“Overpaid Executive Tax” in SF hits firms that pay CEOs 100X more than workers

Businesses can either pay tax, reduce top executive salary, or pay workers more.

Read the whole story

 

[TheShark]

If everywhere did this {or something even stronger} then we'd see the start of a more equitable western wold.

But solidarity is a bit like socialism and for some mind bending reason socialist, like Liberal has become a bad word in America.

In the US of A the idea of being nice and fair to people is seen as dangerous.

Even at your best, America, you're still a nasty piece of work.

The anti-socialism mindset is...mindnumbingly absurd. And it's most prominent in states with a local economy largely if not entirely dependent on, wait for it, SOCIALISM. Like Kentucky. The ONLY THING keeping that state afloat is the countless millions of dollars in federal aid, collected from "Liberal" states with functional economies, the state receives every year. Without that, most of Kentucky would be a 3rd world shithole. But that's pretty much par for the course for Republicans -- hypocrisy. Socialism is bad...except when they're the ones getting the money. Or how welfare is bad...except when its being given to corporations.

Republicans are completely out of touch with reality. But what do you expect of a collection of people who cannot accept a reality that doesn't include magical sky fairies and an all power space daddy? Reality was *NEVER* part of their lives. Which is what makes them SO easy to dupe into stabbing themselves in the backs. The mental gymnastics it takes for them to make sense of the world leaves them too exhausted to question the lies they're fed by Republican leadership. It's like shooting fish in a barrel...of fish.

We need to pass a federal law which caps the federal payments to a state at the amount of revenue received from that state. Spin up some propaganda about "stop the blue state bailouts!" and tell all the red state folks it will keep their hard earned tax dollars from going to lazy colored people in cities and they'll beg for it to be passed.

You forgot your /s. It's mostly the Blue states that are paying more in taxes than what they get back, with the Red states overwhelmingly on the dole. Edit: That said, the crowd that was exploited by Trump would be easily swayed by your scheme even if it's fake as h***.

I didn't include the /s because I actually think it would be a great idea. It's not very bipartisan of me but I'm pretty fed up with red states whining about socialism when my hard work pays for their social security and farm subsidies.

 

[scarletjinx]

Unless they've written this very carefully to close all the loopholes that a CEO can earn "no salary" but actually be paid millions and have a giant golden parachute, it's barely going to make a difference. Does anyone have the ability to tell if this is the case?

Let’s pretend your loophole closed fantasy is real. What happens next?

Yep, no more executives in San Francisco. You will have successfully taxed them right out of your jurisdiction.

I wonder if the taxers will cry at that point or rejoice at how even the income is in their economic wasteland of 100% minimum wage jobs.

Very quick Googling shows California's taxes are among the highest in the US. Hence why all companies and executives have left California. Hence why Cali only has the 8th highest GDP per capita of US states. It's sad, really.

Show your data.

Um...... quick Duck Duck Go "ing" search results in absolutely no support to your claim. In fact, California's GDP ranks ~ #5 IN THE WORLD most years.

https://en.wikipedia.org/wiki/Economy_of_California

As to companies and executives leaving, I've heard that talking point ad nauseum without ever hearing any supporting information to prove.

Personal observation regarding the current costs of commercial & residential real estate, population statistics (population flight is generally lower on socio-economic side; new residents generally on the higher end), & the fact of the actual California GDP being so high leads me to suspect there ain't no such executive/corporate flight from the evil overtaxed socialist California.

Census data - net gain:
https://www.census.gov/quickfacts/CA

Discussion of socioeconomic population movement - it's about the jobs
https://www.ocregister.com/2019/12/18/r ... us-shrank/

 

[pi.squared]

In order for that to work, the entire company has to leave. You can't still have an office in SF, as many of the tech giants do. So now, you have to hire an entirely new staff, and deal with the growing pains of a new team getting accustomed to an unfamiliar product, and being unproductive while they ramp up.

These companies have just spent the last 8 months proving that work-from-home isn't an issue. They can close the office but still retain all of the talent.

Well, the white-collar talent. The custodians and secretaries are out of a job now.

