I wrote earlier this year that I could accept a tax hike if there was a deal that actually resulted in a permanent reduction in the burden of government spending.
In reality, however, we will never get an acceptable deal. Instead, the politicians want us to accept deeply flawed packages like the Simpson-Bowles tax-hike.
But maybe I have to moderate my views. When a group of people loudly say we need higher taxes, then perhaps we should agree. But since they’re the ones saying taxes should go up, we should stick them with the tax hike.
Glenn Reynolds, the Instapundit, has been suggesting that it’s time to repeal the Hollywood tax cuts. After all, that crowd is always pontificating for statism. So let them put their money where their mouths are.
I’m thinking of a different group. Based on their penchant for supporting tax hikes, maybe it’s time to raise taxes on corporate executives. Here are some relevant blurbs from a Wall Street Journal story.
A coalition of anti-deficit groups has tapped businesses and foundations and raised more than $29 million… They are planning to run “fix the debt” ads after the election. …And they are building a roster of big-company chief executives, thus far numbering about 70. These executives are alarmed by the degree of dysfunction in Washington and have pledged to speak out about the urgency of addressing deficits… The “fix the debt” campaign, as it is called, is coordinated by deficit worrywarts in Washington… The effect that CEOs have on Congress depends on who they are and what they actually do. Former Sen. Sam Nunn (D., Ga.), who is leading a group of retired congressmen to build support for a deficit deal, says Democrats need CEOs to organize grass-roots support for a deficit compromise among their workers. And Republicans need business cover for agreeing to raise taxes in exchange for restraints on the growth of health-care spending. CEOs enlisting in the fix-the-debt campaign see no alternative to both cutting benefit spending and raising taxes, despite campaign rhetoric to the contrary. “It’s going to entail sacrifice by every American, every company, every entity,” says Mr. Oberhelman. “I, for one, believe that revenue has to increase. I think every American would pay more if they thought spending was going to be cut and the budget brought to balance.”
At the risk of disagreeing with Mr. Oberhelman, it goes without saying that higher taxes will lead to more spending rather than less.
Corporate executives probably understand tax hikes don’t work, but they want to “play ball” with the politicians – probably because many of them are crony capitalists.
But regardless of their motives, the obvious response is to ask them to cough up some of their cash.
A hike in the corporate income tax wouldn’t be the right approach, though, since that would penalize shareholders, workers, and consumers.
Increasing personal income tax rates also would be the wrong approach since that would punish every successful person, not just wayward corporate executives.
I’m guessing that the best approach is to impose a special excise tax on the fringe benefits and salaries of CEOs at publicly traded companies.
True, that will also punish corporate executives who aren’t guilty of sucking up to the political class, but that will have a positive impact in that the good CEOs will pressure the statist CEOs to stop being suck-up a$$holes.
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If anyone is looking for a way to boost tax revenues, look boosting the payout requirement of tax exempt foundations. Presently, these entities only have to pay out 5% of their assets each year. Because competent portfolio managers can normally earn more than that, foundations have eternal life to muck around in our body politic and agitate for any cause, mostly leftist.
If the payout was boosted to, say, 7.5%, it would flush a lot more money out into the normal (taxable) economy. This is not chicken feed because foundations may hold over 4% of our GDP in their asset portfolios.
Foundations have self-sustaining boards, they don’t have any shareholders to vote in new management policies and they don’t have any customers who can boycott them. Unless we bring mortality to tax-exempt foundations, we will have the Soros, Ford and Tides foundations with us until the end of time.
Really want to shut the limolibs up? A 1% annual excise tax on all assets over $1,000,000. Applies to individuals, and corporation, both for-profit and non-profit. Harvard has a $30,000,000,000 endowment? That’ll be $300,000,000 please. And again, next year.
And if they still don’t think the government is spending enough, we can crank it up to 1.5% or 2% or whatever it takes to shut them up.
[…] LIKE A GOOD ARGUMENT FOR DAN MITCHELL’S PROPOSED EXCISE TAX ON CEO PAY — Corporate CEOs: Raise Taxes on Top 2%. Also, income from the exercise of stock options […]
[…] receipts. That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax […]
[…] That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax […]
Don’t forget the 99% private jet tax.
[…] Dan and I brainstorm on tax increases the Republicans should get behind. I like his proposal for an excise tax on CEO salaries, since so many of them seem to think we’re […]
Wow, little departure from your normal post… Thanks for sharing your thoughts on this.
At some point, with mandatory collectivism on the march and collective top down management of the economy as the new hope for American prosperity (recycled from history’s dustbin of failed hopes) and their fates more and more determined by the pitchforks, CEOs have to capitulate and go along, shifting their abilities to managing cronyism in order to survive in relative success during the last few years of the once great empire of individual freedom – the declining years.
It is tempting to despise them and to sacrifice the ones that do not participate in this scheme in order to get revenge. However, that is very close to what I would call “revenge regulation, or revenge mandates”, you know, “you banned my gun, I get back to you by banning your marriage – even if it does not really bother me who you marry – I just get revenge” sort of thing. But that is one of the great unrecognized components of descent into serfdom, so it may be better to refrain from such tactics.
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But, more generally, in the end, how much money do these CEOs and the other “rich” have?
