Post 26 of 30 :: Executive Pay

I've recently read an article titled, "Why Obama, Congress must curb CEO pay" (link). While I consider myself a conservative, I am not so conservative as to "cut my own throat", compensation-wise. Therefore, I must agree with the author.

The article's basic point is this: executive salaries are too high - way out of line with what the average American earns - and are hurting the economy. If you can accept that premise, the questions that must be asked are, first, can the government (Congress) do something about it, and, second, why should it?

The point is that the government can decide, through tax policy. Take the average employee's salary, multiply it by 20, then tax a company an amount equal to the difference between the average and any other employee's salary that exceeds the average.

For example, if the average employee's salary is $20K, and the president of that company makes $400K, no tax is owed. But if that same executive makes $4,000K (four million bucks), that firm will owe the feds $3,600K in taxes. Total cost to the company for that executive: $7,600K.

Why is it that the government can do this? Because the government sets tax policy through the writing of laws and the establishment of rules guiding the application of those laws. See the US Constitution, article I, section 8:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Why should the government do this? Because it is in our government's best interest, and is the reason the Constitution was established:

". . . to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity . . ."

I believe the operative phrase is "the general Welfare". If executive compensation is getting out of hand, as most would agree it is, it is at the expense of the common man, and should be corrected.