Unless you're a Chief Executive Officer yourself, you probably think corporate Chief Executive Officers, in this country anyway, are overpaid to an extent previously seen only in sports figures and rappers, and you might even be right. But the process is more or less self-reinforcing: all these guys sit on each other's boards, and they vote more money for each other every time.

Elderbear has a proposal:

Revise the tax code. No business may deduct compensation in excess of 10 times that paid to the lowest paid worker on their federal taxes. Again, include the value of total compensation packages, bonuses, 401-K matching funds, etc. When work is outsourced, include the outsourced workers in the calculation. Thus, if Sweatshops-R-Us outsources the majority of its labor to Vietnam, no salary paid in the US may be deducted beyond the portion that exceeds 10 times the wage paid to Vietnamese laborers. In cases where workers toil beyond 40 hours, use a 40-hour week as a basis.

This gives corporations the freedom to pay their executives what they will, it gives them the freedom to seek out the cheapest labor markets, too. But it gives executives incentive to take better care of their workers, without dropping into a centralized, socialist, redistribution of wealth plan.

Hmmm. I have a certain antipathy to tweaking the tax code for some nebulous public good, but he may be on to something here. Given corporate antipathy toward taxation in general, it might even work to some extent.

Still, one thing bothers me. Corporate income taxes don't actually get paid by the corporation anyway: they are simply added to the price of whatever goods or services are being offered. Some preachers on the supply side have argued that this is a good reason to abandon the corporate income tax altogether.

Under current tax law, an employee isn't an asset: he's an expense. Is it any wonder that employees are so often given short shrift, sometimes even no shrift at all? So long as I'm nothing more than an expense, the corporation has no incentive to give me any better consideration than it does a case of copy paper or a tank of diesel fuel. So the solution may lie, not in restructuring the tax, but in getting rid of it altogether, which will have the additional salutary effect of making it impossible for Congress to hand out tax breaks as quid for whatever quo they can wheedle out of America's boardrooms. The CEO may still be overpaid, but at least he won't be pissing away the company's cash on tax-avoidance schemes.

The Vent

9 March 2004

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