Taxes could be raised to French levels for all the rich. Then, even if we ignore Laffer Curve effects, that would raise how much really? Two, three thousand dollars per capita for the American middle and lower class? To be used presumably for redistribution through the efficient channels of government?
I have not done a back of the envelope calculation lately, but the sums raised when distributed to the entire population (even if, as I said, we assume a liberal’s dream Laffer Curve – a perfect 1:1 straight line) are not that great. But the bigger question is: “And then what?” What happens then to America? Once we have flattened the effort reward curves for those who will make the most exceptional contributions to revolutionizing human living for generations to come, and we have given another ten thousand dollars per year per family across the land, then what?
The average American family is in the top 20% of worldwide prosperity. Another 10k per year in redistribution money may bump it in the top 17%. Is this what is all about? Are there indeed studies that put the threshold of happiness to being between the top 20% and top 17% of worldwide prosperity? Once that happens, is the American middle and lower class going to stop asking for more fund transfers from the common pool of funds? Are they going to say, “ok we have gone from the top 20% in world prosperity to the more exclusive 17%, that’s enough now”.
And what would you have done? You would have then, in one stroke, erased most of the economic freedom and motivation to produce advantage that America holds over the rest of the world, and have consigned yourselves to European like growth trendlines of one to two percent annual growth, against the backdrop of a much bigger world that is rising along a five percent annual growth trendline. You would have thus consigned yourselves to a trajectory of cultural convergence to the rest of the world – and decline.
But the majority seems poised to take. Why? Because they can! It’s just as simple as that. So whether in one stroke or in installments, this trajectory of cultural convergence and decline is where you are finally headed. It may have taken two hundred years for America to exhaust its initial serendipitous windfall of individual freedom, but the advantage is now finally exhausted. It is everywhere! In the way Americans and TV networks talk, in the economic freedom rankings, the evidence of convergence is everywhere. You are now in the throes of the final chapter of convergence towards averagedom – decline to worldwide averagedom. The margin of any remaining advantage to the rest of the world is now too thin to prevent entry into the vicious cycle of decline-desperation-more mandatory collectivism. The point of no return has passed. You rejected those values that once differentiated you from the rest of the world, while others (primarily the three billion people of the emerging world) have started adopting the very American values you are rejecting. Feelings, numbers, trends, all give a sense that the end of American economic exceptionalism must not be too far out. There can be no economic exceptionalism without cultural exceptionalism. Culturally mimiking the rest of the world, and namely Europe, will bring the same result: Decline. Few Americans are aware how precipitously that convergence is now underway. There is little chance that Americans will not continue to fall for the same sirens of mandatory collectivism that have bamboozled virtually every nation they have been applied to. The dream of statism and decline is coming true poor fellas. And YOU brought it upon yourselves…
May the world learn a lesson from American decline…
Once the money of the rich and their productivity is eaten up, the familiar monster Americans are creating, the state of mandatory collectivism, will starve again, and will have to turn to eating its own children: The very Middle and Lower class that primarily created it. That is why taxes on the rich are a rhetorical but also inevitably economical preamble to more taxes on the middle and lower class. That is the phase Greece, Spain and Italy are in, and the phase France is entering. That is the real face of HopNChange dreams folks! The hope that other people’s intelligence, competence or hard work will shield you from the consequences of mediocrity and allow you to maintain your six times world average American Middle Class standard of living – a deserved privilege earned during more capitalist times.
As I have said many times, the three billion souls of the newly, partially liberated, emerging world have little desire or patience to see how America’s experimentation with flatter effort-reward curves goes. The long unrecognized and taken for granted envious American Middle Class position in the world will be dispatched in short order. It is already well underway. The full effect of the changes has not manifested itself yet but the core is rotting. Amongst others, ObamaCare is only one year away from unleashing the greatest incentive to indolence ever offered this side of the Atlantic.
Concerning the Hollande Tax in France (the symbolic 75% tax on income over 1 million Euros a year) this article:
http://www.lemonde.fr/politique/article/2012/09/07/la-taxe-a-75-histoire-d-un-coup-politique-du-candidat-hollande_1757049_823448.html
in Le Monde says that both the sports stars and those who work in the creative industries (music, film) are not happy about it.
“Ce projet d’hypertaxation, ce serait la mort du football français” (This hypertaxation will be the death of French football) and
“Cela me semble beaucoup”, estime l’actrice Catherine Deneuve.” (That seems a lot to me, said actress Catherine Deneuve)
“I’m guessing that the best approach is to impose a special excise tax on the fringe benefits and salaries of CEOs at publicly traded companies.”
You are guessing? Truly scary stuff.
If you vote to raise taxes you’re guilty and not solving a problem. Two things… 1) Our government is broke
2) Our politicians are degenerates
Wise up. Everybody will be voted out.
Quit with the toying. Let’s go for a one time 15% estate tax of anyone worth more than $25 million. That will shut up the limousine liberals! And it’s only fair.
Let’s start a list:
Bill Gates,
Warren Buffet,
Howard Schultz (Starbucks)’
Jim Sinegal (Costco),
Jeff Bezos (Amazon)
. .
(and that’s just in my neighborhood…