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 20 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.
Once in office, though, his economic advisers urged him to modify his pledge to allow corporations to deduct executive pay in excess of $1 million if the pay was linked to corporate performance – that is,
The SEC is dragging its feet implementing a section of the Dodd-Frank reform that would require publicly traded companies to calculate the ratio between the CEO’s pay and that of the firm’s median pay package. The New York Times editorial board urges them to push forward.
Corporate lobbyists say it’s too complicated to figure out the math. They figured out how to create uber-complex financial products that untangled the global economy, but aren’t able to divide the CEO’s earnings (they must know) by the median employee pay?
Of course, the real reason they oppose the law is that they don’t want to add fire to the public debate about excessive CEO salaries – certainly while the rest of America struggles to pay bills, put kids through college and afford mortgage payments. Obscurity, not transparency, benefits the privileged.
Their opposition to useful information for investors and consumers is a replay of earlier legislative battles.