Skip to comments.A fair way to shrink the wealth gap
Posted on 01/24/2007 1:59:36 PM PST by 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
(Excerpt) Read more at csmonitor.com ...
the biggest scam in the tax code - are the low tax rates on unearned income. theresa heinz kerry and the walmart heirs can sit back and collect interest, none of it is subjected to payroll taxes for example. that's how americans with permanent wealth in the US get their money, through unearned and passive income sources. we tax traditional wages too much in the US, and unearned and passive income too little.
You're right. As noted by an article in Fortune, CEO pay hikes have been a product of the Law of Unintended Compensation, which holds that any attempt to reduce compensation has the perverse result of increasing it.
--In 1989, Congress tried to cap golden parachutes by imposing an excise tax on payments above 2.99 times base salary. Result: Companies made 2.99 the new minimum and covered any excise tax for execs.
--In 1992, Congress tried to shame CEOs by requiring better disclosure of their pay. Result: A window into what other CEOs were making, and a competitive game of match and exceed.
--In 1993, Congress declared that salaries over $1 million would be non-tax-exempt. Result: Companies opted for huge stock option grants and effectively adopted $1 million as the universal base compensation rate (well, the universal base compensation rate for about three or four years -- until boredom with peanuts set in).
You can slice it various ways like:
"In 2001 top 5% owned 60% of national wealth, while bottom 60% owned 4%"
One thing to remember that income is very different from wealth. Really wealthy people can get by with ZERO income.
Editorial written by Karl Marx?
I couldn't read past the first idiotic line.
So what? I just want to point out that the same top 10 percent also pays about 70 percent of all federal income taxes.
If you are really (independently) rich you do not need any income/earning.
I'm against egalitarian legislation but I think that FReepers might want to question just what is a corporation and why we still create them. Not the corporation that is a business of great capital created through the issuance of stock but the corporation that is chartered by government under special laws.
No, I am not expert in these matters but I do recall something of the history of what we call corporations.
Exactly! eye-popping? wtf! America is unique in that there are people of ALL income groups. There is not the ultra-billionaires and the poverty stricken only. If you go to where the super-rich have 20 million dollar mansions, next to them may be "smaller" 5 million dollar mansions, if you drive further out, you can see homes in all price ranges. you don't see shacks next to the ultra mansions. The CSM editor has his head up his puckered, hypocritcal ass. How much money does HE make? I'll bet you that its a hell of a lot more than the "lowly" 27K that the "average person makes. I'll take a wild guess, that whatever it is, even 300K/yr. he doesn't consider himself "rich". Only people who make more than him are greedy, but he makes an amount that is "just right".
I even have more suggestions.
1. All lawmakers cannot make more than 25 times the lowest paid voter.
2. All Hollywood movie actors cannot make more than 25 times the lowest paid worker on the set.
3. All musicians cannot make more than 25 times the janitor cleaning up the studio.
Once we stop these people from exploiting the lowest paid workers with their huge salaries, then we can move on to people who actually do something productive.
You sure? Corporations, as constituted, are a creation of government.
We need free-er markets. Not more government interference. The key to helping the plight of the poor is to allow the markets to create more rich people. You don't punish success and you don't reward failure.
"You sure? Corporations, as constituted, are a creation of government."
You may want to lay off the crack pipe. You obviously don't know what you are talking about. What does the fact that corporations are a creation of government have to do with the fact that we have a free market economy? 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.
We've always had problems too...
However, free markets work better than managed economies. The "manager" always manages to screw some fundamental up that causes problems later on.
We still have a free market economy; although, there is a lot of government intervention in our economy so you are correct that it is looking more like some mix of socialism (Welfare State). It is not pure capitalism, but it is an economy based on free market capitalism with too much government intervention from the Left.
Shouldn't it work both ways? 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?
That is only a concern for Marxist governments that do not believe in free market capitalism.
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.
Marxists were opposed to the compromises like redistribution, trade-unionism and national solidarity between classes. They wanted to HASTEN the revolution and not to prevent or delay it.
Tell me, where the chance for Communist revolution is greater, in a stratified Latin American country with great contrasts between the poverty and wealth, or in egalitarian Scandinavia? Read my tagline.