Secretaries have been upgraded to virtual assistants. Starting circa 2005, several companies started aggressively marketing virtual assistants to SOHOs. I'm aware of several SOHOs that replaced retiring secretaries with virtual assistants. More than one has discovered their virtual assustsnt literally lived on the other side of the planet, months after the person started working for them.

As far as custodians go, SOHOs are making employees are responsible for cleaning their work area, with devices like iRobot to clean the floors twice daily.

 

[coslie]

People leave California because it's expensive because it's too crowded because everyone and their dog want to live there.

But for someone living in a world where tax cuts are the solution to all problems, and the lack of tax cuts are the cause of all problems, then sure, people are fleeing taxation, and California is doomed real soon now..

 

[pi.squared]

Businesses can either pay tax, reduce top executive salary, or pay workers more.

OR... or, and I'm just spitballing here... they can ignore the law, claim it doesn't apply to them, sue the city (or whomever) asserting the law is unconstitutional, that they don't have the legal authority, etc...

OR, failing all other options, including but not limited to funding smear campaigns of people who end up replacing those who enacted the law, who then, being bought-and-paid-for, end up repealing the law, the companies and their CEOs can figure out clever ways to pay their executives without actually being observed paying them, so they can PRETEND to be in-compliance while actually not just ignoring the law, but in fact making things worse out of sheer spite.

Hell, they might manage to avoid owing federal tax too, as an added bonus after the measures they'll take to skirt this perhaps-well-intentioned nonsense.

For example, just off the top of my head: the CEO of any given company forms an overseas nonprofit or charity, possibly through multiple shell companies, and ends up being the beneficiary of those companies. A portion of what would have been their salary goes through THAT and as a result, never has any tax applied to it, with the end-result of netting both the local government AND state and federal taxing authorities an even smaller amount than they were already getting from these people in tax to begin with.

I predict this will, in general, at best, have no effect on the problem they were trying to address whatsoever, and at worst... that it will actually exacerbate the problem they were trying to remedy.

I'm not saying what I think SHOULD happen... only what I believe WILL happen. Sadly. Because it seems like a noble cause... just probably it's like trying to scoop water up with a sieve. Lots of effort for little to nothing in the way of end results.

Nevada Shell Company
Wyoming Shell Company
South Dakota Trust
Bahamas Trust

Good luck getting enough financial data from anything in that train that demonstrates a connection between them.

 

[scarletjinx]

That was exactly my thought. I think there's going to be a significant spike in independent contactor executives. Perhaps a flood of new LLCs with a single employee.

California does not allow for single member LLCs.

Show your data.

I do not know where you got that idea. Let's take a look at California's entities regulatory body:

https://www.sos.ca.gov/business-program ... -entities/


Ooops! LLC formations have no such limitations

 

[C.M. Allen]

Here is something simple. If they richest want 90% of the profits, they can pay 90% of the taxes.

https://www.pewresearch.org/fact-tank/2 ... ncome-tax/
In 2015, the top ~4.5% of tax returns paid 73.7% of the individual income taxes...

And? There are a few things of note when it comes to taxation:

• Firstly, for a country with its own sovereign currency, it doesn't actually need taxes to pay for things as it can always pay for anything it wants by simply creating more money; the reason they don't is because this would cause inflation, so taxation is really more about controlling inflation than it is about paying for stuff.
• With that in mind, a lot of taxation isn't actually about the best way to raise money, but about penalising negative economic behaviours. Monopolies are bad for economies, which is why bigger corporations are supposed to pay more tax, likewise with high incomes; past a certain point high incomes become meaningless, they can't live anymore comfortably than they already do. Of course the system is utterly broken so it barely functions at all, let alone as intended.
• High incomes are a negative in economies because the wealthier someone is, the more likely they are to save their money rather than spend it, which means instead of being out paying for jobs, goods etc., it gets tied up in the financial markets, which these days are basically an entirely separate economy designed to never trickle down to anyone else; it sort of does to a degree in some ways, but nowhere near the scale or effectiveness that neoliberals pretend.
• High incomes are also a negative to economies because it's money removed from a business that that business could invest. If you pay a CEO $10m/year, but your front-line staff $20k/year, then for the cost of that CEO you could employ 500 more staff and have a better business.

