophole that allows companies to abuse the tax system and forces taxpayers to subsidize these excessive forms of compensation.
This bill will include a broader definition of executive compensation and limit the deductibility of that compensation to the greater of $500,000 or 25 times the pay of the lowest wage worker. This would discourage the skyrocketing pay at the top and encourage companies to raise the pay of workers at the bottom.
“The financial crisis has brought bailouts of the banks, the auto companies and the single largest $170 billion bailout of the world’s largest insurance company, AIG,” said Congresswoman Lee. “While the banks and the car companies have had to agree to reasonable restraints on their executive compensation, AIG continues to pay out huge bonuses to the very division that drove the entire company into ruin.
“This crisis has made some things crystal clear, markets don’t regulate themselves and we need to end taxpayer subsidies of out of control executive compensation packages.
“Let’s be clear, limiting the tax deductibility of these out of control pay packages does not stop any company from compensating their executives any amount they choose, it simply limits their tax deductibility. We shouldn’t be allowing excessive compensation, which is more than 25 times that of the lowest paid workers at the company, to be deducted. American taxpayers should not be bearing the burden of excessive pay packages.”
# # #