yllus
Elite Member & Lifer
- Aug 20, 2000
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That's pretty nonsensical if you stop to think about it and hold any belief in the free market system.
As a society it's pretty clear that we value entertainment - the laughter and joy we can pack into life - above all other things, so the payout we're willing to make to our entertainers is reflected by that. Not to mention that following the "things which are purely entertainment" thread to up tax revenue would mean the decline of pay for a hell of a lot more jobs than just the actors on stage and players on a field.
Pretty much but in some cases you don't have many (sometimes any) options - utilities for example. Also cable, internet, land line phone, etc are usually restricted to carrier based on location.
I would give a pass to actors and sports players. They often have a limited amount of time while they are still young hot hip or popular when they can make the big bucks. There are some exceptions, but those are far and few between. In any sporting even a sports career could end forever. There is a narrow time during which sports players are in their prime.
As far as CEO's are concerned there are thousands of people capable of doing the job. They also sit on each other's boards and vote each other big bonuses.
As far as CEO's are concerned there are thousands of people capable of doing the job. They also sit on each other's boards and vote each other big bonuses.
Athletes generate tangible value. There's nothing wrong from making money at something that millions of people watch.
At least they're the ones who are going to get their asshole reamed by Obama in a couple years.
did you read?
let me go through it again, perhaps you will understand better
its all a matter of incentives, what is the motivation of the individual. What we have been seeing for quite a few years now is a trend to executives working shorter careers and making much much more money. In general, these ceos have been making decisions to maximize short run profits while nuking the long run prospects of their given companies. Basically the best strategy for a ceo today is to max out their profits for a few years, collect their enormous bonus, and retire to whereever they retire to.
alternatively, my proposition here is that if you soft cap their pay, in order to stay wealthy, they will have to stay on and work longer, and think about the long term health of their companies, so they can keep their job.
to address your last point, i covered capital gains and dividend interest in the op.
anyways, empirical evidence generally shows that in the low term, when you cut taxes, people work less, because they need to work less to reach a given income. Obviously at a high enough rate, people will drop out of the economy, but that tax point, even for low income earners, is pretty damn high. Its an obvious conclusion, yet so many people are willfully ignorant to it.
blackangst1
Lifer
- Feb 23, 2005
- 22,902
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utilities are natural monopolies, the government just chooses to regulate them, and for good reason.
we might have been reading different thread, but the initial suggestion was the we tax acgtors/athletes, etc at a much higher rate simple because of their profession (fear no evil's post) then other people said that was dumb and one guy pointed out that athletes in particular often have limited career lengths.
There's a huge difference between taxing some Fortune 1000 CEO who doesn't do shit and got there because he was good at sucking pole and didn't build the company and someone who built a company from ground up. I wouldn't be against taxing a non-founding CEO at a very high rate and lowering entrepreneur CEOs rates down to nil.
That made more sense to me than your initial post.
But I dont agree it will work as you think. You will still get the short term thinking because the majority of these guys are paid with stock. And I dont think they will work harder because they make less money via higher taxation. They may work longer but that doesnt mean it will be better work.
I also dont think there is a huge flight of executives to retiremet where we need to enact tax law in an attempt to make them work longer. I dont know many executives who are below the age of 40. With most of them in the 50+ range. They are putting in the longevity you desire.
And you cant really put a stop to people changing jobs. We have a lot more mobility in this economy than the economy from 40-60 years ago. People have the ability to move jobs. From the exec down to the lowest grunt.
I think the best way to curb the short term thinking is for boards to put limitations on stock options that have them mature years out instead of being immediately saleable.
As for the drop in employment. It could be a coincidence since tax cuts seem to correspond with recessions for the past 30 years.
It's worse than that (and the next year it was 22%, btw) - while their share of income was 22%, their share of wealth is 50%. This reflects the effect of long-term accumulation - how the wealthy can own more and more, while people who make less spend more of their income (and thereby transfer it to the wealthy who add it to the pile).
That's a big flaw in PJ's point: when he talks about the percent of income taxes paid by the top 1% going up, he seems to think that's a good thing as they pay a larger share. But what does it really indicate? That they are earning more and more of the income, and we have an increasing concentration of wealth.
When everyone is doing better - a stronger middle class - the top 1% pays a smaller percentage of all income tax. That's a good thing for society.
So, he's actually disproven his own point.
