I was recently reading yet again about a CEO receiving an obscene bonus for his yearís work. And again, I couldnít help but think it is wrong to have a few people earning up to a hundred times what the average person earns. (BTW, I also donít like seeing my shareholder profits handed out so freely!)
The normal line is that salaries and bonuses are determined by market forces and if you pay peanuts, you get monkeys. I think this true to a degree, but I am still uneasy with such a huge inequality in income.
It got me thinking that perhaps this could be balanced a little by taking a large tax cut from very high incomes which would take just a little pressure off the need to raise taxes from the average person. A sort of super tax on income at, say, a rate of 70% for income over a million dollars.
Iím sure there are plenty of arguments against this and I realise it sounds a bit socialist.
There is the argument that high tax rates kill incentive. I think thatís only true up to a point. I think the level of annual income at which one could live a very comfortable life is well below a million dollars. People who chase more than this donít actually need the money, but want it as a trophy. The trophy is still there even if they have to pay high tax on it.
Another argument is that those with very high incomes will find ways of sheltering it from high taxes. Perhaps, but the tax office is, rightly, continually looking for ways to stop people doing this.
Maybe the take from such a tax would be quite small, but I donít think that stops it being worthwhile.
The government might just squander what was raised, but that is a totally separate discussion.
I think ASF members cover quite a cross section of the community and Iíd be interested to hear the thoughts of others.