Companies and their general counsel are closely following a newPortland, Oregon, tax that is based on the pay disparity betweenCEOs and average workers. This week Portland becamethe first in the U.S. to impose such a tax on about 550businesses, but it could spread to other cities.

The contentious tax idea hits at a time when companies arealready gearing up to comply with the U.S. Securities and ExchangeCommission's pay ratio disclosure rules that go into effect on Jan.1. Portland will base its tax on the numbers filed with theSEC.

Michael Stevens, a partner in Alston & Bird's employeebenefits and executive compensation group in Atlanta, says the taxis largely symbolic. “It's a sort of sin tax like those oncigarettes, alcohol and other behaviors the government wants todiscourage. Portland wants to discourage pay inequality,” heexplains.