[Congressional Record Volume 145, Number 25 (Thursday, February 11, 1999)]
[Extensions of Remarks]
[Page E211]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       INCOME EQUITY ACT OF 1999

                                 ______
                                 

                         HON. MARTIN OLAV SABO

                              of minnesota

                    in the house of representatives

                      Thursday, February 11, 1999

  Mr. SABO. Mr. Speaker, the American economy continues to grow at a 
remarkable rate and to defy the troubles striking many other parts of 
the world. Yet despite the strength and prosperity of our economy, the 
income gap between rich and poor in this country is still on the rise. 
The benefits of the past 20 years of growth are being shared very 
unevenly--the richest 20% of households now earn as much as everyone 
else in America put together. It was not always this way. In the years 
from the end of World War II through the 1970s, economic growth brought 
with it greater equality. But in the past two decades this progress has 
been reversed, and our country now has a more unequal economy than we 
did in the 1940s.
  As the income gap grows, working Americans are finding it harder to 
make ends meet. The dark secret of the 1990s expansion is that almost 
half of all American families have not seen their incomes return to the 
same purchasing power as they had before the 1990 recession. With so 
many people having stagnant incomes and only a few reaping most of the 
gains from the economy, we risk splitting our society in two.
  Although many forces lie behind the growing inequality of income and 
wealth in America, it is clear that both government and corporate 
America have roles to play in narrowing the gap. For this reason, I am 
introducing the Income Equity Act of 1999. This legislation addresses 
the problem by encouraging corporate responsibility. For too many 
years, the trend in corporate America has been to pay top executives 
lavishly, while thinking of other employees as an expense or not 
thinking of them at all. My legislation will encourage companies to 
take a closer look at how they compensate their employees at both ends 
of the income ladder.
  The Income Equity Act would place a new limit on our government's 
practice of subsidizing excessive executive pay through the tax code. 
My bill would enhance the current $1,000,000 cap on the tax deduction 
for executive compensation with a cap set at 25 times the company's 
lowest full-time salary. For example, if a filing clerk at a firm earns 
$18,000, then any amount of executive salary over $450,000 would no 
longer be tax deductible as a business expense. This bill will not 
restrict the freedom of companies to pay their workers and executives 
as they please. It will send a strong message, however, that in return 
for tax deductions, the American taxpayer expects companies to 
compensate their lowest-paid workers fairly.
  Economic inequality is a problem that will, if not addressed, tear 
apart the fabric of our democratic society. Our government has every 
reason, and every right, to encourage responsible corporate 
citizenship. The Income Equity Act is not the ultimate answer to the 
widening gap between the rich and the poor, but it is an important step 
toward ensuring that all Americans can share in our nation's 
prosperity.




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