Proposal to link corporate taxes with CEO compensation

[Saz]

[exploited]

Your linked article deals with a completely different proposition, and in any case, what you've highlighted is that the Swiss people disagreed with it. Neither point is relevant to mine.

I'm not proposing to cap CEO pay. Did you even read the article. My god.

[Saz]

[Winchester]

The CEOs won't care as long as they get theirs.

[Winchester]

[Spider]

Are we looking to raise wages for the majority or punish those at the top of pyramid? Sounds to me more like this would actually force wages down somewhat in order to cover the extra tax bill. What we'd need is a graduated averaged pay across all the jobs in the company, rather than singling out particular job titles. That just smacks of trying to put someone in their place, rather than improve the lot of the workers.

Take the multiple from the top paid 20% as a ratio against the bottom paid 20%. Set upper management's salaries as a function of what they pay their janitors. The guy in the corner office can only make say 10-15 times more than the guy pushing the broom. If he wants a raise, it comes only by giving the janitor a raise, since his salary is locked at a multiple of his lowest paid employee's. He's still making 10-15 times as much.

[Mr.Bill]

[Stratego]

[Professor]

Not so sure this would have the effect intended. It's a good conversation to have, and this would probably work in some small scale. But, perhaps not for the majority.

Most information from http://www.manta.com/mb

Of the 29 million companies in the US, roughly half are privately held. This means that the CEO is usually also the owner. Or, even if s/he's not called the CEO, s/he acts in that capacity. For these companies, CEO "pay" is not really a salary. The CEO gets all the money that is left over after taxes, payroll, etc. Realistically, a smart CEO will leave some of the net revenue in the company, for growth and safety. But, that's his choice. Technically speaking, the net revenue for a year is all his, whether he chooses to take it or not.

So, if a CEO right now is used to taking $4 million out of net revenue as his "salary", out of a gross revenue of $100 million, what happens when you raise taxes? Well, theoretically, there would be less net revenue left. Perhaps less than the customary $4 million he's used to. Let's say, per the example in the OP, that his $4 million is 100 times the salary of an average worker (who gets $40,000). He'll be paying 8%, which takes $8 million from gross revenue. The incentive is to move him to 25x, which means he's only going to make $1 million, and in return pay only 7% in taxes, or $7 million.

This is why this won't work. You want the CEO to take a $3 million cut in pay, in order to save $1 million in net revenue? It's not going to happen.

(I think I did the math right. Please check me, though.)

[Winchester]