But there's another flaw as well - he claimed that raising the top rate makes the people stop producing because "all" of their income goes to taxes.
When the top rate was 70% the top 1% paid 'only' 19% of taxes, while with the top rate cut almost in half, they paid twice that percentage.
So, his argument really shows no problem with the wealthy being overtaxed when the top rate is increased:
Take it back to 70%, and watch the top 1% pay only 19% of taxes.
Sounds good.
Here is a NY Times article with more numbers, titled "Income Gap Is Widening, Data Shows".
Here is a link to a useful chart in the article, showing how the share at the top is increasing back to levels last seen just before the Great Depression. Note how the percent of income to the bottom 90% was stable for decades, and began the downward trend when Reagan came into office, the end of the FDR-Carter 'liberal' period.
Another interesting issue the articlee mentions, that I've discussed:
Fern
Elite Member
- Sep 30, 2003
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The portion below looked to me to be the 'core' of your position. If so I must disagree with it.
^I was working in the tax profession back then, the top individual rate was 70% but the top rate on wage type income was capped at 50%.
But know also that corporate rates were high and wages are deductible, so that induces the company to pay higher wages since it is essentially subsidized by the federal government vis-a-vis the income tax deduction.
Back then companies were generally much smaller than now. Today's corporations are (international) behemoths compared to back then. So, some increase in exec comp is warrented. IDK how much though (that's a different topic anyway).
You can't cap their pay. Higher rates are presently a somewhat ineffective tool anyway as most of their compensation is from (qualified) stock options and thus treated like capital gains anyway (it won't look like wages on their tax return).
Anyway, I've personally known/worked for these type people, they are driven by a lot more than money. A lot of them have so much they really can't use more. I felt they were mostly driven by power, stastus and things like that. So, I don't believe too many are quitting because they are rich enough; they're getting fired because the BoD thinks they need a new direction, a fresh approach etc.
Things change more quickly these days, and it's harder for them to keep up. Things are just too dynamic. When a new CEO is hired they usually have a specific mission, likley they get it accomplished in 3 - 6 years and then the next one comes in (there are exceptions like Jack Welsh who was at GE)
So no, rarely does one wanna leave and lose all that power and those perks. I remember when John Akers was booted out at IBM, he was devastated because they kicked him out of the Augusta national Country Club for losing his CEO and Chairman of the Board status. Lot of perks and status in being a CEO, not so much hanging around with your wife when retired.
Fern
well i agree, there are other options for encouraging long term good decision making.
as far lower taxes leading to people working less, lets go through this quick:
people have a basic tradeoff in life between enjoying life and working.
people of course have to maintain the basics; such as food, clothes, rent, etc, stuff beyond that can be spend on better food, housing, trips to whereever, prostitutes, or whatever. Here you have the choice between how much stuff you want and how much time you want to enjoy it. Look at this at a choice made over the course of a lifetime.
now if the government cuts taxes, an individual can have more stuff and have more time to enjoy it in. (again, think over the course of a lifetime)
now if you have a temporary tax cut, that people know is temporary, people will respond by working more in that time frame and less later on.
neoclassical model
fairly decent representation of the raw economics of it
of course what is best involves alot of value and goal judgements. are we trying to maximize tax revenue and gdp? is people working more a good thing or bad thing? and so forth
Originally posted by: Fern
The portion below looked to me to be the 'core' of your position. If so I must disagree with it.
^I was working in the tax profession back then, the top individual rate was 70% but the top rate on wage type income was capped at 50%.
But know also that corporate rates were high and wages are deductible, so that induces the company to pay higher wages since it is essentially subsidized by the federal government vis-a-vis the income tax deduction.
Back then companies were generally much smaller than now. Today's corporations are (international) behemoths compared to back then. So, some increase in exec comp is warrented. IDK how much though (that's a different topic anyway).
You can't cap their pay. Higher rates are presently a somewhat ineffective tool anyway as most of their compensation is from (qualified) stock options and thus treated like capital gains anyway (it won't look like wages on their tax return).
Anyway, I've personally known/worked for these type people, they are driven by a lot more than money. A lot of them have so much they really can't use more. I felt they were mostly driven by power, stastus and things like that. So, I don't believe too many are quitting because they are rich enough; they're getting fired because the BoD thinks they need a new direction, a fresh approach etc.
