Nine Pictures of the Extreme Income/Wealth Gap

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Originally Posted by RandomGuy

Be successful? I would not say "probably".

Knowing something is shady as shit, and proving it in court to the degree that a jury of 12 average americans could understand it is something else entirely.

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Not in this current socio-economic climate. Choose the right venue, pick the right jury, and you are way better off than you were a few years ago.

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Originally Posted by vy65

Srsly tho guise, will anyone defend that article's depiction of how corporations work?

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I will.

I think studies done that show an inverse correlation between CEO pay and stock performance would tend to indicate that "creating wealth" is not exactly gauranteed when you pay your CEO a lot.

In general, the fact that most BOD's tend to have the CEO as Chairman, and other management executives as members would make it pretty easy for the management of a company to run it for the benefit of the average "C" level executive as opposed to what is ultimately good for the shareholders.

The rot of stock options is a subtle taint that skews solutions to the short term.

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Originally Posted by vy65

Not in this current socio-economic climate. Choose the right venue, pick the right jury, and you are way better off than you were a few years ago.

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In the same way that buying two lottery tickets doubles your chances.

If you can show any shareholder lawsuits over executive compensation that indicate a trend, we can maybe get closer to the truth.

Executive compensation is something of a hot topic these days though.

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Originally Posted by LnGrrrR

After all, the person making 40k per year still gets taxed roughly 20%, right? So that leaves him with 32K per year. It is a big jump in overall difference (8k < 45k) but the doctor still is bringing home almost 3x the amount of the 40K per year person when all is said and done. It's not like he's living out of cardboard boxes. (Again, I'm leaving out skill/stress/etc etc for purposes of clarity.)

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I think that's the key though. Unless you want to argue that people should be paid the same, I think your position ultimately penalizes someone who has more skills and who may work a lot more/harder via higher taxation. If the doctor ultimately deserves more pay, I just don't see the justification in taxing him more simply because he makes more. Plus, things get even more complicated if you assume that this guy became a doctor so that he could support his stay-at-home wife and 2 kids. In that case, the 32k difference is highly significant.

I get that you're not saying that we should tax the doc the same as the CEO. And I'm not saying that an executive of a fortune 500 company shouldn't pay anything. But, at a certain point, people who are "successful" end up having to pay for others - without benefiting from said payment. And in the example above, these payments for others can detrimentally impact one's own family.

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Originally Posted by RandomGuy

I will.

I think studies done that show an inverse correlation between CEO pay and stock performance would tend to indicate that "creating wealth" is not exactly gauranteed when you pay your CEO a lot.

In general, the fact that most BOD's tend to have the CEO as Chairman, and other management executives as members would make it pretty easy for the management of a company to run it for the benefit of the average "C" level executive as opposed to what is ultimately good for the shareholders.

The rot of stock options is a subtle taint that skews solutions to the short term.

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There is a strong push now, started by pension funds like CalPERS, to tie the majority of executive compensation to stock performance. This includes the use of Short and Long Term incentive schemes. Major corporations like Verizon and GE are making moves in this direction.

Also, just because the CEO is the chairman of the board doesn't mean that compensation necessarily is fucked. I'm pretty sure compensation has to be ratified by independant board members. If those board members are not sufficiently independant, litigation is likely.

Quick google search brings up a few shareholder lawsuits.

http://www.google.com/search?q=execu...holder+lawsuit

That got me to an interesting law blog:
Executive Compensation: The New Front Line in the Litigation Wars?

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Litigation over executive compensation is nothing new. The long-running clash over Richard Grasso’s $187 million NYSE pay package is only one of many titanic legal battles compensation issues produced in the past. But executive compensation litigation recently seems to have entered a new phase, fueled by moral outrage.



Drawing on popular anger evidenced most recently in the outrage surrounding the AIG bonuses, these most recent compensation-related cases could represent an even more pronounced litigation threat than prior lawsuits over pay. The same forces driving the litigation have also produced a variety of other corporate and social responses, some of which may or may not fully serve the purposes of overall social utility.

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I thnk people are indeed starting to "smell a rat" in the way CEO's are paid.

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Originally Posted by vy65

There is a strong push now, started by pension funds like CalPERS, to tie the majority of executive compensation to stock performance. This includes the use of Short and Long Term incentive schemes. Major corporations like Verizon and GE are making moves in this direction.

