How in the world are companies supposed to streamline risk factor disclosures when they are constantly faced with new problems and dilemmas, many of which affect the bottom line?

An argument against the Securities and Exchange Commission’s controversial “pay ratio” rule is that it is yet another example of activist campaigns wedging into a disclosure regime that, ideally, is predicated upon materiality.

The argument—and it is a good one—is that SEC rulemaking should focus on materiality through the eyes of an average investor. Drawing that line is often easier said than done. The “conflict minerals” rule—mandated supply chain due diligence for certain materials mined in the war-torn Congo—is often bemoaned as a political matter that similarly found its way into the regime. That rule, however, raises an interesting argument in terms of risk. Proponents, and it isn’t easy to argue with the logic, pitch the effort as one that does resonate with some investors. A supply chain at risk in a politically unstable region could indeed have a negative drag on company operations.

Of course, most merely want to further their cause with a “name and shame” strategy to bend corporate policies to their ideal. Nevertheless, at least there is a debate to be had.

The argument is a lot harder to make for the pay ratio rule, a requirement to disclose CEO pay as a ratio to the pay of a company’s median employee. Companies will begin reporting the data for tax years beginning in January 2017.

The rule, fueled by public outrage over massive executive pay packages, is a godsend for both the media and union negotiators. But is the information material? It may not be, by a strict and traditional definition, but it is a lot closer now.

On Dec. 7, Portland, Ore., became the first state to, quoting a press release, “use the tax code to address the phenomenon of outrageous CEO pay.” The City Council passed an ordinance, sponsored by City Commissioner Steve Novick, that requires publicly traded corporations to pay a surtax if they pay their CEO more than 100 times their median worker.

“When I first read about the idea of applying a higher tax rate to companies with extreme ratios of CEO pay to typical worker pay, I thought it was a fascinating idea—the closest thing I’d seen to a tax on inequality itself,” Novick said in a statement.

He added: “Extreme economic inequality is—next to global warming—the biggest problem we have in our society. The top 1 percent and, especially, the top one-tenth of one percent, have a far larger share of wealth and income than they did forty years ago.”

The surtax is expected to generate an estimated $2.5 million to $3.5 million per year. Portland’s Revenue Bureau has identified more than 500 publicly traded firms that do business in the city and therefore will be subject to the tax if their CEO-worker pay ratios are above 100-to-1. The list includes major corporations “known for sky-high CEO pay,” as the press release puts it, including Wells Fargo, Walmart, and General Electric.

Portland will base its tax on SEC filings (no word yet on what will happen if the Trump Administration pushes through a repeal).

They say that elections have consequences; so do regulations. In the case of the pay ratio rule, the development in Portland is a bad scenario made worse in the eyes of many CEOs and their teams.

They say that elections have consequences; so do regulations. In the case of the pay ratio rule, the development in Portland is a bad scenario made worse in the eyes of many CEOs and their teams.

Oh yeah, it may get worse. California, New Jersey, and Rhode Island are among the states considering a similar idea. The former state took a unique approach to the issue with a bill that failed to pass: It proposed tax breaks for companies where the CEO was paid less than 100 times above the median worker. Carrot, meet stick.

Although not based on the SEC’s pay ratio data, Philadelphia and Columbus, OH, are among cities that impose business-income taxes.

We may never see a similar demand in “red” states like Texas, but don’t be surprised if executive pay-based taxes catch on in many other states and municipalities across the nation.

Brace yourself. The tax debate has also gone national.

Congressman Mark DeSaulnier (D-Calif.) has introduced the “CEO Accountability and Responsibility Act,” a bill that would adjust the income tax rate of publicly traded corporations based on the ratio of compensation of their highest paid employee to the median compensation of all employees.

The proposed formula includes tax rate discounts for low pay ratios, escalating up to a 3 percent corporate surtax for ratios exceeding 400-to-1.

The good news for companies, maybe, is that executive pay may not be as outsized as critics claim (although dipping below the 100-to-1 ratio may not be common).

A September study by the global business consultancy Mercer found that CEO-to-median-employee pay ratios are expected to be less than 200-to-1 at the majority of surveyed companies that have already estimated a ratio. These estimates are lower than the 300-to-1 ratios frequently publicized by supporters of the SEC’s pay ratio rule.

“While the ratio may still seem significant to some, it is not as high as many might think,” says Gregg Passin, senior partner and North America leader of Mercer’s executive rewards business. “Supporters of pay ratio disclosure that hope it will pressure companies to reduce CEO pay may be disappointed to learn that banking/financial services companies, often criticized for excessive pay, have lower ratios than most other industries.”

The big picture, beyond the pay ratio rule itself, is that “name and shame” campaigns are no longer going to be limited to, or focused on, reputational risk alone. The new target looks like it might be your bottom line.