Personally I'm of the view that income tax should be 100% above about $500k/year, and companies should be taxed on revenue not profit, but that's far too radical to ever actually happen unless someone fancies a revolution.

This issue with wages has never been a problem of low end. Not really. It's always been about the absence of a ceiling, of a maximum wage. Countless economic and political issues can be traced directly back to that. Just one example: it's nearly impossible to 'buy' a politician when the wealth gap between the lowest earners and the highest earners is 100%. There simply isn't enough financial gain necessary to motivate it. The personal gain to someone's lifestyle is insignificant.

As a result there was absolutely no corruption in the Soviet Union and the Warsaw Pact countries!

Hmm, maybe there's a flaw in this reasoning?

If you're going to use that as a rebuttal, you've already failed to make your point. -edit for clarity- The Soviet Union and others were *NEVER* communism or socialism or marxist. They were a bunch of kakistocracies and plutocracies. You might as well point at *AMERICA* as an similar 'example' of your point.

 

[dagar9]

move on over to "flyover country" we like having jobs and generally aren't fans of these business hating, wealth demonizing, NeoMarxist ideals that seem to be pushing California residents out of the state. We'd be happy to have you.

Nah. Nobody's going to move out of California wanting to live in Missouri or Kansas.

 

[s73v3r]

move on over to "flyover country" we like having jobs and generally aren't fans of these business hating, wealth demonizing, NeoMarxist ideals that seem to be pushing California residents out of the state. We'd be happy to have you.

Nah. Nobody's going to move out of California wanting to live in Missouri or Kansas.

Not to mention, there aren't enough high talent engineers in those places. That's a big reason why so many of these companies stay in SV, despite the high cost of living.

But, assuming some of these companies choose to move to Kansas City, what do you think they're gonna do with regard to the talent issue? Same thing they do in SV: recruit people and move them there. Those people are highly educated, demand high quality services and schools from where they live, and are typically more left leaning. So by bringing the businesses, you're bringing the people who are enacting those policies.

 

[C.M. Allen]

move on over to "flyover country" we like having jobs and generally aren't fans of these business hating, wealth demonizing, NeoMarxist ideals that seem to be pushing California residents out of the state. We'd be happy to have you.

Nah. Nobody's going to move out of California wanting to live in Missouri or Kansas.

Not to mention, there aren't enough high talent engineers in those places. That's a big reason why so many of these companies stay in SV, despite the high cost of living.

But, assuming some of these companies choose to move to Kansas City, what do you think they're gonna do with regard to the talent issue? Same thing they do in SV: recruit people and move them there. Those people are highly educated, demand high quality services and schools from where they live, and are typically more left leaning. So by bringing the businesses, you're bringing the people who are enacting those policies.

It's not just about the people. It's the infrastructure, too. Ports, trucks, airplanes, etc, etc. Businesses want quick, cheap access to those things (even though they don't want to have to pay for them), which you're not going to find outside of other, similarly high-priced metropolitan areas. Not unless the business PAYS to build them (see: Amazon).

 

[Cloudgazer]

Here is something simple. If they richest want 90% of the profits, they can pay 90% of the taxes.

https://www.pewresearch.org/fact-tank/2 ... ncome-tax/
In 2015, the top ~4.5% of tax returns paid 73.7% of the individual income taxes...

And? There are a few things of note when it comes to taxation:

• Firstly, for a country with its own sovereign currency, it doesn't actually need taxes to pay for things as it can always pay for anything it wants by simply creating more money; the reason they don't is because this would cause inflation, so taxation is really more about controlling inflation than it is about paying for stuff.
• With that in mind, a lot of taxation isn't actually about the best way to raise money, but about penalising negative economic behaviours. Monopolies are bad for economies, which is why bigger corporations are supposed to pay more tax, likewise with high incomes; past a certain point high incomes become meaningless, they can't live anymore comfortably than they already do. Of course the system is utterly broken so it barely functions at all, let alone as intended.
• High incomes are a negative in economies because the wealthier someone is, the more likely they are to save their money rather than spend it, which means instead of being out paying for jobs, goods etc., it gets tied up in the financial markets, which these days are basically an entirely separate economy designed to never trickle down to anyone else; it sort of does to a degree in some ways, but nowhere near the scale or effectiveness that neoliberals pretend.
• High incomes are also a negative to economies because it's money removed from a business that that business could invest. If you pay a CEO $10m/year, but your front-line staff $20k/year, then for the cost of that CEO you could employ 500 more staff and have a better business.