Also, just because the CEO is the chairman of the board doesn't mean that compensation necessarily is fucked. I'm pretty sure compensation has to be ratified by independant board members. If those board members are not sufficiently independant, litigation is likely.

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I would agree. It doesn't exactly mean the compensation is "fucked", but it does lend itself to pay levels that have little bearing on "market prices" for labor.

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Originally Posted by RandomGuy

I would agree. It doesn't exactly mean the compensation is "fucked", but it does lend itself to pay levels that have little bearing on "market prices" for labor.

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But that ultimately depends on a lot of factors: the corporate culture of the particular company, the personalities of board members, the success of the company, etc...

Sure executive compensation isn't great. But that article's depiction of the way corporate boardrooms work was just incorrect. In addition to not understanding the legal restrictions on BODs, it ignored the fact that a lot of progress has been made. That's all I'm saying.

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Originally Posted by TeyshaBlue

Here's what I can tell you because I did get spanked for a bit of "shareholder activism" during my tenure. I worked for the world's largest pharmaceutical wholesale distributor. I also administered the contracts for the Vetrans Administration. As a result, I was privy to some inside info regarding negotiation tactics with pharmaceutical companies. It was quite a shock to see an ex-CFO from a pharma company we were negotiating with on our BOD. I was equally shocked to see one of our recently retired VP's on their BOD. I looked at other relationships between our BOD and our vendor BODs. It turns out, there was about a cross-pollination between the two populations for about 1/3 for our BOD.
My curiosity piqued, I called on others in my industry who were more or less in my shoes....high enough up to see some of this, but not high up enough to benefit from it. We weren't alone, it turns out.

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My understanding as well is that such "cross pollination" is common. "incestuous" is another word often used to describe them.

I have occasionally seen board members of companies work for investment banks, and *coincidentally* have all of their investments with said investment banks.

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Originally Posted by TeyshaBlue

My curiosity piqued, I called on others in my industry who were more or less in my shoes....high enough up to see some of this, but not high up enough to benefit from it. We weren't alone, it turns out.

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Shoot, look at the cross-pollination between ex-military and the firms that the gov't hires. And then look at those firms who tend to look for ex-military. I see it occurring in the comm world, and I'm sure it occurs in other sections.

Now, part of this is because said military are not only trained in comm, but familiar with the military world in which these companies are trying to get contracts. And I'm sure it happens at higher levels, in which it might get a little morally murky.

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Originally Posted by RandomGuy

My understanding as well is that such "cross pollination" is common. "incestuous" is another word often used to describe them.

I have occasionally seen board members of companies work for investment banks, and *coincidentally* have all of their investments with said investment banks.

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It's no different than having your GC be a partner at the law firm you outsource most of your work to. There's nothing necessarily bad with those arrangements.

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Originally Posted by vy65

But that ultimately depends on a lot of factors: the corporate culture of the particular company, the personalities of board members, the success of the company, etc...

Sure executive compensation isn't great. But that article's depiction of the way corporate boardrooms work was just incorrect. In addition to not understanding the legal restrictions on BODs, it ignored the fact that a lot of progress has been made. That's all I'm saying.

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I think you are not quite right.

That article's depiction of the way corporate boardrooms work was more correct than many would admit.

"legal" restrictions rarely stop naked greed, and are non-existant when it comes to non-publicly traded companies.

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Originally Posted by RandomGuy

I think you are not quite right.

That article's depiction of the way corporate boardrooms work was more correct than many would admit.

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Originally Posted by The Article

If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select -- and which includes some fellow CEOs on whose boards they sit -- gives them the pay they want. The trick is in hiring outside experts, called "compensation consultants," who give the process a thin veneer of economic respectability.

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CEOs don't choose BOD members. They have no impact on the selection process. BOD members are chosen by shareholder vote.

What a bunch of pap.

1) Wealth is not finite and, therefore, it's concentration in one area does not preclude it from being increased or decreased in others.

2) Punitively taxing the wealthy only hurts those you claim to be helping. Reduce someone's wealth by confiscatory taxation and they buy less stuff made by those who are not so wealthy, employ fewer of those who are not so wealthy, and reduce their footprint in the service industry where most of those who are not so wealthy can be found.

3) The wealthy stay wealthy, and the poor stay poor, because of personal circumstances -- not because of what each is doing to the other.

And, after all is said and done, our poor are the best situated poor people on the planet...so, STFU.

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Originally Posted by vy65

I think that's the key though.

