Bring back the fifties


The most recent issue of the American Prospect (sorry, no link, you can download a PDF version, but only if you subscribe) contains a column by Robert Reich on the increasing disparity in income in this country. He disparages the notion that CEO pay can be reined in by giving more theoretical power to shareholders. He's absolutely right about that. You can give shareholders all the theoretical rights you want, but in reality they exercise virtually no control over major corporations and, as Reich points out, they have little incentive to rein in director pay. I wondered if he would get to what I consider the obvious solution to the problem, and guess what, he did:

The answer is not to grant more rights to shareholders. It’s to enact a far more progressive income tax, including a sharply higher marginal rate on yearly incomes above, say, a measly million,

It really is startlingly simple. I would venture to say that if you graphed the change in the top marginal tax rate against the disparity between the income of the average wage slave and the typical CEO you would find an inverse relation. During the 50s the top marginal tax rate was 91%. That means the CEO with a $40,000,000.00 payout would hand $36,400,000.00 of that to the government. Need I point out that this high tax rate didn't stop the United States from leading the world economically? And, for myself, I'd be quite happy with the leavings. $3.6 million is not a bad chunk of change for a year's work. What is truly amazing is that the very idea of raising taxes on the rich is simply not an acceptable topic of conversation in today's political discourse, when it was an accepted fact of life in what is often caricatured as a stultifying and conservative decade.
Posted: Tuesday - March 27, 2007 at 07:58 PM          

©