Tackling education funding and income inequality through policy

In California State Senator Nancy Skinner of Berkeley has proposed a new corporate tax that will raise taxes based on the pay gap between executive staff and their employees.  The additional tax revenue would be used to fund early childhood education and other education programs in the state.  



According to EdSource: "The bill would increase the tax rate for corporations with incomes of more than $10 million from the current rate of 8.84 percent, to anywhere from 10.84 percent to 14.84 percent. Financial institutions with similar high income levels will be subject to an even higher tax — from 12.84 percent to 16.84 percent."

This is an interesting policy proposal.  On the hand if there is vast pay gaps between CEOs and their underlings (as there currently are), then corporations will pay for the inequity in the form of a tax which can provide educational services to more individuals, presumably some that can't afford it.  On the other hand to avoid the tax, corporations could pay their employees more to reduce the inequity.  The state would collect less tax but the wealth would be more evenly distributed making it easier for individuals to pay many education costs.  Furthermore, as California has an income tax, the additional income from higher salaries could be used across the state for education.  

Of course there is the danger that corporations will leave the state in favor for lower corporate tax rates.  While I don't doubt that this is possible, it is unlikely large Silicon Valley companies such as Google, Facebook, and Microsoft are going to abandon the talent concentrated in the San Francisco Bay Area.  

This is likely to be a hypothetical discussion either way.  This is the second time Skinner has proposed the bill. Last year it did not get any traction.  Skinner is betting that the political climate is better this year for such a proposal.  It may be.  Updates will be added to this post as we learn more.