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Really? You want to go there? You want to say that the harder a profession is, the more/less said profession should be taxed?

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Originally Posted by vy65

Unless you want to argue that people should be paid the same, I think your position ultimately penalizes someone who has more skills and who may work a lot more/harder via higher taxation.

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So who gets to determine how "hard" or "specialized" or "in-demand" a job is?

I feel that, being in the military, I do a job that is rather specialized. (Comm). Should I pay less taxes due to that?

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Originally Posted by vy65

If the doctor ultimately deserves more pay, I just don't see the justification in taxing him more simply because he makes more.

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Please explain how the doctor "deserves" his money moreso than any other person in his salary range.

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Originally Posted by vy65

Plus, things get even more complicated if you assume that this guy became a doctor so that he could support his stay-at-home wife and 2 kids. In that case, the 32k difference is highly significant.

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Aren't there already tax incentives built in to our laws that deal with dependants?

Should a doctor without a family get taxed more? Is that more morally justified?

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Originally Posted by vy65

I get that you're not saying that we should tax the doc the same as the CEO.

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I didn't say that. That is where the cutoff currently lies, and I'm ok with it. If they made multi-millionaires pay 40% in taxes, instead of 30%, I'd be ok with that morally speaking. (I'm ignoring possible economic ramifications.)

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Originally Posted by vy65

And I'm not saying that an executive of a fortune 500 company shouldn't pay anything. But, at a certain point, people who are "successful" end up having to pay for others - without benefiting from said payment. And in the example above, these payments for others can detrimentally impact one's own family.

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That would happen even with a flat tax. Tell me, if you don't have kids in school, do you benefit directly from paying education? How about medicare? SS? If you're a pacifist, do you benefit from paying the military?

If you're trying to argue that people who pay taxes sometimes don't benefit from those taxes... well, duh. Feel free to try to completely overhaul the tax system.

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Originally Posted by vy65

It's no different than having your GC be a partner at the law firm you outsource most of your work to. There's nothing necessarily bad with those arrangements.

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Yes, actually. They are conflicts of interest, or provide ground for potential conflicts of interest.

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Originally Posted by Yonivore

What a bunch of pap.

1) Wealth is not finite and, therefore, it's concentration in one area does not preclude it from being increased or decreased in others.

2) Punitively taxing the wealthy only hurts those you claim to be helping. Reduce someone's wealth by confiscatory taxation and they buy less stuff made by those who are not so wealthy, employ fewer of those who are not so wealthy, and reduce their footprint in the service industry where most of those who are not so wealthy can be found.

3) The wealthy stay wealthy, and the poor stay poor, because of personal circumstances -- not because of what each is doing to the other.

And, after all is said and done, our poor are the best situated poor people on the planet...so, STFU.

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Originally Posted by LnGrrrR

Really? You want to go there? You want to say that the harder a profession is, the more/less said profession should be taxed?

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Yes.

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Originally Posted by LnGrrrR

So who gets to determine how "hard" or "specialized" or "in-demand" a job is?

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The market.

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Originally Posted by LnGrrrR

I feel that, being in the military, I do a job that is rather specialized. (Comm). Should I pay less taxes due to that?

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Depends. I don't really know much about your field or what you do, so it's hard for me to say.

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Originally Posted by LnGrrrR

Please explain how the doctor "deserves" his money moreso than any other person in his salary range.

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Never said that/not my argument.

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Originally Posted by LnGrrrR

Aren't there already tax incentives built in to our laws that deal with dependants?

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Yes, and if I remember correctly, it's like 4.5k, or less than 1/7th of the 32k difference.

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Originally Posted by LnGrrrR

Should a doctor without a family get taxed more? Is that more morally justified?

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Shouldn't get taxed more, I don't think. Are you denying the financial stress on the doctor with a wife + kids?

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Originally Posted by LnGrrrR

That would happen even with a flat tax. Tell me, if you don't have kids in school, do you benefit directly from paying education? How about medicare? SS? If you're a pacifist, do you benefit from paying the military?

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I think there are justifications for each. 1) you might have kids in the future, so it benefits you to invest in education now; 2) there is a chance you might need both medicare and social security; 3) you still receive protection from the military even though you might not want it.

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Originally Posted by LnGrrrR

If you're trying to argue that people who pay taxes sometimes don't benefit from those taxes... well, duh. Feel free to try to completely overhaul the tax system.

