A fair way to shrink the wealth gap

Christian Science Monitor ^ | January 24, 2007 | Editorial

[Graybeard58]

Bloated CEO salaries – subsidized by taxpayers – undermine American values. Congress needs to reform the tax code.

The new Democratic-led Congress has already made great strides on its ambitious legislative agenda. From hiking the minimum wage to cutting interest rates on student loans, Democrats have won impressive bipartisan support for their legislative goals.

Not included on the agenda, however, is any proposal designed to address what may be the most fundamental problem facing America right now: an alarmingly high degree of inequality.

Currently the top 10 percent of income earners in the US own 70 percent of the wealth, and the wealthiest 5 percent own more than the bottom 95 percent, according to a Federal Reserve Study. The ratio of average CEO pay to worker pay in the US shot up from a mere 301-to-1 in 2003 to 431-to-1 in 2004. The average CEO now earns $11.8 million per year, versus the paltry $27,460 for the average worker. As America tries to grapple with soaring healthcare costs and lack of universal coverage, UnitedHealth Group CEO William McGuire received an obscene $124.8 million in compensation in 2005. He's just one of many grossly overcompensated kingpins of the US economy.

Adding insult to injury, taxpayers actually subsidize these bloated CEO salaries. The federal government gives tax breaks to corporations for those salaries, to the tune of hundreds of millions, if not billions, of dollars.

We used to call this by another name: the Gilded Age.

Income disparity hurts democracy

The level of inequality and unfairness has risen to such eye-popping levels that it is attracting attention from unlikely sources. Ben Bernanke, Federal Reserve Board chair, has called rising inequality "a concern in the American economy." Mr. Bernanke's esteemed predecessor, Alan Greenspan, has said that disparate income distribution is "not helpful for

[weegee]

Of course George Soros and Bill Gates heavily biased such figures with their OWN bloated salaries.

[decimon]

You may want to lay off the crack pipe.

You're a genius.

A corporation is a legal entity, so it is created by government and gets a liability shield and separate identity from its owners, but that has nothing to do with free market economics.

Nothing to do with free-market economics. Got it.

[Reeses]

the most fundamental problem facing America right now: an alarmingly high degree of inequality.

Our biggest problem is an alarmingly high degree of envy being fanned by the mainstream media, from both inside and outside America. It does not matter that people have multiple cars, computers, TVs, recorders, cell phones, fat reduction exercise equipment, and high tech health care, all better than any billionaire had it just 20 years ago. What matters is 2% of us have bigger numbers sitting on a computer's hard drive somewhere, and they must be destroyed!

I have a hard time believing people will revolt against the rich considering how luxurious poor and middle-class lives are these days. The envious do vote for Democrats to bring down others, and they do join in on mob looting sprees when they come, but excluding their envious torment they have it extremely good.

[HANG THE EXPENSE]

Work harder you sorry assed demorats, thats how you close the gap.

[freedomfiter2]

Why does anyone but the companies shareholders care what the CEO makes??


Because ultimately, every inefficiency lowers everyones standard of living. Of course it's still nobody's business except the shareholders.

[HuntsvilleTxVeteran]

Don't forget the people who can only run 100 yards in 18 seconds and others who can run 100 yards in 10 seconds.
An 18 second runner should get an 8 second head start to make it fair.

[Old North State]

Good Idea. Let's start with wealth equality and let Congress lead the way. No person in Congress can have more than 15 times the wealth of the lowest wealth person working for the government. That's the definition of excessive wealth for people on the government payroll.

[A. Pole]

A corporation is a legal entity, so it is created by government and gets a liability shield and separate identity from its owners, but that has nothing to do with free market economics.

Should the owners be shielded from liability? How one and the same person can have two "separate identities"? Can you have free market without personal responsibility?

The legal construct of corporation is to serve the common public interest. If this plain truth is forgotten it will lead to the erosion, reduction and abolishment of this construct.

[A. Pole]

Why does anyone but the companies shareholders care what the CEO makes??

Because the companies/corporations are a bargain shielding the owners from personal responsibility. If you prevent public interest from looking into corporations, you will sooner or later abolish this shield. Do you really want it to happen?

