Taxing the rich results in more taxes being paid by the middle class
Trickle-down economics does not work. It does not make sense that a Corporate CEO would use after-tax income to hire more workers. That money, once it leaves the Company and ends up in the CEO's pocket, is much less likely to pay for new hires than if the money were left in the Company in the first place.
You tax behavior that you want to discourage. In order to discourage exorbitant salaries given to Corporate CEOs, government should tax them at a higher rate than those with less income. If all income over $1,000,000 were taxed at 90%, then Boards of Directors would be highly reluctant to pay CEOs anything over $1,000,000. So instead of a CEO getting $100,000,000 and taking home $70,000,000, a CEO will make $1,000,000 and take home $700,000. The remaining $99,000,000 gets rolled back into the Company, to hire new workers. These workers, then, will pay taxes from their salaries. The benefit from higher taxes on the rich comes not from increased tax revenues FROM the rich; rather, the benefit comes from taxes (Income tax, State tax, Local tax, Sales tax, Gasoline tax, etc) paid by new hires.
Plus, if CEOs took home $70,000,000, they may spend $20,000,000 per year, but then put $50,000,000 into investments or trust funds, and take it out of the economy. If that money is instead spent on lower-wage workers, then they will spend $60,000,000 of that money in locally-produced services and goods, in addition to $30,000,000 in taxes, saving $10,000,000 of the original $100,000,000. So only 10% of the original $100,000,000 is stashed away when low-wage workers get it, as opposed to 50% when high-wage, low-taxed CEOs get it.
And one more benefit: employed workers pay into the entitlement programs and do not take from them, as opposed to unemployed workers who take out of entitlements and do not pay in. So funneling CEO salaries to workers reduces the deficit.
Taxing high-wage CEOs is not a way of getting more tax money from them; rather it is a way of forcing the Boards of Directors to roll that money back into the Corporation, funding jobs, and pumping more money back into the economy, and decreasing the deficit.
You tax behavior that you want to discourage. In order to discourage exorbitant salaries given to Corporate CEOs, government should tax them at a higher rate than those with less income. If all income over $1,000,000 were taxed at 90%, then Boards of Directors would be highly reluctant to pay CEOs anything over $1,000,000. So instead of a CEO getting $100,000,000 and taking home $70,000,000, a CEO will make $1,000,000 and take home $700,000. The remaining $99,000,000 gets rolled back into the Company, to hire new workers. These workers, then, will pay taxes from their salaries. The benefit from higher taxes on the rich comes not from increased tax revenues FROM the rich; rather, the benefit comes from taxes (Income tax, State tax, Local tax, Sales tax, Gasoline tax, etc) paid by new hires.
Plus, if CEOs took home $70,000,000, they may spend $20,000,000 per year, but then put $50,000,000 into investments or trust funds, and take it out of the economy. If that money is instead spent on lower-wage workers, then they will spend $60,000,000 of that money in locally-produced services and goods, in addition to $30,000,000 in taxes, saving $10,000,000 of the original $100,000,000. So only 10% of the original $100,000,000 is stashed away when low-wage workers get it, as opposed to 50% when high-wage, low-taxed CEOs get it.
And one more benefit: employed workers pay into the entitlement programs and do not take from them, as opposed to unemployed workers who take out of entitlements and do not pay in. So funneling CEO salaries to workers reduces the deficit.
Taxing high-wage CEOs is not a way of getting more tax money from them; rather it is a way of forcing the Boards of Directors to roll that money back into the Corporation, funding jobs, and pumping more money back into the economy, and decreasing the deficit.
posted by batguano at 10:58 AM
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