Personally I'm of the view that income tax should be 100% above about $500k/year, and companies should be taxed on revenue not profit, but that's far too radical to ever actually happen unless someone fancies a revolution.

This issue with wages has never been a problem of low end. Not really. It's always been about the absence of a ceiling, of a maximum wage. Countless economic and political issues can be traced directly back to that. Just one example: it's nearly impossible to 'buy' a politician when the wealth gap between the lowest earners and the highest earners is 100%. There simply isn't enough financial gain necessary to motivate it. The personal gain to someone's lifestyle is insignificant.

As a result there was absolutely no corruption in the Soviet Union and the Warsaw Pact countries!

Hmm, maybe there's a flaw in this reasoning?

If you're going to use that as a rebuttal, you've already failed to make your point. -edit for clarity- The Soviet Union and others were *NEVER* communism or socialism or marxist. They were a bunch of kakistocracies and plutocracies. You might as well point at *AMERICA* as an similar 'example' of your point.

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

 

[C.M. Allen]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

...sorry, but while they can claim low economic inequality, the reality was anything but. Like Putin, Stalin and his loyalists lived like kings while the people slaved and starved. It suffered from EXTREME economic inequality. And second, just as relevant as before, anything you build on top systemic corruption and inequality is going to be just as corrupt and broken. The Soviet Union was built on top of the systemic corruption and inequality of the Russian empire before it, which was reflected in the Soviet Union's systemic corruption and inequality...and Putin's Russia repeated that same mistake, inheriting the same corruption and inequality, because the wealthy, powerful, and corrupt are the ones who orchestrated the whole thing. Unsurprisingly, the extreme inequality, and the corruption it creates, is rotting Russia away from the inside.

So, once more, if you're going to use that as a rebuttal, you've already failed to make your point. Rather, it proves the exact opposite. It is yet another example of what significant inequality does to a society. The Soviet Union is just another tombstone in the graveyard of civilizations toppled by inequality, stretching back to the origins of human civilization. Wealth is power, and power corrupts. Always.

 

[Cloudgazer]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

...sorry, but while they can claim low economic inequality, the reality was anything but. Like Putin, Stalin and his loyalists lived like kings while the people slaved and starved.

Those are the best available figures that came from Piketty. Are you claiming that you're a greater expert on income inequality than Piketty? Which source are you using? Bergson? Yanowitch? Wiles and Markowski? Pryor? Wädekin? Chapman? McAuley? Matthews? Schroeder? There have been numerous studies and none of them agree with your claim that...

It suffered from EXTREME economic inequality.

So I'm sure you have a strong citation for that claim, beyond just the fact that the USSR was no true scotsman! Sci-hub links are fine.

And second, just as relevant as before, anything you build on top systemic corruption and inequality is going to be just as corrupt and broken.

Which is another way of saying that you were wrong when you claimed that introducing an income cap would remove corruption. It wouldn't.

Here's another example - in the 1970s the UK had a de-facto income cap due to marginal tax rates of 94% at the top. There is no historical data for corruption, but if you think that the UK was less corrupt in the 1970s ... well there's plenty of evidence to the contrary. Local governments were much more corrupt back then for example.

So - where's your data? You made a claim that there's a causal connection between reducing the top income and reducing corruption. So far you've got nothing to back that up, beyond saying that Thomas f-ing Piketty doesn't know squat about inequality in the USSR.

I'm waiting.

 

[pika2000]

People leave California because it's expensive because it's too crowded because everyone and their dog want to live there.

But for someone living in a world where tax cuts are the solution to all problems, and the lack of tax cuts are the cause of all problems, then sure, people are fleeing taxation, and California is doomed real soon now..

I thought people want to live in CA because they love the poop aroma on the streets.

 

[lyme]

Do you really want the government in charge of all capital?

