It is better for taxes to be flat, with cash subsidies for low earners
From one perspective, maybe - but progressive tax rates (like we had before Reagan) have other beneficial effects. By making it fiscally unrealistic to pay corporate executives ludicrous sums, or for private owners to pull vast amounts of money out of the company, that money stays in the corporation where it is far more likely to be used in a way more useful to the wider economy - hiring people, updating/expanding equipment, etc. We only saw the explosion in executive salary after the Reagan tax cuts.
For example - does it make any sense for former General Motors CEO Rick Wagoner to have made more money than Honda's ENTIRE executive board combined, when the two companies are roughly the same size? (At least in 2006, the only year I found numbers for both.) Especially since the latter live in/near Tokyo, one of the most expensive cities in the world; I doubt even the most upscale area near GM's headquarters can compare.
While it's not the greatest example because of the huge pile of cash Apple is sitting on, as I heard someone remark in response to the R's demand for even further personal tax cuts - "Steve Jobs doesn't hire people - Apple does."
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Date: 2011-04-25 07:50 pm (UTC)From one perspective, maybe - but progressive tax rates (like we had before Reagan) have other beneficial effects. By making it fiscally unrealistic to pay corporate executives ludicrous sums, or for private owners to pull vast amounts of money out of the company, that money stays in the corporation where it is far more likely to be used in a way more useful to the wider economy - hiring people, updating/expanding equipment, etc. We only saw the explosion in executive salary after the Reagan tax cuts.
For example - does it make any sense for former General Motors CEO Rick Wagoner to have made more money than Honda's ENTIRE executive board combined, when the two companies are roughly the same size? (At least in 2006, the only year I found numbers for both.) Especially since the latter live in/near Tokyo, one of the most expensive cities in the world; I doubt even the most upscale area near GM's headquarters can compare.
While it's not the greatest example because of the huge pile of cash Apple is sitting on, as I heard someone remark in response to the R's demand for even further personal tax cuts - "Steve Jobs doesn't hire people - Apple does."