I was thinking the other night from the aig thread, and other thread on similar topics, about how businesses managed to survive and hire 'the best of the best' back in the days when top end income was effectively limited by indirect government action through very high marginal tax rates.
Now after the last several months and years, its become pretty apparent that many of these extremely highly paid individuals have done some very poor jobs of managing the long run interests of their investors, and i think most people can agree that the earnings these people made are not what they were actually worth.
first, several observations:
*since the 70's and early 80's, income's have become increasingly unequal, particularly at the extreme high end.
*top board members on average serve shorter terms in their executive roles than was previously the case
*top marginal tax rates have fallen precipitously
back in the day, with much higher tax rates, the extremely highly paid where limited in the amount of income they could earn. To maintain their status, they kept at their job for longer periods of time. income was effectively tied across the board with long term performance of a company, giving clear positive incentives.
Now days, i think we can all agree that much of that long term vision and planning has gone to the wayside. With low tax rates, high income earners are effectively only limited by the amount that their fellow executives will agree to pay each other. In order to justify these extremely high incomes, they need extremely good short term performance, which is most easily obtained by focusing on the short run rather than the long run, and taking risks that are unlikely to hurt in the short run (although they may blow up in 5 years).
basically what i am proposing would be a top tax bracket that starts around 5 million (pretty arbitrary, i know) and would tax at 70+%, with the idea that this would make high income earners work longer, smarter, and better serve the interests of investors.
edit: accidently hit post instead of add poll; poll up
edit2: grammar and spelling and word omissions, etc
Now after the last several months and years, its become pretty apparent that many of these extremely highly paid individuals have done some very poor jobs of managing the long run interests of their investors, and i think most people can agree that the earnings these people made are not what they were actually worth.
first, several observations:
*since the 70's and early 80's, income's have become increasingly unequal, particularly at the extreme high end.
*top board members on average serve shorter terms in their executive roles than was previously the case
*top marginal tax rates have fallen precipitously
back in the day, with much higher tax rates, the extremely highly paid where limited in the amount of income they could earn. To maintain their status, they kept at their job for longer periods of time. income was effectively tied across the board with long term performance of a company, giving clear positive incentives.
Now days, i think we can all agree that much of that long term vision and planning has gone to the wayside. With low tax rates, high income earners are effectively only limited by the amount that their fellow executives will agree to pay each other. In order to justify these extremely high incomes, they need extremely good short term performance, which is most easily obtained by focusing on the short run rather than the long run, and taking risks that are unlikely to hurt in the short run (although they may blow up in 5 years).
basically what i am proposing would be a top tax bracket that starts around 5 million (pretty arbitrary, i know) and would tax at 70+%, with the idea that this would make high income earners work longer, smarter, and better serve the interests of investors.
edit: accidently hit post instead of add poll; poll up
edit2: grammar and spelling and word omissions, etc
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