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 ...
From each, according to his abilities,
to each, according to his needs.
This is inherently misleading. As I understand it, the numbers are based on the S&P 500. So we're talking about the compensation of 500 people out of 300M. IOW, a significantly smaller group than professional athletes, whose compensation levels are similar and which nobody seems to get upset about.
I do believe these guys are overpaid, but that's the concern of those paying them.
"Oddly, however, in this country that was founded at least in part on the principle of equality for all"
The article must be referring to a country other than the US. Perhaps the defunct USSR.
For the record I am against corporate welfare, the same that I am against individual citizend welfare, however the best way to deal with this problem would be to stop considering "corporations as people for tax purposes", and instead to eliminate Corporate taxes infavor of replealing the irs, and then impleminting a FLAT TAX on income.
Actually, this writer has it wrong.
It's not 'equality for all'.
It's 'equal OPPORTUNITY for all'.
Big difference.
Funny, various government agencies--local, county, state, and federal--own an awful lot of land and property in my area.
Stock options here we come!
A cap on wealth would whack George Soros, Teresa Kerry, the whole Kennedy clan, etc. etc.
Can't have that!
But are we rich? BWAHAHAHAHAHA!!!
And if a corporation's shareholders want to spend $X million to hire the best management talent, I should be concerned because ...?
Actually, I thought we capped that at a million dollars back in the 90s. That lead to paying them with stock options, which incentivised them to drive up stock prices, which lead to the dot.com and stock market crash.
What they call "tax breaks" are in this case writing off the cost of labor as a business expense. The corporate executives pay taxes on every dime.
If they took the money away, and paid it to every employee, the corporate tax payment would not change.
There goes another formerly reasoned and credible publication whose "evolved" editorial staff has been through the re-education camps that used to be our great universities.
You would think you were reading "Communist Workers United" instead of CSM.
Sad, and discouraging.
Hey I'm all for this. I can't wait to get my share of Pelosi's vinyards and vacation resort properties and Jane Harman's millions. And as soon as Julia Roberts signs up to do another $20 Million movie I'm so sure I will be getting my fair share. Oh, I do hope I can find something to wear when I get my first check from Barry Zito's new contract. And whatever will I do with all the money I can expect to receive from Michael Moore's next docudrama?
From each according to their means, To each according to their needs.
Why does anyone but the companies shareholders care what the CEO makes??
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.
My BS meter just got pegged by this. IIRC, there is already a $1 limit on deductibility of CEOs, so his examples of salaries in the tens of millions of dollars wouldn't be taxed much more. This author just wants to reduce that to 25 times the minimum pay in the corporation. So if there is one person in the company working full time at minimum wage, then the maximum pay which a company could pay and still count it as a business expense would be $267,800. Anything above that the government will get to tax twice: once at the corporate rate and then once again at the CEO's tax rate. Why not tax it again at the company's bank's tax rate and at the CEO's bank's tax rate?
Limiting the government to taxing income only once was the reason why wages are tax deductible. It was only a flurry of governmental greed which lowered that limit before. Now this chump wants to limit it some more. Just another example of the greedy hand of government.
According to libthink, if you work and pay taxes, you are rich and must give more of your money to the poor, to be distributed by the libs of course.
There used to be a perk called Tuition Reimbursement where Electronic Technicians could upgrade to Engineer by turning their Associates Degrees into Bachelor Degrees. Then Beacon Hill got greedy. They figured by taxing it as income and taking away the business expense deduction that they could squeeze a few more pennies out of us. Instead, Tuition Reimbursement went bye-bye along with the potential tax revenues from higher salaried engineers. It was stupid.
If Social Security is privatize, at least for the working poor, then the money they save in private accounts is theirs and the wealth gap has shrunk.
A RDSA - Rainy Day Savings Account that lumps all SS, medicare, unemployment comp, workers comp, health insurance, etc into one big savings account will close the wealth gap even faster.
Most people who cry about the wealth gap don't want to close it. Then they would have nothing to cry about.
Of course, that is true of other special interest groups on both the left and right. The pro-life movement repeatedly seems to defeat itself. One wonders if they really want to win.
The anti-immigrant movement repeatedly portrays their issue in an unfavorable light. One wonders if they really want to win.
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.
Of course George Soros and Bill Gates heavily biased such figures with their OWN bloated salaries.
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.
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.
Work harder you sorry assed demorats, thats how you close the gap.
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.
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.
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.
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?
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