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Singh proposes corporate tax hike tied to CEO-worker pay gap
- PeterStuer 3y agoWould be interesting to see how they would pretend to close the loopholes on this one.
- dmbche 3y agoUnorthodox approach - I'm all for trying that and seeing what happens
- bushbaba 3y agoCeo no longer is paid. Instead their startup is acquired or scores a lucrative consulting gig.
- AHOHA 3y agoIt will never pass, in canada, you better open a business than being an employee, less taxes and more funds.
- ryandrake 3y ago> According to an NDP news release, the tax increase would be 0.5 per cent if a CEO makes 50 to 100 times the median income of workers, and would rise to a five per cent increase if a CEO makes a salary 500 times or more higher than the median income of workers. Doesn’t this seem kind of… tame to the point if nothing? Do it right! I’d want to see something like +10% for the lowest ratio up to say +50% for someone making 1000x their workers. And of course it needs to be total (including deferred) comp so they can’t avoid it with obvious accounting shenanigans.
- yieldcrv 3y agoright? this doesn't affect shareholders that much and doesn't affect the CEO at all
- chrisweekly 3y ago100% with you in spirit. BUT. "so they can’t avoid it with obvious accounting shenanigans" - therein lies the rub. Such a scheme has yet to be invented.
- DangitBobby 3y agoThis is a huge flaw with the legal system in general. I wish we could somehow encode the spirit of the law instead of trying to use a shitty language (Legalese English) to fully specify it, since we all know it's futile.
- donmcronald 3y agoI’m past the point of wanting to make the rich pay their fair share. The wealth gap is too wide for that to help. I think it’s time to start talking about clawing back the wealth they’ve accumulated.
- throwaway202303 3y agodo some research and see who is paying what when it comes to taxes. this fair share bullshit is just communist propaganda
- rurp 3y agoUm, you might want to look up effective tax rates. At least in the US, the highest earners pay absurdly low rates in reality. I would be delighted to pay double the rate the average billionaire does.
- Zanni 3y agoPlease show your work. The top marginal rate in the US is 35% plus state taxes of up to 12.3% (California). If you can arrange to take your income as long term capital gains or qualified, you can get the federal rate down to 20% (but you're still on the hook for state taxes).
- rurp 3y agoI'm talking about rates people actually pay. The listed tax rates are fairly meaningless once individuals pass a certain amount of wealth. Effective rates increase to a point and then drop precipitously once a person has enough wealth to game the system. The richest Americans pay a rate of less than 10%. https://www.whitehouse.gov/cea/written-materials/2021/09/23/what-is-the-average-federal-individual-income-tax-rate-on-the-wealthiest-americans/ https://www.whitehouse.gov/cea/written-materials/2021/09/23/...
- throwaway202303 3y agodon’t start a sentence with um. its arrogant. and you are wrong. just go and look up what proportion of the population pays the most tax by income band. the rates are irrelevant
- nine_zeros 3y agoA step in the right direction but the taxes have to apply to all C-level people, the board of directors, and their direct reports aka people who set the budgets.
- Tiktaalik 3y agoI like the idea of building in greater alignment of incentives between all the workers at the company, from the lowest worker to the top. By all means CEOs should be highly paid, but if the company is successful and doing well, the workers that are enabling that success should see their fortunes rise as well.
- lumost 3y agoIt’s a balance. A 100x pay gap between employee and ceo is close to a 1000x gap in disposable income. How many ceos are truly better than 1000 employees?
- bombcar 3y agoIn that case we should see companies that have the 10x CEO and 900 more employees doing well.
- lumost 3y agoThe best ceos will work at the highest paying firms. This does not mean that this is the most efficient arrangement in aggregate or for an individual company. How often have we seen claims that lowly engineers are overpaid?
- marketingLizard 3y agoIs it though, or is it the best CEOs at marketing themselves work at the best firms? The idea is that you're sort being Skinner boxed since each CEO and company is different and it changes with time too.
- bombcar 3y agoIs the number of people who can be good CEOs close to the number of CEOs needed? If not, it should be possible to get more CEOs.
- 3y ago
- refurb 3y agoSounds like it would be a great lesson in unintended consequences: - it would punish low skill industries over high skill industries; the PE shop of a dozen people where the lowest paid worker makes $500,000 doesn't have to worry, but the retail chain with 100,000 employees is going to be hit hard - provides a strong incentive to outsource low paying jobs, rather than bringing them in house, or come up with other corporate structures (franchises for retail operations, move headquarters out of the country) to avoid having low paying employees on corporate payroll Completely unsurprising suggestion by the NDP who has never been elected to lead the country before, so tends to have a ton of half-baked populist ideas that don't appear to be thought through very well and will never actually be implemented, but are very good at attracting voters.
- harimau777 3y agoCouldn't the law just be written to include franchises, contractors, etc. in the calculations?
- donmcronald 3y agoYeah. Make it include all direct and indirect employees. Outsourcing to a 3rd world country for pennies on the dollar? Great, enjoy your massive tax bill.
