Reed Hastings: Please Raise My Taxes

Re:Reed Hastings: Please Raise My Taxes by tjic on Friday February 06, 2009 @03:46PM (#470327)

Reed writes:

  The reality is that the boards of public companies hate
  overpaying for anything, including executives. But 
  picking the wrong chief executive is an enormous 
  disaster, so boards are willing to pay an arm and a leg 
  for already proven talent

So if it currently takes $2 mill / year in an executive's pocket to get him on board, and that means $3 mill / year pretax (because, as Reed points out, the current tax is roughly 33%), then why, with a higher tax rate, is it going to take any less to get the same executive on board?

The only different between a 33% marginal tax rate and a 50% marginal tax rate, of course, is that now the board have the pay the same executive $4 million pretax to get the same after tax dollars in his pocket ... and the bitching and moaning about high executive salaries will ramp up in proportion.

Reed is a pretty smart guy, but this is a pretty stupid editorial.

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Re:Reed Hastings: Please Raise My Taxes by gravitycop on Friday February 06, 2009 @03:53PM (#470339)

why, with a higher tax rate, is it going to take any less to get the same executive on board?

The difference is that with a pay cap, no matter where an executive works, he gets paid the same. He has no incentive to compete against his peers. Within a high tax-bracket (with no pay cap), instead, executives have incentive to compete, because their salaries are able to differ from one-another.

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Re:Reed Hastings: Please Raise My Taxes by markwweaver on Friday February 06, 2009 @04:32PM (#470413)

The way I understood it, the pay cap is only for companies that take government money. So companies that are already in trouble are going to be the ones that can't attract the new executive talent they need to survive. If a company that takes government money can't turn itself around and still fails, then all the bailout did was postpone the failure - and the government loses its investment - a bad deal all around.

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Re:Reed Hastings: Please Raise My Taxes by gravitycop on Friday February 06, 2009 @04:43PM (#470425)

the pay cap is only for companies that take government money.

Yes, it is. Reed Hastings' proposal is, however, not just for companies that take government money.

Perhaps a starting place for "tax, not shame" would be creating a top federal marginal tax rate of 50 percent on all income above $1 million per year.

That isn't to imply that there are not healthier alternatives. Andrew W. Mellon advocated a flat income-tax rate of 10%: http://www.archive.org/stream/taxationthepeopl033026mbp/taxa...

the Government received substantially the same revenue from high incomes with a 13% surtax as it received with a 65% surtax. It is not too much to hope that some day we may get back on a tax basis of 10%, the old Hebrew tithe, which was always considered a fairly heavy tax.

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Re:Reed Hastings: Please Raise My Taxes by katz on Friday February 06, 2009 @04:13PM (#470378)

Or executives may have an incentive to go to the UK or Australia.

American companies compete with international companies for executives.

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