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No thanks.

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Originally Posted by RandomGuy

Yes, actually. They are conflicts of interest, or provide ground for potential conflicts of interest.

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What are those conflicts?

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Originally Posted by Yonivore

What a bunch of pap.

1) Wealth is not finite and, therefore, it's concentration in one area does not preclude it from being increased or decreased in others.

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No one is saying this or has said that. Congratulations on attempting to refute something no one believes.

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Originally Posted by Yonivore

1) Wealth is not finite and, therefore, it's concentration in one area does not preclude it from being increased or decreased in others.

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Agreed, for the most part.

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Originally Posted by Yonivore

2) Punitively taxing the wealthy only hurts those you claim to be helping. Reduce someone's wealth by confiscatory taxation and they buy less stuff made by those who are not so wealthy, employ fewer of those who are not so wealthy, and reduce their footprint in the service industry where most of those who are not so wealthy can be found.

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If taxation is confiscatory, then are you saying all taxation is immoral?

What rates are punitive, and which aren't?

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Originally Posted by Yonivore

3) The wealthy stay wealthy, and the poor stay poor, because of personal circumstances -- not because of what each is doing to the other.

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Proof? :lol

There's actually some amount of mobility when it comes to poor/rich classes.

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Originally Posted by Yonivore

And, after all is said and done, our poor are the best situated poor people on the planet...so, STFU.

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Which is neither here nor there.

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Originally Posted by vy65

What are those conflicts?

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How do you know you are getting the best representation you can, if your general counsel just happens to be a partner at the law firm?

There is also the question of the potential to pad billings.

These are the kinds of things auditors look at when they look for fraud and conflicts of interest.

Not saying all such arrangements lead to unethical behavior, but they form one of the more important "legs" of fraud, i.e. opportunity.

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Originally Posted by RandomGuy

How do you know you are getting the best representation you can, if your general counsel just happens to be a partner at the law firm?

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This is besides the point. Usually, you will have used said firm for years, and after being assured of the quality of legal represenation, hire on an attorney as your GC. They wouldn't be GC if you weren't already assured of their worth

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Originally Posted by RandomGuy

There is also the question of the potential to pad billings.

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Oh buddy. I got some news for you . . .

I thought you meant a legal conflict of interest.

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Originally Posted by Yonivore

And, after all is said and done, our poor are the best situated poor people on the planet...so, STFU.

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Certainly true in a relativistic outlook.

Naturally, a sane society, IMO, would expect that those who can take care of themselves, do so. A sane society would also recognize that some cannot and that even the superheroes among us run into bad luck.

The aspiration to upward mobility, often lampooned, is not a bad thing in American society. It beats the sad reality of widespread self-pitying, particularly among those who aren't anywhere close to fitting into the admittedly rich American view of poverty.

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Originally Posted by vy65

Yes.

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So then you'd abandoned your idea that anything other than a flat tax is moral, correct?

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Originally Posted by vy65

The market.

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Could you be slightly more specific? As it is, the "market" (ie. civilians) elect representatives, which make tax laws. So the market is determining tax rates.

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Originally Posted by vy65

Depends. I don't really know much about your field or what you do, so it's hard for me to say.

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Now extrapolate that "I don't know" to the millions of different jobs out there, and figure out how hard implementing a tax code that relies on how "hard" a job is would be to implement.

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Originally Posted by vy65

Never said that/not my argument.

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Didn't you just say that a "harder" job deserves less taxation?

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Originally Posted by vy65

Yes, and if I remember correctly, it's like 4.5k, or less than 1/7th of the 32k difference.

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So you think there should be a bigger exemption for dependants?

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Originally Posted by vy65

Shouldn't get taxed more, I don't think. Are you denying the financial stress on the doctor with a wife + kids?

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Considering this is all hypothetical, yes I deny said financial stress. Are you saying that a hypothetical couple making 40K with two kids doesn't have financial stress too?

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Originally Posted by vy65

I think there are justifications for each. 1) you might have kids in the future, so it benefits you to invest in education now; 2) there is a chance you might need both medicare and social security; 3) you still receive protection from the military even though you might not want it.

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And all those apply to the person who pays in more, right? In fact, one could say that the person who makes more MIGHT start a business, and therefore, MIGHT take advantage of people education in public schools, MIGHT take advantage of healthy workers, etc etc etc.

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Originally Posted by vy65

No thanks.

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I figured not.