Bernie Sanders’ tax plan would have cost Apple $1.4 billion last year

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Tim Cook earnings apple
Bernie Sanders thinks Tim Cook — along with many other corporate executives— is overpaid.
Illustration: Ste Smith/Cult of Mac

Presidential candidate Bernie Sanders’ proposed “inequality tax” would punish large businesses that pay their CEOs vastly more than the median wage for employees. Apple is one of those companies.

Tim Cook compared with the average Apple employee

Sanders’ proposal would charge additional taxes to businesses with annual revenue over $100 million in which the chief executive takes in more than 50 times the company’s median salary. As the difference between CEO pay and median pay grows, companies would face additional tax penalties.

According to Apple’s proxy statement filed with the Securities and Exchange Commission, “The 2018 annual total compensation of our CEO was $15,682,219, the 2018 annual total compensation of our median compensated employee was $55,426, and the ratio of these amounts is 283 to 1.”

With CEO Tim Cook making more than 200 times the average employee’s income, the iPhone-maker would have seen a 2% increase in its taxes if the Sanders plan had been in place in 2018. CNBC points out that Apple’s taxable income last year came in at $72.9 billion. That means Sanders’ proposal would have cost Apple $1.4 billion more.

Putting this into perspective: Apple vs. Microsoft

While some might find the difference between Cook’s salary and that of the average employee shocking, consider rival Microsoft’s ratio for some perspective.

Last year, Microsoft paid CEO Satya Nadella $25,843,263 — far more than Cook received — but the disparity between his compensation and the average Microsoft employee was 154 to 1 — far less. This is the result of the company’s median income being $167,689, or more than three times the median Apple salary.

A simple fact lies at the heart of the pay difference between these two businesses. Apple operates nearly five times as many retail stores Microsoft. Therefore, the iPhone-maker employs a much higher percentage of retail workers. Moderately skilled jobs like these just don’t command high salaries.

Bernie Sanders tax plan: Change the system

Cook manages a company that raked in $265.6 billion last year (2.4 times Microsoft’s revenue). And such jobs do command high salaries. While it’s easy to complain that CEOs of large enterprises are overpaid, Cook isn’t an outlier.

Sanders’ goal isn’t to single out Apple, but to increase the pay for average workers — while reining in executive compensation. “It is time to send a message to corporate America,” said the presidential candidate. “If you do not end your greed and corruption, we will end it for you.”