Tuesday, March 10, 2009

Time for a Maximum Wage

We've been having the wrong argument.

Liberals have been arguing that we should tax the rich more (as we used to). Conservatives say that taxes (any taxes) retard growth and remove incentives.

I say they are both wrong.

The conservative argument is based on the idea that only the possibility of obscene amounts of money is an incentive for work and creativity. Bull. Ask most nonprofit employees, nuns, or fire fighters if their primary incentive is cash.

What if the entire world worked on the principle of politicians, Wall Street brokers, and CEOs? We would be screwed. As far as I'm concerned, if owning a gold plated yacht is the only thing that motivates you, you need to do some serious soul searching.

Meanwhile the liberals operate from an equally objectionable principle. Suggesting that we just increase taxes on the rich requires an acceptance of the glaring income inequality behind all this mess.

The Tax Justice Network has a fascinating and disturbing quote from former U.S. Treasury Secretary Larry Summers:

If the income distribution in the United States were the same today as it was in 1979, the bottom 80 percent of the population would have about $670 billion more, or about $8,000 per family. And the top one percent would have about $670 billion less, or about $500,000 per family.
$8,000 per family! How much more comfortable would your life be with an extra $8,000 a year?

Does anyone really need to make $54 million a year? How can we accept a society where some Wall Street schmuck makes $54 million while your average teaching assistant makes $22,820? The person who grows your food is lucky to bring in $22,640. The person who serves your food makes $16,700. The person who takes care of your child brings in $19,670.

We need to close that gap.

I'm not suggesting that we give everyone the same amount of income. People should receive extra compensation for long years of education, for extra responsibility, for doing the kinds of jobs that other people don't want to do, and for doing the kinds of jobs most essential to our survival. And people should receive compensation for outstanding efforts. But that doesn't mean that the difference has to be as vast as it is.

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1 comment:

Daemon said...

I think this argument lies toward the top of a slippery slope downwards, although the concepts have merit.

I'd settle for the US tightening down corporate oversight and tax law and forcing both corporations and individuals to pay their fair share of tax to reduce the tax burden on the rest of us.

I write corporate tax software for a living, and you wouldn't believe some of the shady (but legal) gymnastics that corporations perform to reduce their tax responsibility to the US government (and the states). Offshore tax dodges, shifting of entities and sub-entities around, etc.

There's a good story on this at Salon this week estimating 100 billion in annual taxes dodged on over 12 trillion in hidden assets:

From the article:
Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)