Robert Reich: We Need to Stop Subsidizing Sky-High CEO Pay

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http://www.alternet.org/economy/stop-subsidizing-sky-high-ceo-pay



Almost everyone knows CEO pay is out of control. It surged 16 percent at big companies last year, and the typical CEO raked in $15.1 million, according to the New York Times.

Meanwhile, the median wage continued to drop, adjusted for inflation.

What’s less well-known is that you and I and other taxpayers are subsidizing this sky-high executive compensation. That’s because corporations deduct it from their income taxes, causing the rest of us to pay more in taxes to make up the difference.

This tax subsidy to corporate executives from the rest of us ought to be one of the first tax expenditures to go, when and if congress turns to reforming the tax code.

We almost got there twenty years ago. When he was campaigning for the presidency, Bill Clinton promised that if elected he’d end the deductibility of executive pay in excess of $1 million.

[Triana]

1. K & R

http://www.democraticunderground.com/10023292710

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2. ...

[Blanks]

3. Give the president a democratic controlled congress. eom

[byeya]

4. I've brought this up several times and am pleased to do so again: Cap the deductibility at

the rate the President of the United States gets.

It's simple, understandable and fair. Should be an easy sell if hammered home.

[Safetykitten]

5. Pissing in the wind. When the head of the country does nothing to rein in corporations, well...

that's about it. Wall Street, big corporations, the HC conglomerates, well, just about everybody knows that this is crime-time and nobody gets caught.

[ProSense]

6. How Bill Clinton Helped Boost CEO Pay

How Bill Clinton Helped Boost CEO Pay

A law he championed to curb compensation has backfired -- and pay packages have exploded

Bill Clinton had what he thought was a great idea to curb the soaring paychecks of the nation's executives. It was 1991, shortly after the launch of his Presidential campaign, and he had just read a best seller on corporate greed by compensation guru Graef Crystal.

Clinton's brainstorm: Use the tax code to curb excessive pay. Companies at the time were allowed to deduct all compensation to top executives. Clinton wanted to permit companies to write off amounts over $1 million only if executives hit specified performance goals. He called Crystal for his thoughts. "Utterly stupid," the consultant says he told the future President.

THE SHAME GAME
Now, 13 years after Clinton's plan became law, the results are clear: It didn't work. Over the law's first decade, average compensation for chief executives at companies in Standard & Poor's 500-stock index soared from $3.7 million to $9.1 million, according to a 2005 Harvard Law School study. The law contains so many obvious loopholes, says Crystal, that "in 10 minutes even Forrest Gump could think up five ways around it."

From the Internal Revenue Service to corporate boardrooms, Clinton's remedy has become the biggest inside joke in the long history of efforts to rein in executive pay. It has allowed companies to take deductions for executive pay tied to goals as vague as "individual achievement of personal commitments" (BellSouth Corp.(BLS ) or improving "customer satisfaction" (Dell Inc. (DELL )). Energy giant AES Corp. (AES ) for a time demanded that its top people maintain a workplace that was "fun."

"We were trying to shame companies into changing their behavior," says former Clinton senior adviser Bruce Reed. "And companies have been shameless in ignoring what we did." Or perhaps just astute in exploiting the flimsiness of Section 162(m) of the IRS code, as the measure is formally known. Reed acknowledges that the Clinton team deliberately watered down the proposal to make it more palatable by, for example, not applying the performance requirement to the award of stock options. Clinton did not return calls for comment.

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Originally posted here http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=3126151&mesg_id=3126783

The original link is dead, but the full piece can be found here: http://www.businessweek.com/stories/2006-11-26/how-bill-clinton-helped-boost-ceo-pay

Report: Federal Defense Contractors Paid Almost Double Obama’s Salary
http://www.democraticunderground.com/10023082217

Obama seeks to limit top pay for federal contractors
http://www.democraticunderground.com/10022927167

[raccoon]

7. rec'd. nt

[Andy823]

8. The big problem

We have the best congress that corporate "MONEY" can buy, so until we get rid of those people who vote the way their corporate masters tell them to, nothing will change.

Congress has to be "changed" if we want real change to happen, and the only way to do that is to get out the voters and fire the clowns that continue to put the welfare of the corporations over that of the people!