No. But the US is currently sprinting in the direction of Jeff Bezos & Mark Zuckerberg controlling all capital, and the government is at least answerable to voters.

Ask yourself: At what point on the road to a Gini Coefficient of 1 (aka one person literally does control all the money) would you say: "maybe this is a dumb way to allocate wealth"? The US has marched very steadily from a Gini coefficient of 0.39 in 1967 up to 0.49 in 2017.

Communism is miles away from how the US practices business, and a step in that direction is a good thing, to perhaps start interrupting the current wealth-accumulation patterns.

That is certainly a coefficient to avoid.

So what allows the CEO to get too much pay and compensation?

Lack of competition. If there was cutthroat competition, there would not be fat profit margins. No fat profit margins, no stupid large compensation.

It is not business that has been failing us it is government. Why do we have shitty last mile internet rules that promote monopolies and zero competition? Why do we allow dumb pipe providers to get into the content business? Why do we allow Google and Amazon to expand into other businesses "because we feel like it and besides our fat profits allow us to do whatever we want including running losses to crush the competition". Why do we allow fat corporations to deny municipalities the simple choice of building out their own broadband? Why is Tesla illegally barred from selling vehicles in all states?

We need to be fixing the true problems, not just rubbing ointment on the symptoms. The Economist has put out some really good articles scientifically identifying areas of the economy with poor competition, therefore stupidly high profit margins, yielding dumb salaries. We just need politicians able to see the problem and fix it.

You are correct, however this is capitalism at its finest. The story that we are taught where companies will compete to bring prices down, is a lie. Companies will independently collude to raise prices to the highest the market will bear, and to carve up the market between the players.

 

[unconcerned]

People who support this are just a bunch of jealous pansies.
Yeah let's penalize the leaders that create and maintain jobs for the masses.
Smart. Just move to a communist country if you support this garbage.

Trickle down doesn't work. I don't like this solution but saying that there's not a problem is plain wrong.

Oh, trickle-down works all right! If we suck at that uber-wealthy butt hard enough, something will eventually trickle out. Might not be the money some people dream all that sucking will one day net them, but it may have /some/ nutritional value left in it at least!

Ooh the good old trickle down centipede...

 

[vze33jng]

"Employees' salaries are based on experience and on value to a company."

This was a written response because there's no way he would've been able to deliver it with a straight face.

For real. Employee salaries are based on how hard hard they are to replace, which comes from the supply of qualified labor and demand of competing positions. The only time the value they bring comes into it is if that value drops below their pay, at which point, they're out of a job.

Exactly right. At one place I worked, there was an untimely death, and when they filled the position, it was with two people, both of whom made more than the recently deceased. It proves that they needed the skills, and valued them, but not until he died, and they realized thaley simply couldn't hire somebody that had all of his skills and licenses.

 

[C.M. Allen]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

...sorry, but while they can claim low economic inequality, the reality was anything but. Like Putin, Stalin and his loyalists lived like kings while the people slaved and starved.

Those are the best available figures that came from Piketty. Are you claiming that you're a greater expert on income inequality than Piketty? Which source are you using? Bergson? Yanowitch? Wiles and Markowski? Pryor? Wädekin? Chapman? McAuley? Matthews? Schroeder? There have been numerous studies and none of them agree with your claim that...

It suffered from EXTREME economic inequality.

So I'm sure you have a strong citation for that claim, beyond just the fact that the USSR was no true scotsman! Sci-hub links are fine.

And second, just as relevant as before, anything you build on top systemic corruption and inequality is going to be just as corrupt and broken.

Which is another way of saying that you were wrong when you claimed that introducing an income cap would remove corruption. It wouldn't.

Here's another example - in the 1970s the UK had a de-facto income cap due to marginal tax rates of 94% at the top. There is no historical data for corruption, but if you think that the UK was less corrupt in the 1970s ... well there's plenty of evidence to the contrary. Local governments were much more corrupt back then for example.

So - where's your data? You made a claim that there's a causal connection between reducing the top income and reducing corruption. So far you've got nothing to back that up, beyond saying that Thomas f-ing Piketty doesn't know squat about inequality in the USSR.

I'm waiting.

