CEO Compensation Corp. Tax Adjustment

Equitable compensation has its rewards.

sponsored by Roger Wilcox • Become a Co-sponsor

primary topic: Corporate Taxes
secondary topics: Economy

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CEO pay has increased dramatically over the past thirty years. In the early 1980's, the average CEO earned 42 times that of the average employee. Today, depending on the timeframe of the study, CEO's "now" earn 280 to 400 times as much. This is both a cause and symptom of the concentration of wealth, which, when excessive, has been clearly linked to numerous societal ills affecting all, even the rich themselves. Think of a banana Republic and the issues readily come to mind.

The IRS corporate tax code must be adjusted to reward companies that maintain equitable executive compensation. Conversely, penalties must apply to the most egregious efforts to hoard financial credit at the top of the organization. I recommend a formula such as a write-off of .1% of taxable income per 1X multiple of CEO (or highest paid employee, all forms of compensation combined) pay over average employee pay below a multiple of 100. For example, if the CEO pay is 50X the average, then the deduction would be 50 x .1 or 5%. Multiples above 100 would result in penalties derived using the same formula. In addition, companies whose top paid executive earns 200X or more of the average employee should forfeit any applicable corporate tax reimbursements.

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