PeshakJang
Platinum Member
- Mar 17, 2010
- 2,276
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Think about this. Salary is a pre-tax expense to companies. Thus, it benefits a company to pay the CEO more since it lowers the tax bill for corporate taxes. Since the CEO's tax rate tops out at 35%, the same as the corporate tax rate, there is only benefit to pay the CEO the money. However, if the CEO were to get taxed higher than the corporate tax rate, there is actually no incentive. This is one of the biggest reasons why CEO wages have outstripped worker wages on a multiples basis for the last 3 decades (as the top marginal tax rate declines) and is a huge reason for wealth disparity.
By that argument, wouldn't it benefit the company more to pay the money to it's employees? Why single out the CEO? You say if the tax rate were higher, there would be less incentive for the company to pay the CEO... but since the workers are already taxed in lower brackets, wouldn't it make more sense (for the company) to pay them more, instead of the CEO? (Of course ignoring who is deciding pay outs)
