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What has really gotten out of hand in America is the relationship involving stockholders, business executives and Wall Street. Let's tax this triumvirate of greed in a way that reflects good social policy and reduces the deficit at the same time.
We should allow corporations to pay 50 million dollar bonuses. They can pay one billion dollar bonuses, if they wish to. But, beyond, say, two million in a given year (stock, cash or apple juice), the tax rate would go back to 60 or 70%, taking the kick out of the huge bonus. (This high taxation should not be applied to entertainers or athletes, in the main, because they have a short shelf life.)
When the bonuses are knocked down to size, then the incentive to provide stockholders with big paydays through dividends or selling out the corporation would be greatly reduced. Business could have a chance to go back to the days of building long term value rather than cashing out by whatever means can be devised, including destroying a given corporation.
Once Wall Street came to understand that the days of manipulating half dead companies, stripping them of employees and product lines and then selling for a huge profit were over, they would have to look for other means to make a killing (regulators, take note and be ready). Perhaps the days of "pump and dump" would be over or at least reduced.
In the old days (like 20 yrs. ago), getting rich was enough for people. Now, we are told, they have to be allowed to get super rich because otherwise there is no incentive for risk. Well, I would happily take the chance that returning to an America based on innovation and hard work would be a far better place than one based on speculation, manipulation and quick profits. In such a nation, the recent retirement gift of Craig Dubow from Gannett Newspapers of 31+ million dollars would be seen for what it is: a reward for laying off, cutting back, downsizing and cheating the future.
The basic idea is to break the back of a system that is, in turn, cheapening American values and the long term viability of our economy while, in the process, collecting significant taxes to pay our bills as we go. When you reach that state, last achieved under Bill Clinton, you are in much better condition to address the long term debt of the country. Of course, tax lawyers and clever accountants will be looking for ways around these changes as soon as announced. That’s the American way. The new rules should be written as to make them much more difficult to evade legally.
Instead of retiring with 30 or 40 million in the bank, a CEO would have to make due for his or her remaining years on 10 million. What a hardship. Not too many years ago, the head of Exxon-Mobile retired with a 400 million dollar pay out. Meanwhile. Congress is talking about how much Medicare and Social Security need to be reduced to balance the budget. One portion of our society get more money than they can ever spend while the rest get reduced benefits (which were not so grand to start with). Does this make sense?
Doug Terry, 11.28.11
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