Literally every example you keep trying to cite as 'proof' is one built on CENTURIES of extreme inequality and the corruption it creates. Nothing changed about wealth distribution from the Russian Empire, to the USSR and Russia now. A tiny proportion of the population owned and controlled everything, while a sizable portion lived in poverty and the rest just got by. The same is true of the UK, being built on, wait for, over a thousand years of Great Britain's monarchy, centuries of inequality and the corruption it creates. Italy, France, Spain, etc, etc. They didn't just 'begin' yesterday. Those societies and nations inherited all the corruption their wealthy and powerful created along the way. That history is inextricable from the present. What makes the US only *MARGINALLY* different is that its past is far shorter. It doesn't have the same length of legacy of corruption and inequality built right into its core. But it preserved the attitudes about wealth and entitlement and inequality, so the corruption quickly festered. See: America's Gilded age.

Corruption does not happen on its own. It's a symptom. The catalyst is inequality. It always has been, and it always will be. As to your other notions: that's just more tired and unchallenged dogma in support of elitism and entitlement that doesn't actually stand up to any serious scrutiny. Not when you actually look across the full spectrum of human history and its countless long-dead societies and empires. They all have a common thread: inequality sets in because human are inherently selfish, corruption builds as people fight over that wealth and power, leadership fails under its own incompetence and detachment, and society collapses on itself. It claimed Rome. It claimed the Hittites. It claimed ancient Greece. It claimed various Chinese dynasties. It claimed Egypt multiple times. It claimed pre-revolution France. It claimed the British Empire ("But GB is still around!" Yes, as a pale shadow of its former self). It's strangling America right now. The pattern is there for anyone to see.

Inequality is toxic to society. But it's toxic like heroin or antifreeze -- you're too busy enjoying yourself while it kills you to stop.

 

[Cloudgazer]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

...sorry, but while they can claim low economic inequality, the reality was anything but. Like Putin, Stalin and his loyalists lived like kings while the people slaved and starved.

Those are the best available figures that came from Piketty. Are you claiming that you're a greater expert on income inequality than Piketty? Which source are you using? Bergson? Yanowitch? Wiles and Markowski? Pryor? Wädekin? Chapman? McAuley? Matthews? Schroeder? There have been numerous studies and none of them agree with your claim that...

It suffered from EXTREME economic inequality.

So I'm sure you have a strong citation for that claim, beyond just the fact that the USSR was no true scotsman! Sci-hub links are fine.

And second, just as relevant as before, anything you build on top systemic corruption and inequality is going to be just as corrupt and broken.

Which is another way of saying that you were wrong when you claimed that introducing an income cap would remove corruption. It wouldn't.

Here's another example - in the 1970s the UK had a de-facto income cap due to marginal tax rates of 94% at the top. There is no historical data for corruption, but if you think that the UK was less corrupt in the 1970s ... well there's plenty of evidence to the contrary. Local governments were much more corrupt back then for example.

So - where's your data? You made a claim that there's a causal connection between reducing the top income and reducing corruption. So far you've got nothing to back that up, beyond saying that Thomas f-ing Piketty doesn't know squat about inequality in the USSR.

I'm waiting.

Literally every example you keep trying to cite as 'proof' is one built on CENTURIES of extreme inequality and the corruption it creates. Nothing changed about wealth distribution from the Russian Empire, to the USSR and Russia now. A tiny proportion of the population owned and controlled everything, while a sizable portion lived in poverty and the rest just got by. The same is true of the UK, being built on, wait for, over a thousand years of Great Britain's monarchy, centuries of inequality and the corruption it creates.

Except the UK is arguably less corrupt now. Even while it is also more unequal.

Italy, France, Spain, etc, etc. They didn't just 'begin' yesterday. Those societies and nations inherited all the corruption their wealthy and powerful created along the way.

Do you think that Sweden, Norway and Germany didn't also have wealthy powerful aristocracies at the same time as France Italy and Spain? Economically all the European nations share a similar highly unequal past. Yet corruption is completely different.

Corruption does not happen on its own. It's a symptom. The catalyst is inequality. It always has been, and it always will be.

