Publicity held and privately owned corporations are two different animals. While I agree with the premise yet feel CEO pay packages would be intrinsically difficult to regulate through taxation, I equate it to the ultimate question... what makes what they do seemingly worth millions of dollars? On the same subject, what makes what a social media “influencer” does worth a million dollars? What makes acting in a Hollywood movie worth $30 million? What makes what Chloe Kardashian does worth $8 million? What makes what Sean Hannity does worth $36 million? I guess what I’m really saying is that inequality exists at far more than simply the CEO level, and in talking about this subject, we should also be examining how we as a society misplace our values.
CEO pay packages are typically determined by boards of directors and of course they act in their own best interests (wouldn’t you?) with a good deal of pay based on share performance and made in the form of tax favorable options. CEO’s are chosen not specifically for their expertise in any area or field, but as @jimK notes, for their access and connections to the halls of power or because they own enough of the company to self-ensure their position of power. Directors as well are not selected because they’re qualified for the position; rather their primary purpose is providing credibility to the corporation and in many cases, their credibility comes from having previously served within the halls of power.
I have additionally read some responses that refer to CEO pay as a shareholder issue. This may be true in publicly held corporations, which have decreased through buybacks by 40% over the past 10 years as a result of their choosing to escape the public company regulations, scrutiny and reporting responsibilities (and tax policy has financed these buybacks), however the bulk of public corporation shares are held by large funds rather than individuals, meaning that the average shareholder (you and me) who owns a piece through a mutual fund index has no ability to set a CEO’s pay package, much less attend a shareholder’s annual meeting. In short, if fund owners are unhappy it’s time to let the fund managers know your thoughts, because YOU, not the fund managers, are effectively the owners; just don’t expect much of a result.
I do wish to say that while I respect and support a large amount of what Senator Sanders says, believes and campaigns on, his S2849, The Tax Excessive CEO Pay Act, smacks of being more a noticeable electioneering statement of his values rather than possibly meaningful legislation that could stand a chance of becoming law at this time.
Like @jimK, I don’t believe that all corporations are inherently evil by nature yet they do in fact act out of self interest, self preservation and self perpetuation. With this being said, corporations will seek the most tax favorable locations to headquarter in and with ever increasing deficits in the US we’ve already given more than we can or should and tied ourselves to their futures, boxed ourselves in and can’t afford to lose their tax revenues regardless of how small we’ve allowed them to become. (I still think back to the night I heard George H. W. Bush use the phrase “new world order” to realize just how much our futures are now interrelated not only through wars but through economics.)
If corporations choose to relocate, we can certainly retaliate to make it more difficult to operate their various divisions in the US if they remain here, which I believe would harm more US workers and consumers than it would help, and haven’t we all see the negative results associated with retaliation?
But as we live in a fickle world subject to the whims of a few, I believe corporations are by and large mostly satisfied operating their global enterprises from the relative safety and stability of US shores.
Several American companies learned a costly lesson the hard way when in 1959 their holdings in Cuba were nationalized. My point is that we are still a nation which through policy offers corporate safety, in this case a few hundred elected people that no one trusts anyway, but with none-the-less an increasingly delicate balance to maintain.
With corporate relocation also comes risk to us as well as greater risk to the corporation, and our ever changing list of allies sharply increases the level of risk further. In the past, the US was seen on the world stage as solid and business stable but I submit that at present, many countries have their own growing doubts and concerns, and are just waiting us out, playing both sides to avoid aggravating either, knowing that the future will be charted for them in 2020.
Rather than attacking with a populist kick in the ass to the Gordon Gekko types that we all love to hate, all inequality would be a much more fair start. I would also be far more happy seeing efforts directed toward eliminating the Trump corporate tax cuts; this in itself was and remains, in my estimation, more corruptive than a corporation could ever be.
I would additionally be more in favor of taxing income at appropriate and more realistic progressive rates, removing deductibility and taxing of security expenses paid by the corporation for the personal benefit of the CEO (this is now reportedly the fastest growing CEO benefit expense) and whatever is paid must be counted as additional income, eliminating lobbying expense deductions - AND - WAIT FOR IT, HERE IT IS... taxing lobbying fees paid at a 100%+ rate, heavily increasing tax rates on lobbying firms and eliminating all political donations while eliminating Citizens United, thereby eliminating an entire class of users and bottom feeders.
This in itself could publicly fund a presidential election. The health care industry alone, for example, spent $586 million on 2018 lobbying fees, with every dollar deducted as an operational expense, and this amount in turn represents nearly $.6 billion of their revenue that was NOT spent on the care of patients, their primary function. There’s something that rubs me the wrong way in knowing that the money I’ve paid is being used to lock me out.
I’m not suggesting this as a punitive measure by any means. It’s not a secret that every country including the United States has tools in its tool arsenal that are used to shape policy. Tax policy, just like interest rates, are tools and tools should be properly and prudently used to advance the many rather than the few.
Our elected officials have always chosen tax policy as the means of selecting winners and losers (more easily thought of as those who for whatever reason will support my election and those who won’t). Tax policy has just made it so much more lucrative to take a million dollars in one shot that to have to ask 100,000 donors for $10 at a time.
If lobbying has been identified as being an evil of our electoral process, and it has, then tax policy should in fact be used to make lobbying unprofitable since lobbying is not illegal - tax policy is already being used for many purposes that culminate in winning elections - auditing of lower incomes at a higher rate than upper, disallowing SALT deductions in states that traditionally vote democratic, and disincentivizing through tax rates on legitimate marijuana producers and distributors to name a few. I’m not suggesting anything new - tax policy is already weaponized enough - if it’s going to be used as a part of our process, then let’s use it for the benefit of the taxpayers while bloodying without completely biting off the hands that should filling the biggest bowl.