Compensation Limits = Higher Taxes for Everyone

[Professor S]

It's quite simple. The top 1% make 20x that of the average workers but also pay 40% of the taxes. Lower executive pay to 3-4x that of the average worker, and government revenue plummets while spending increases dramatically, and the hand is forced an tax increases are implemented for everyone.

So... how much do we love our justified rage and class hatred? Enough to screw ourselves? We'll see...

[BreakABone]

I thought Compensation limits were only for companies that accepted TARP and was only until they paid the gov't back.

Wouldn't it motivate said executives to work faster and harder to pay the gov't back?

Or am I missing a step?

[Professor S]

I thought Compensation limits were only for companies that accepted TARP and was only until they paid the gov't back.

Wouldn't it motivate said executives to work faster and harder to pay the gov't back?

Or am I missing a step?

Walking snot ball Barney Frank and others today were talking about making overall limits on compensation. I work from home some days so I have cnbc and Fox business on all day, so I think I have the jump on this.

Even using your case, why would executives be motivated to pay the government back? I'd be motivated to go to another company who didn't have to take TARP funds so I can make more money.

If they make compensation limits for every major corporation, why wouldn't you leave the country for extra millions per year? The top talent from around the world comes to New York for money, not sight seeing. There is no reason why the world's financial system has to flow through wallstreet, and if we hamstring ourselves it can and will move to other nations who are set to compete with us like China and India.

It just seems to me like the West thinks that it will always be in t he position of world economic power, and I think thats a very foolish idea.

[Jason1]

I wouldnt say that is true at all. If there are less people making mega millions, there will be a greater middle class who all pay taxes also.

Fox News reports lies and distorts the truth, they are the bastard children of news networks.

[Fyacin]

I think you are working on the assumption that there is a limited amount of wealth and that if the rich have less, we get a better "share".

[Professor S]

I wouldnt say that is true at all. If there are less people making mega millions, there will be a greater middle class who all pay taxes also.

How does the rich making less equal the middle class making more? And if the middle class is larger only due to the upper class being forced to the middle, thats still an overall drop in American wealth and therefore a drop in taxable income. Once again, the wealthy 1% pay 40% of the taxes, and the working poor pay little to no federal taxes at all. So if you destroy wealth, where does the revenue come from?

What are your feelings about the likely affect on global competition?

Wealth is not based on a old timey brass scale. When you take from one, that doesn't necesarily mean the other gets more, it just means there is less.

And like Fyacin stated, we do not live in a malthusian universe where wealth is static and because someone has more, that mean others have less. Over the last 40 years, wealth has grown for ALL classes in America, rich and poor. The rich grew at 70% the rate of inflation, but the poor grew at 30%. Those are the numbers far left pundits purposely twist when they say the gap in wealth is growing, but that doesn't mean the poor have gotten poorer, it means they haven't grown at the same rate. There is considerable growth and increases in standard of living none the less, and there is an argument that without the growth of the wealthy, the growth of the poor and middle class is impossible. Honestly, Thomas Malthus has to be one of the most damaging intellectuals in human history...

I've never seen a poor person hire anyone. Thats not an insult, as I have been poor, simply a logical statement. The fact is the poor and middle class are beholden to the wealthy for their economic health and career and that simply is not going to change. Even if you nationalized every business, that simply means the wealth that we are beholden to is centralized in the government, and we've all seen how wonderfully they manage things (TARP, Medicare, MediAid, Social Security, the DMV, need I go on?).

In the case of wealth being held by the private sector, we have choices. We can change jobs if we don't like the one we have. We can save and approach investors to start out own businesses to try and become the top 5% that we envy so much. We can go back to school and change directions completely if we like.

If we hand private business decisions to he government, our choice disappears. We have one option, because wealth is controlled by one source. Centralized power isn't just dangerous in the private sector, but it's dangrous in government as well.

But the main reason why we should fear the decisions being made right now is that they are being done in such a way that they are beholden to emotion, and not thought or unintended consequences. Rash decisions often lead to regret, especially when they involve handing government freedoms afforded to the people.

All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse. ~ Benjamin Franklin



Fox News reports lies and distorts the truth, they are the bastard children of news networks.

Not any more than MSNBC, and I said Fox Businesses, not Fox News and I also mentioned CNBC. I consume multiple sources for news, not just one and I certainly don't rely on political campaign promises for news ;). Either way it's irrelevant because my post came from comments made during the live broadcast of the AIG bialout hearings. The words came from the horse's mouth, not some blogger or pundit.

[Bond]

Wouldn't it motivate said executives to work faster and harder to pay the gov't back?

Or am I missing a step?
Maybe... but it seems as though these provisions are being discussed and enacted ex-post, which is not terribly effective in my mind. It's not reasonable to loan money to private companies without stipulations, but then to impose conditions after the money has already been loaned. Perhaps this is a side effect of jamming through the TARP (and such) legislation so quickly.