- jvmfjvfjvf 3y agoGreat, enjoy your companies leaving Canada to not pay a massive tax bill.
- refurb 3y agoBut companies don't set the pay for contractors, they pay contracting firms a lump sum for services. And contracts are basically every single service the company may need, whether business related or unrelated like gardening, trash pick up, snow removal, etc. If a company hires an outside company to come pick up their garbage, do the garbage men also count? What happens when they switch vendors, do they report that back to the government? What happens if the outside firm gives their employees a raise? Does that get reported back to the main company, who then informs the government? What if they hire an outside firm for only 1 month, does that count? Who tracks all this? How does it get reported to the government? That sounds like a massive regulatory mess and burden which of which the cost will be passed to customers.
- InitialLastName 3y agoI don't see this addressed in the article, but maybe Canadian working culture is different than the US: Wouldn't this create a perverse incentive for companies to continue the trend of eliminating their lowest-wage employees from the books, either via contractors or automation?
- tilne 3y agoWe already have that. Why not at least help the higher wage employees get paid?
- AndrewKemendo 3y agoNo it incentivizes increasing the wage of the lowest paid worker. Or coop is 9:1 ratio between highest to lowest So if you want to suggest we increase CEO pay to 1M then helper pay would go up to 111,000 which would be great but generally hard to justify.
- InitialLastName 3y agoAssuming a roughly continuous distribution, unless >50% of workers earn the lowest wage, increasing the wage of the lowest-paid worker will do nothing to affect the wage of the median worker, and thus nothing to change the ratio in question. On the other hand, no longer employing the lowest-paid workers will move the median point up the pay scale.
- AndrewKemendo 3y agoNot sure how you got there. The ratio is between highest and lowest paid, not median. So you’re measuring something I’m not interested in targeting for this particular protocol There’s no downside to anyone other than someone wanting outsized pay at the maximum pay level Further, it’s anyone paid by the cooperative for work. So “outsourcing” doesn’t offer a workaround as it’s a contractual agreement that sets a labor wage-price during the contract negotiation.
- 3y ago
- ngokevin 3y agoWhy does everyone focus on hiking corporate taxes when the top corporations skirt around and pay 0 tax?
- koolba 3y agoBecause corporations can’t vote so you’re only directly alienating people with a basic understanding finance and economics. Corporate taxes should be zero. Anything else stifles innovation and leads to double taxation.
- asynchronous 3y agoI feel as though if a corporation is hoarding billions of dollars worth of wealth (without reinvesting it or doing something positive to the economy with it) then I do think society should incentivize them by taxing the hoard.
- lazide 3y agoAt some point that hoard has to go somewhere or do something no? It gets taxed then. Even if it just inflated the share price, if the shares get traded, there are capital gains taxes.
- medvezhenok 3y agoHave you heard of the buy, borrow & die strategy? Basically once you are rich enough, you can live off of loans collateralized by your property/stocks and then after you die the cost basis gets stepped up to market value thereby avoiding capital gains taxes for your descendants.
- lazide 3y agoLast I heard, Elon ended up paying one of the largest tax bills of a private individual - ever. It works until it doesn’t.
- 3y ago
- tomohelix 3y agoHere come the contractors... Or, CEOs receive 50k/yr compensation, but the company will approve a certain discretionary spending amount every year to cover living expenses for the CEO. This may or may not include dining at the most expensive restaurants around, free travel to anywhere with any arbitrary amount of number of people, house purchases, luxury spending like a yacht... No, these are not regular compensation. We are simply subsidizing the living expenses. There is no concrete amount involved. No sir. Or pick any other number of convoluted schemes to mask "compensation". Best way to do this is the easiest way, raise the corporate tax directly.
- bushbaba 3y ago…they already get that. So this is still progress. Also you could argue that counts as taxable income.
- zrail 3y agoIn the US the IRS certainly argues that all of that is taxable income.
- rcme 3y agoOr the company creates a trust and names the CEO as the beneficiary. The trust dissolves when the CEO stops working at the company.
- kpw94 3y agoIt may depend on the tax authorities view on those perks. In European countries with high tax rates it's common for fairly low level employees to get a company -paid car and other perks that reduce the taxable income: https://humancapital.aon.com/insights/articles/2016/car-allowances-remain-common-in-europe https://humancapital.aon.com/insights/articles/2016/car-allo... But it's not common practice in the US, which has a more car centric culture. Probably means there's no tax advantage there.
- endisneigh 3y agoI’m curious why the worker pay ratio matters. If the issue is people not liking high paid leaders why not simply have a maximum wage and/or wealth?
- teaearlgraycold 3y agoI like both of those ideas. A maximum income tied to GDP per capita.
- logicchains 3y agoAll this does is encourage all the most successful/productive people in your country to move somewhere else, leaving your country poorer and less productive.
- logicchains 3y agoBecause if you enforce a maximum wealth, anybody with any kind of ambition is going to leave your country and you'll be left without any entrepreneurs, and hence no creation of new businesses or jobs.
- endisneigh 3y agoCouldn’t the same be said about a ratio between ceo pay and lowest worker?
