By Colton McAllister, State Politics Reporter

The City of Los Angeles has cleared yet another tax proposal for circulation, this time aimed at companies where the highest-paid employee earns more than fifty times the median worker. Supporters are calling it a fairness measure. Critics are calling it another sign of a political moment that increasingly treats high earners as an endless resource to tap whenever a city runs short on money.

The proposal, known as the Overpaid CEO Tax Ordinance, would add a new layer of business taxes onto any company with at least three hundred employees. It follows LA’s recent “mansion tax,” which has already slowed property sales and pushed some wealthier residents into neighboring cities, according to local business groups.

Aidan Chao, Chairman of the Los Angeles County Taxpayers Association, was blunt in his assessment.

“The CEO tax is nothing more than another punitive tax designed to score political points while ignoring the billions already wasted on homelessness, housing, and broken infrastructure. This initiative will drive out employers, cost jobs, and leave the city with fewer resources to solve the very problems it claims to address.”

Los Angeles is not the only place where this mindset is taking root. On the other side of the country, New York City’s new mayor-elect Zohran Mamdani has campaigned on raising taxes for million-dollar earners and increasing the city’s corporate tax rate to one of the highest in the country. Some New York business leaders have already gone on record saying they will reconsider operating in the city if the tax proposals advance.

And culturally, the tone is shifting as well. High-profile entertainers such as Billie Eilish have begun publicly urging billionaires to give their wealth away, reinforcing a broader “soak the rich” narrative that is spreading through younger progressive circles nationwide.

Supporters of these policies argue that top earners can afford to give more and that increased revenue will pay for expanded public services. Economic researchers offer a more complicated picture. Studies show that while most wealthy residents do not immediately flee a high-tax jurisdiction, a small percentage do, and their absence is felt in long-term revenue declines. Even moderate out-migration can strain cities where a relatively small group of top earners supports a large percentage of overall tax receipts.

California is already experiencing this dynamic. State revenue analysts have noted that a single high-income household relocating can have the same fiscal impact as dozens of middle-income families combined. Los Angeles is no exception. Every employer that leaves takes jobs, income, and long-term stability with it.

This is the concern raised by taxpayer advocates: that these symbolic taxes, while politically popular, distract from the real issues facing urban centers. Cities like Los Angeles continue to struggle with homelessness, housing shortages, regulatory burdens, and some of the highest operating costs in the nation. Adding new taxes may win applause, but it does not address the waste and dysfunction that contribute to the very problems these proposals claim to fix.

Whether the Overpaid CEO Tax makes it onto the ballot remains to be seen. What is clear is that California’s largest cities are embracing a national movement to target high earners in the hope that they will simply adapt and stay. If economists and business leaders are correct, even a small shift in behavior could leave cities with fewer resources and fewer employers at a time when they can least afford it.

For taxpayers and workers across the state, the question is becoming unavoidable: are these policies solving problems, or are they creating new ones?

Photo: Creative Commons / Billie Eilish performing “What Was I Made For?” in Inglewood (Dec 2024); via Wikimedia Commons