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Bill sought to tie corporate tax rate to CEO pay

By WTOP Staff

JUDY LIN
Associated Press

SACRAMENTO, Calif. (AP) — The state Senate on Wednesday rejected a bill that sought to tie California’s corporate tax rate to executive compensation in an effort to address the growing wealth gap.

By a 19-17 vote, lawmakers failed to pass SB1372 by Democratic Sens. Mark DeSaulnier and Loni Hancock.

The bill would have replaced a publicly traded corporation’s current tax rate starting Jan. 1 with one based on a ratio between its top paid employee and the median workers’ salary. Currently, corporations pay 8.84 percent of net income to the state, with banks paying 2 percent more.

The bill proposed reducing the corporate tax rate for any company in which the CEO’s pay is less than 100 times that of the median worker. The lowest tax rate would have been 7 percent for any company whose chief executive is paid less than 25 times the median.

The tax rate for companies in which CEO pay is 100 times more than the median worker’s pay would have gone up on a sliding scale, up to 13 percent for companies that pay their top executive more than 400 times the median.

DeSaulnier, D-Concord, said today’s chief executives are receiving hundreds of times more than the average worker. For example, former Disney CEO Michael Eisner received $750,000 in 1984, which he said was 37.5 times more than a typical worker. Current CEO Robert Iger receives $34.3 million, which is 974 times the median pay.

“This is not to vilify those individuals. They work hard. They are creative. But from a historical standpoint, this is not a sustainable model for us to maintain,” DeSaulnier said before the vote. “Income inequality is a huge threat to California’s economic growth and stability.”

The bill sparked a long debate on the Senate floor. Democrats called it a tax incentive that will motivate corporations to stop providing outrageous salaries to CEOs, while Republicans called it one of the worst ideas this year.

Sen. Steve Knight, R-Palmdale, called the bill un-American and said government should not tell a company what to do. “If we’re going to tell them how much to pay people, we should tell them what to do,” Knight said.

Sen. Hannah-Beth Jackson, D-Santa Barbara, said the majority of Californians are left “fighting for crumbs” while executives have no incentive to give back.

“This is an attempt to recognize that the recovery we’re experiencing today is being felt by the top 1 percent,” Jackson said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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