Things change more quickly these days, and it's harder for them to keep up. Things are just too dynamic. When a new CEO is hired they usually have a specific mission, likley they get it accomplished in 3 - 6 years and then the next one comes in (there are exceptions like Jack Welsh who was at GE)
So no, rarely does one wanna leave and lose all that power and those perks. I remember when John Akers was booted out at IBM, he was devastated because they kicked him out of the Augusta national Country Club for losing his CEO and Chairman of the Board status. Lot of perks and status in being a CEO, not so much hanging around with your wife when retired.
Fern
this is the kind of post i was looking for.
edit: ok i've dwelled on this for a few minutes, and the bolded part is what i'm going to address.
Lets assume that your are of the portion of the people in the thread who thinking severe inequality is bad. If you tax these people at a higher rate, by this argument, the efforts of these people won't be severely effected, and you will be able to tax them more to help mitigate the trend toward inequality, either by the government simply taking more of their money or them just choosing to have less income. (keep in mind that in the op i did talking about addressing dividend income, capital gains, etc)
if you are looking for more revenue for government, then i think you have succeeded in determining who is best to tax
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
- 106
Originally posted by: miketheidiot
this is the kind of post i was looking for.
edit: ok i've dwelled on this for a few minutes, and the bolded part is what i'm going to address.
Lets assume that your are of the portion of the people in the thread who thinking severe inequality is bad. If you tax these people at a higher rate, by this argument, the efforts of these people won't be severely effected, and you will be able to tax them more to help mitigate the trend toward inequality, either by the government simply taking more of their money or them just choosing to have less income. (keep in mind that in the op i did talking about addressing dividend income, capital gains, etc)
if you are looking for more revenue for government, then i think you have succeeded in determining who is best to tax
Yeah, I can agree with you there.
I'm another not apposed to a new higher bracket on the really high earners.
I also think the stock option provision is being abused. OK, give some amount beneficial treatment, but millions and milions of dollars worth? That's excessive IMO. I'd modify it as well as a few other things to increase tax on some of these enormous bennies.
Just got to remember when increasing taxes on this group, you better think about it thoroughly. They've got a lot professional help (tax lawyers and CPA's) and far more flexibility than others to control when things are taxed. Better close the loopholes or they'll get away with very little increase in taxes.
Fern
Originally posted by: Fern
Originally posted by: miketheidiot
this is the kind of post i was looking for.
edit: ok i've dwelled on this for a few minutes, and the bolded part is what i'm going to address.
Lets assume that your are of the portion of the people in the thread who thinking severe inequality is bad. If you tax these people at a higher rate, by this argument, the efforts of these people won't be severely effected, and you will be able to tax them more to help mitigate the trend toward inequality, either by the government simply taking more of their money or them just choosing to have less income. (keep in mind that in the op i did talking about addressing dividend income, capital gains, etc)
if you are looking for more revenue for government, then i think you have succeeded in determining who is best to tax
Yeah, I can agree with you there.
I'm another not apposed to a new higher bracket on the really high earners.
I also think the stock option provision is being abused. OK, give some amount beneficial treatment, but millions and milions of dollars worth? That's excessive IMO. I'd modify it as well as a few other things to increase tax on some of these enormous bennies.
Jusr got to remember when increasing taxes on this group, you better think about it thoroughly. They've got a lot professional help (tax lawyers and CPA's) and far more flexibility than others to control when things are taxed. Better close the loopholes or they'll get away with very little increase in taxes.
Fern
Fern
if i remember correctly, clearing up loopholes worked pretty well in the 80's, ofc that was well before my time.
Fern
Elite Member
- Sep 30, 2003
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Yeah, they cleaned up a lot of stuff.
Oddly enough, these stock option rules were created when they did the clean-up in 1986.
But back then the stock market wasn't as 'retail' now. Unfortunately, when they created the stock option rules they didn't put the kind of limitations in I have in mind. I guess they didn't figure on execs getting 10's of millions of dollars worth each year back then.
Also, the cap gain rates weren't as favorable.
Fern
Oddly enough, these stock option rules were created when they did the clean-up in 1986.
But back then the stock market wasn't as 'retail' now. Unfortunately, when they created the stock option rules they didn't put the kind of limitations in I have in mind. I guess they didn't figure on execs getting 10's of millions of dollars worth each year back then.
Also, the cap gain rates weren't as favorable.
Fern
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