The word "deserve" has no place in this conversation. I am a lowly public school teacher, and if the world were fair, I suppose I "deserve" a higher salary because I am doing a service for humanity. But the world is not fair, and we should probably be glad we don't always get what we deserve.
Economies work in reality, not in "shoulds". Teaching can be a tiring, thankless job, but it's not that difficult. I may be really good at it, but no one is lining up to buy tickets to watch me do it. My pay is low, but it's what the market will bear. Lots of people could take my place and do a decent job.
Lebron James, on the other hand, has incredible skills that are gifted to a tiny few. No one else is Lebron. People willingly hand over hundreds of dollars to watch him play and owners hand over millions to have him play for their teams. His pay is also what the market will bear. His value to his team, his league, and even his city is why he is paid so much.
Greed makes people start looking to punish success rather than trying to emulate it, which is all progressive tax rates represent. You can't raise the floor by lowering the ceiling.
Rent-seeking, has a specific meaning in economics. Making money from stock sales is also rent-seeking. Much of activity on Wall St is essentially finding a way to make more money from money.
A superstar tax is unworkable. as you said in your article. But we don't need to go down the rabbit hole to resolve the moral and economic issues of superstar pay- or in fact any other huge income and wealth. We already have the tools, we just need to re-implement them:
1. Reinstated progressive taxation and high marginal rates, reversing the flattening of the tax code begun under Reagan and continued under Bill Clinton- this will address not only superstars, but ordinary billionaires.
2. Eliminate the carried interest loophole which allows hedge funders etal to claim lower rate on their commissions than you and I do on our salaries.
3. Place especially high taxes on income gained from stock trading especially if the trades are done within a year of the purchase of the stocks. This will reduce volitility in the market as well as prevent manipulation to see stocks rise and fall for some Wall St trader's wealth portfolio
Good comments, Dennis! The late Molly Ivins (I often disagreed with her, but she did have some insights into things) once called the stock market nothing more than a hi-tech pyramid scheme. One buys stocks hoping that down the line someone else will buy yours at a higher price.
I once had a conservative tell me that he bought stock to invest in a company which is why he bought Apple stock. I asked him what he would do if the stock started falling in value and he said he'd sell right away. That's not investing, that's gambling!
I also think as an addendum, that we keep taxes on DIVIDENDs lower and tax the capital gains earnings from SELLING stock much higher if sold less than a year after purchase. Buying stock that pays dividends IS investing.
If we encourage the investing aspect and deter the gambling aspect, it would incentivize CEOs to actually pursue long term sustainability for companies and shield them from pressure of the gamblers for short term jumps in stock value.
RE "that's not investing, that's gambling," I agree. I sometimes think that the "gambling" aspects of investing should be outlawed. Examples: going short on a stock, buying puts, calls, and straddles, etc. I'm reminded of the old joke: How can you play the stock market and end up with a small fortune? Invest a large fortune.
It's easy to fall into a class or even racial bias in a discussion like this. I agree with Dennis Murphy that there are more rational ways to raise revenues. If anything, athletes and entertainers have traditionally been the victims of monopoly practices, such as the reserve clause in baseball that restricted a player's ability to move to a new team at a better salary. The owners kept the profits the players generated.
This probably isn't germane to the discussion; it's more in the nature of trivia. I read something once which shows the power of inflation. At the opening game of the 1941 baseball season, Yankee fans booed Joe DiMaggio because his salary had been raised to $50,000 (!) per year.
The word "deserve" has no place in this conversation. I am a lowly public school teacher, and if the world were fair, I suppose I "deserve" a higher salary because I am doing a service for humanity. But the world is not fair, and we should probably be glad we don't always get what we deserve.
Economies work in reality, not in "shoulds". Teaching can be a tiring, thankless job, but it's not that difficult. I may be really good at it, but no one is lining up to buy tickets to watch me do it. My pay is low, but it's what the market will bear. Lots of people could take my place and do a decent job.
Lebron James, on the other hand, has incredible skills that are gifted to a tiny few. No one else is Lebron. People willingly hand over hundreds of dollars to watch him play and owners hand over millions to have him play for their teams. His pay is also what the market will bear. His value to his team, his league, and even his city is why he is paid so much.
Greed makes people start looking to punish success rather than trying to emulate it, which is all progressive tax rates represent. You can't raise the floor by lowering the ceiling.
Rent-seeking, has a specific meaning in economics. Making money from stock sales is also rent-seeking. Much of activity on Wall St is essentially finding a way to make more money from money.
A superstar tax is unworkable. as you said in your article. But we don't need to go down the rabbit hole to resolve the moral and economic issues of superstar pay- or in fact any other huge income and wealth. We already have the tools, we just need to re-implement them:
1. Reinstated progressive taxation and high marginal rates, reversing the flattening of the tax code begun under Reagan and continued under Bill Clinton- this will address not only superstars, but ordinary billionaires.
2. Eliminate the carried interest loophole which allows hedge funders etal to claim lower rate on their commissions than you and I do on our salaries.
3. Place especially high taxes on income gained from stock trading especially if the trades are done within a year of the purchase of the stocks. This will reduce volitility in the market as well as prevent manipulation to see stocks rise and fall for some Wall St trader's wealth portfolio
Good comments, Dennis! The late Molly Ivins (I often disagreed with her, but she did have some insights into things) once called the stock market nothing more than a hi-tech pyramid scheme. One buys stocks hoping that down the line someone else will buy yours at a higher price.
I once had a conservative tell me that he bought stock to invest in a company which is why he bought Apple stock. I asked him what he would do if the stock started falling in value and he said he'd sell right away. That's not investing, that's gambling!
I also think as an addendum, that we keep taxes on DIVIDENDs lower and tax the capital gains earnings from SELLING stock much higher if sold less than a year after purchase. Buying stock that pays dividends IS investing.
If we encourage the investing aspect and deter the gambling aspect, it would incentivize CEOs to actually pursue long term sustainability for companies and shield them from pressure of the gamblers for short term jumps in stock value.
RE "that's not investing, that's gambling," I agree. I sometimes think that the "gambling" aspects of investing should be outlawed. Examples: going short on a stock, buying puts, calls, and straddles, etc. I'm reminded of the old joke: How can you play the stock market and end up with a small fortune? Invest a large fortune.
It's easy to fall into a class or even racial bias in a discussion like this. I agree with Dennis Murphy that there are more rational ways to raise revenues. If anything, athletes and entertainers have traditionally been the victims of monopoly practices, such as the reserve clause in baseball that restricted a player's ability to move to a new team at a better salary. The owners kept the profits the players generated.
This probably isn't germane to the discussion; it's more in the nature of trivia. I read something once which shows the power of inflation. At the opening game of the 1941 baseball season, Yankee fans booed Joe DiMaggio because his salary had been raised to $50,000 (!) per year.
What is the true purpose of a tax? Doesn’t the answer to this question reveal one’s world view of the very purpose of a government?