- djha-skin 3y agoThis is something which can easily be defeated with Hollywood accounting practices. The larger the payout, The more resources become available to protect the payout. Even if this ever theoretically passed it wouldn't really do anything except make CEOs hide their wealth rather than declare it.
- supernova87a 3y agoI don't think headline-grabbing CEO pay differences from the average worker are the thing driving broad based economic inequality in our economies today. Cutting the salaries of every CEO and redistributing it to their company workers would hardly give every employee an extra $1,000 at most places. Economic inequality springs from (among other things) the fact that each and every one of us chooses to buy things & engage in our economy which has gotten more and more efficient, and reward a few hundred thousands (or millions) of people who happen to be able to produce disproportionately more things that the rest of the population will pay for and reward them for. I'm not saying they're deserving of it or anything like that, just to say that's what it is (or part of it). And I'm not addressing the asshole PE CEOs which are a different breed of leech, but are their own sliver of headline-dominating but not significant to the general population's wealth concerns. At the same time, efficiency and labor supply means that low skill wages have not moved much. You're not going to defeat these economic tides by handicapping a couple of CEOs, as much as that might feel gratifying or even politically symbolically meaningful. We each of us have made the economic inequality that we sit in. And I might also point out, what is at the bottom of our economic ladder is still in an absolute sense, well above what is the bottom of the ladder in many, many other countries, in material wealth and security.
- mullingitover 3y ago> and reward a few hundred thousands (or millions) of people who happen to be able to produce disproportionately more things that the rest of the population will pay for and reward them for. To be accurate, these people don't produce anything themselves. The labor that goes into creating the products and services is what's producing things. These people move capitol around. The boards of directors of the corporations that employ them are populated by other people like them. They're all a group who primarily are in the same occupation, and have a vested interest in seeing coordinators of capitol be paid extremely generously. Compare this with CEO salaries in Scandinavia or Japan, which are significantly lower and yet their companies are highly competitive. My theory is that this country never got over its yearning for a stratified class system, with a full-blown landed aristocracy and monarchy. We have a little taste of class mobility, but as soon as people move up the ladder they frantically scramble to pull it up behind them.
- pfannkuchen 3y agoAnti new money sentiment in general could cynically be seen as the current elite being worried about the potential for anyone to become influential without a filter on their political alignment with the elite.
- darig 3y ago[dead]
- olliej 3y agoMany things limit the effectiveness of this. First companies aggressively outsource and making employees “contractor” mean it’s easy enough to manipulate “average” compensation. It would need to cover all compensation as well, not just salary. I think more interesting would be banning stock buybacks or dividends for a period of five years from any company that lays off more than X employees or X% of their employees, and zeroing all outstanding executive stock options, rsus, etc whenever such layoffs occur would do much more work
- gmerc 3y ago[flagged]
- SaintSeiya 3y agoI believe that CEOS and higher execs should be first in the firing lane by law if the company do bad and not the janitors, contractors and baseline workers. They take all the glory, credit and pay for the company success and no accountability or risk at all. Now that's an incentive.
- corry 3y agoIsn’t the decision to either fire the executives/CEO or others the domain of the owners of the company? And perhaps rightly so? It’s not like shareholders/boards LIKE paying CEOs more than they otherwise could - especially if performance is bad enough to warrant big cuts. They would pay them as little as they can get away with to maximize their own return, similar to all roles down the hierarchy. To my uneducated mind, it seems far better to (1) have better gov-mandated worker protections around termination/layoffs - longer severance, continued benefits, etc; and/or (2) higher corporate taxes to fund programs that assist in job transition/EI/etc… than arbitrary rules around CEO pay ratios or “executives always get fired first” rules.
- rmk 3y agoI do not know if Canada has done aggressive QE to keep asset values afloat, like the US has. As people with larger incomes are the larger holders of assets (including stocks, real estate, other property), they are the biggest beneficiaries. That is the driver behind regular workers falling behind. At least in the US, creating the problem by voting for or encouraging QE, handing out stimulus checks like there's no tomorrow, and then turning around and playing to the crowds by attacking CEO compensation is cheap grandstanding. A little bit of honesty about how these things contribute to the problem will no doubt make any politician unelectable.
- mrtweetyhack 3y ago[dead]
- snapplebobapple 3y agoThe problem is this is a fundamental misunderstanding of the actual problem. If anything, high ceo pay just tells you the board has been captured by the ceo because shareholding is too dispersed to form a coherent line to push back from and discipline the board by firing them when they overpay the ceo. This isn't a problem, this is actually usually great because ceos are often not old wealth, it is bringing middle class and upper middle class kids that made it into the 1% or 0.1%. That there is so much profit for a ceo to take if they can capture the board is because of the actual problem. The actual problem is structural in two parts, the first part is integrating third world labor has blown a hole in labors pricing power and will continue to do so for another couple generations but should sort itself out. The second part is government has failed at breaking up companies with excess market power and that problem needs people like singh to pull their heads out of their asses and fix it. Unfortunately singh doesn't even comprehend the real problem and that makes him unfit to lead.