I couldn’t agree more with this from Firedoglake:
It’s not hard to rein in executive compensation, all you have to do is decide what the maximum pay you want someone to be able to receive is and tax most of the rest of it away. The simplest thing is to just count all income equally, tax it all at the same rate, don’t allow deductions beyond a certain level (50K or so) and tax all income above, say 1 million at 90%, 95% for all income above 5 million. Don’t allow too much income deferral and there you go. Slap on some “in kind” rules for corporations (yes, if your corporation pays for your car, that’s salary) and while there will always be loopholes, you’ll still rein in the worst excesses.
And that’s the bottom line. As long as executives know that in 5 years they can make so much money they’ll never need to work again, they won’t take care to make sure that their business is long-term viable. Rule #1 of designing incentive systems isn’t “more money equals better performance” it’s “match incentives to the behaviour you want.” If you want an economy that doesn’t have bubbles, don’t pay people for creating bubbles, pay them for long term steady growth, paying high salaries and creating new jobs.
In fact, I’m absolutely sure I’ve made the same argument, but I can’t find an example. Too many posts, too little memory. Anyway, this would be a return to the system of taxation we had in the fifties and sixties. Limiting income in this fashion would, in fact, force executives to concentrate on the long term advantage of the company, rather than focus on the short term quick kill. We are not going to embarrass these people into limiting their looting of the corporation and shareholders, whose interests they supposedly protect. They are beyond embarrassment. Just tax almost everything above a set threshold.
Unfortunately, Democrats have been well trained to Republicans. They are afraid of the “T” word, and are also afraid of the charge that they are engaging in class warfare, something that the Republicans and the corporate chiefs have been waging for years. Unfortunately, to date, only one side has been fighting, while the other side takes all the casualties.