[Hendrix]

"If government cannot impose tax/redistribution obligations on the rich, should they expect the same government to use its resources in protection of their assets? Should they expect the poor and middle class to risk their lives in defending the country and legal order?"

The government should be neutral and protect everyone's assets, rich and poor alike. The rich are paying taxes, so they should get the same protection as everyone else and they should not have to pay more to get the same protection. Wealth redistribution has nothing to do with that, and if the poor and middle class want to go to work for the government, that is not the fault of the rich. In fact, the poor and middle class are getting exactly what they are getting paid to do. The rich should not be forced into a Marxist wealth redistribution scheme to get the same government protections and benefits as everyone else. I would say you have faulty logic with this premise.

"Clearly, you do not know Marxism. Marxists believed that capitalism is a necessary step on the way to socialism. More free market and inequality, the better."

Clearly you are misrepresenting Marxism. Marxism wanted capitalism to fail and that is why it wanted inequality from capitalism, but what you failed to state is that Marxists want wealth redistribution to make people equal. Everyone knows that wealth redistribution is a Marxist idea. I am surprised you don't know that.

Your tagline is nonsense. Our free market system works and capitalism works every place it has ever been tried. The poor countries that you site are run by corrupt dictators who oppose capitalism.

[Jacquerie]

So what changes to tax law would you make?

[Hendrix]

"Should the owners be shielded from liability?" Absolutely.

The corporation is the one conducting business and thus it is the only one that should be liable for the debts of the business. Corporations serve a vital purpose of pooling capital from lots of people and allowing one entity to use the capital in our free market system.

"How one and the same person can have two "separate identities"? Can you have free market without personal responsibility?"

Again, the corporation has the responsibility, and rightly so because it is performing the business.



"The legal construct of corporation is to serve the common public interest. If this plain truth is forgotten it will lead to the erosion, reduction and abolishment of this construct."

WRONG. The legal construct of the corporation is to make a profit for its owners. It has nothing to do with the common good--that is Marxist language.

[sergeantdave]

"We used to call this by another name: the Gilded Age."

And what you want, Mr. Socialist, we used to call Stalinism.

[Reeses]

All my possessions for a moment of time. - Elizabeth I (1533 - 1603)

It's not fair that some Americans live to 100, are billionaires of time, while some die young. To make life fair the socialists might choose to shoot everyone on their 30th birthday.

[PzLdr]

Income disparity hurts SOCIALISM - and the self esteem of editors incapable of generating more wealth than people they [wrongly] look down on.

[Hendrix]

The Left cannot get it through their heads that socialism is a failed ideology. They hate the fact that they have been proved wrong by history, and they are simply hard headed people who refuse to admit when they are wrong. They refuse to concede that our free market system is superior to what they believe in.

[Puddleglum]

Everyman a millionaire! (to quote John Dos Passos)

[Hendrix]

"Adding insult to injury, taxpayers actually subsidize these bloated CEO salaries. The federal government gives tax breaks to corporations for those salaries, to the tune of hundreds of millions, if not billions, of dollars."

The author of the article is a labor law attorney and it is clear that he does not have a clue about tax law or basic economics. The reasons corporations get a tax deduction for compensation that they pay to employees (including executives) is because the corporation no longer has that money (it paid it out). That compensation is taxed to the person who got it (the employee or executive) instead of the corporation that had to pass it on. This is not a tax subsidy. This guy is a complete idiot when it comes to basic tax law or economics.

[FreedomCalls]

IOW, a significantly smaller group than professional athletes, whose compensation levels are similar and which nobody seems to get upset about.

WTF? People are always complaining about high player salaries. I, and several other people I know, refused to attend any more Rangers games when they decided to pay Alex Rodriguez $252 million over 10 years. We weren't going to subsidize his inflated salary by paying for $4 hotdogs and $6 sodas from our pockets.

[Tarpon]

Where is the inefficiency in CEO pay? Maybe they deserve it ... Or should Steve Joobs take apay cut?

The whole notion that government should decide what people earn I find repulsive.

Now the situation the New York Times has with their two tiered stock that does not give shareholders a say, that needs looking into, or better yet de-list the company.