This is a just-so story. You've got nothing. You've not even got a correlation of unequal societies and corrupt societies let alone a causal connection.

So - let's recap shall we, you've not provided any evidence for your claim that the USSR had incredible inequality, so we can mark that one abandoned right?

And you've also abandoned your claim that a wage cap would eliminate corruption, because now you say that corruption is a complicated beast and history matters - so there's no point from a corruption perspective imposing a wage cap, in spite of your previous claims that there would be.

We're left with you making an unsupported and probably unsupportable claim that inequality caused the corruption we now see in the world, because the great authority CM Allen has said so.

I thought it was supposed to be republicans who preferred faith over fact and dogma over reason?

 

[Sandwichman]

I really think people look at this with an emotional response instead of a logical well thought out plan. There will be some things that need to be answered, like whether it will be cheaper to just pay the tax and keep the status quo? Think in terms of MLB salary caps. Better in the short term to pay upfront in the early years of the luxury tax to win games than pay on the back end when the tax is to expensive compared to the revenue generated on a winning team. What really needs to happen is we need a fundamental shift in how goods and services are valued. Everything can't exponentially increase in value forever without eventually causing economic meltdown. First step is to actually change the tax system within this country. I don't care who the President is, but the affluent among us will always have a way of claiming zero tax liability whether the tax rate is 37% or 60%. Until that happens there isn't a way to actually make any significant change within our economic system. There always needs to be incentive for people to work and do better. Without that we become what we fear the most, ignorant and dependent on a government that can't take care of it's people.

 

[latoya]

The pay ratio limit is based on the median salary of employees in *San Francisco*. Therefore, simply moving all employees from SF to Oakland or Silicon Valley (as they've already been doing) is the easiest and cheapest way to avoid this and future similar ordinance by SF. Or they can move just the low paid jobs, with the added bonus of increasing gentrification problems.

Nevertheless, as one of the richest and most liberal cities in the US with negligible conservative political power, SF has everything it needs to keep being what it is: a progressive paradise with healthcare, government services, safety nets, and equality second to none.

 

[Mark086]

Nevertheless, as one of the richest and most liberal cities in the US with negligible conservative political power, SF has everything it needs to keep being what it is: a progressive paradise with healthcare, government services, safety nets, and equality second to none.

You are hilarious.

Everybody in SF has the right to shit on the streets, that's the epitome of equality expressed there.

 

[maximara]

How long until they find a way to pay a "not salary" to the top execs and bypass the law completely?

Way to bypass is to outsource low earning employees.

Auxillary nurse, cleaner or reception clerk at a private hospital? Not anymore, hospital outsources nurse auxillaries to an employment agency that rents them back per hour to the same private hospital.

Median salary of hospital goes up once only people on payroll are doctors and they avoid the penalty tax for CEO of the chain of hospitals who earns 15M/year.

That may be illegal per the medical board.

 

[coslie]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

I'm not necessarily wanting to get involved in the overall argument, personally I'd say corruption* in it's broader form is one of the greatest drivers of income inequality, not the other way around.

But what I really wanted to point out is that the Gini coefficient is irrelevant in the context of the former Soviet Union. Formal income just didn't matter, there was nothing to spend it on. Personal connections, and influence determined your consumption, not money. Basically corruption -was- the de facto currency in the FSU.

You could pull out a giant stack of bills and all it would get you was a place on the multi year waiting list for one of those stupid little plastic cars while government officials whiz past you in black Mercedes. Unless you had a friend or relative who could help or had a favor or gift to trade. You could try and convince someone to take your near worthless money as a bribe, but good luck with that.


* Corruption as in abusing power for personal gain or in exchange for favors, myriad forms of which have been decriminalized by the SCOTUS.

 

[C.M. Allen]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

I'm not necessarily wanting to get involved in the overall argument, personally I'd say corruption* in it's broader form is one of the greatest drivers of income inequality, not the other way around.

But what I really wanted to point out is that the Gini coefficient is irrelevant in the context of the former Soviet Union. Formal income just didn't matter, there was nothing to spend it on. Personal connections, and influence determined your consumption, not money. Basically corruption -was- the de facto currency in the FSU.

