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-- Interesting
Interesting
I don't think this editorial is full of much information, but it might change the tone of some of our favorite celebrity activists...
From the Times today
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| Raise the Price of Fame * E-Mail This * Printer-Friendly By NORMAN R. AUGUSTINE Published: June 16, 2005 FEW people are aware that several years ago Congress, in its wisdom, limited to $1 million the amount of a chief executive's pay that a corporation could annually deduct as a business expense when calculating its income tax. The provision of the legislation, imaginatively titled by ebullient accountants as "Section 162(m)" of the Internal Revenue Code, did permit exceptions - for example, when the pay was "performance-based" and tied to objective goals. Skip to next paragraph Enlarge This Image Adam McCauley Readers Forum: Op-Ed Contributors The government deems the leadership of companies that do business with it to be even less worthy. In fiscal year 2005, companies that, say, provide equipment for the armed forces, are precluded from recovering in the total cost of those products annual compensation for a chief executive over $473,318. (One cannot help but be in awe over the government's ability to decree with such exactitude.) Nonetheless, in this instance Washington may have been on to something. The occasional good chief executive aside, how could anyone defend the extravagant compensation of Bernard J. Ebbers (who pocketed more than $400 million in salary and company-secured loans before WorldCom crashed); Kenneth L. Lay (who received more than $100 million in compensation the year Enron went belly up); or Richard M. Scrushy of HealthSouth ($125 million over five years). Assuming that having Congress seek to influence pay scales in the private sector is good public policy, we must ask ourselves - even recognizing that chief executives are now about as popular as Attorney General Eliot Spitzer at a Business Roundtable picnic - why focus only on chief executives? Why not really increase tax receipts by applying a version of the existing law to superstar athletes, rock stars, movie directors and a few others one might, with a bit of extra effort, be able to conjure up? After all, wouldn't there be some rough justice to the public getting something back from the likes of Jason Giambi and Barry Bonds (both at the center of baseball's steroid storms) with contracts of $120 million for seven years and $90 million for five years, respectively? Or Latrell Sprewell (who choked his basketball coach) at $62 million for five years, or Kobe Bryant (who had rape charges against him dropped) with his new contract at $136 million for seven years? Or Howard Stern (fined by the Federal Communications Commission), who recently signed a $500 million, five-year radio contract? The new legislation could be called the "Robin Hood Tax Act of 2005." How could anyone be against Robin Hood? The beauty of the Robin Hood Act is not what these funds could do for our country, but what our country could do with these funds. The added revenues would not be used to reduce the national debt, modify Social Security, or even pay for premium pork. Rather, they would underwrite just three initiatives: providing merit bonuses for public school teachers, supplementing the wages of nurses working in public hospitals, and increasing the pay and death benefits of America's soldiers serving in combat zones. And best of all, the pain would hardly be noticeable to the big earners involved. As Randy Moss of the Minnesota Vikings put it after being fined $10,000 for pretending to moon Green Bay fans: "Ain't nothing but 10 grand. What's 10 grand to me?" Norman R. Augustine is the retired chairman and chief executive of the Lockheed Martin Corporation. |
If the comparisons were to be made, which I realize the author intends some sarcasm, it would not be taxing the income of the employee, but the employer, so it would be only allowing the Oakland Raiders to deduct say up to $8 million per employee as a business expense even if Moss makes more than that per year, rather than Moss himself being further taxed.
Anyway, what if the rule were that they could deduct for a CEO's salary, say up to 20x the average employee's salary, rather than cap it at $1 million? That would mean successful companies could deduct more and partially help ensure that there would be some proportional scale in comparison to what the company is actually paying for employees as business expenses. If there were no provision in place at all of any sort then it would be quite easy for a CEO who is also an owner to simply greatly overcompensate their own salary as a disguise to shelter company profits from taxation.
Hmm, yea read the op-ed this morning. Good piece.
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| Originally posted by wolverine16 Anyway, what if the rule were that they could deduct for a CEO's salary, say up to 20x the average employee's salary, rather than cap it at $1 million? That would mean successful companies could deduct more and partially help ensure that there would be some proportional scale in comparison to what the company is actually paying for employees as business expenses. If there were no provision in place at all of any sort then it would be quite easy for a CEO who is also an owner to simply greatly overcompensate their own salary as a disguise to shelter company profits from taxation. |
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