You could pull out a giant stack of bills and all it would get you was a place on the multi year waiting list for one of those stupid little plastic cars while government officials whiz past you in black Mercedes. Unless you had a friend or relative who could help or had a favor or gift to trade. You could try and convince someone to take your near worthless money as a bribe, but good luck with that.


* Corruption as in abusing power for personal gain or in exchange for favors, myriad forms of which have been decriminalized by the SCOTUS.

It's worse than that. The Gini coefficient doesn't even capture the full reality. It's narrowly focused on a specific subset of the economy. To elaborate, let's pick apart some economic inequality numbers in the US. Jeff Bezos, one of the wealthiest Americans, has a total worth of $200b earned over a period of 26 years (Amazon was founded in 1994). If you look at what his annual earnings is, you'd get roughly $1.2m per year. Does that add up? Nope. Not even ****ing close. Any way you slice that $200b up over those 26 years, his most recent years have netted him well over a billion dollars per year. That's over a thousands times higher than his supposed annual earnings. But wait, let's keep going! The federal minimum wage is $7.25 an hour. By comparison, working standard full-time hours, Bezos 'earns' over $3m an hour. PER. HOUR. Which means he makes over 400,000 times the lowest paid workers in the US. And yet, the Gini Coefficient for the US was only 0.48 for 2019.

In short, the Gini Coefficient is being used to mean something it simply does not represent. The data it captures and the methodology used to collate that data doesn't even BEGIN to represent the full reality. Anyone trying to use that information to convey a nation's economic inequality is being deliberately misleading.

 

[Cloudgazer]

That's a no True Scotsman argument.

Your claim was, essentially that reducing inequality would reduce corruption - but it doesn't hold water - the USSR was corrupt as anything but it had an admirably low Gini coefficient.

https://medium.com/@sumdepony/the-sovie ... 5bede96b5c

Roughly at Norwegian levels. It certainly didn't have Norwegian levels of corruption though!

In fact if you were to consider the Gini coefficient only of the developed 'European' west of Russia it likely had a Gini coefficient even lower than that of the Nordics.

Reducing inequality won't necessarily reduce corruption, in fact it can increase it if the society is one in which corruption is tolerated. Corruption is societal not economic.

To use a less extreme or contentious example, anywhere in Europe has a lower Gini coefficient than the US

https://www.theguardian.com/inequality/ ... -countries

But plenty of Europe is, to this day, more corrupt

https://www.transparency.org/en/cpi

I'm not necessarily wanting to get involved in the overall argument, personally I'd say corruption* in it's broader form is one of the greatest drivers of income inequality, not the other way around.

But what I really wanted to point out is that the Gini coefficient is irrelevant in the context of the former Soviet Union. Formal income just didn't matter, there was nothing to spend it on. Personal connections, and influence determined your consumption, not money. Basically corruption -was- the de facto currency in the FSU.

You could pull out a giant stack of bills and all it would get you was a place on the multi year waiting list for one of those stupid little plastic cars while government officials whiz past you in black Mercedes. Unless you had a friend or relative who could help or had a favor or gift to trade. You could try and convince someone to take your near worthless money as a bribe, but good luck with that.


* Corruption as in abusing power for personal gain or in exchange for favors, myriad forms of which have been decriminalized by the SCOTUS.

Exactly - but that's precisely the kind of thing that happens when you impose harsh limits on the extent of formal wealth, or impose harsh limits on the services that formal wealth can buy.

The example I always turn to is rental housing in Stockholm - informal wealth, a high place on the housing list is more valuable than regular wealth because renting isn't an open market in Stockholm - wealth doesn't matter.

At least not officially - of course in practice it does, because honest uncorrupt sweden is actually surprisingly corrupt in this one area. Paying illegally under the table for private transfers is not uncommon. Illegal sublets are also not uncommon.

 

[whitetigersx]

Businesses can either pay tax, reduce top executive salary, or pay workers more.

Or leave.

And give up the market? Sounds like a dubious business proposition...

 

[BlackHex]

I absolutely agree with the intent, I have long wanted such a law... however, it is just way to easy to bypass such legislation. I'm pretty sure they just need to do something simpler like increasing the top-rate tax to 90% over 100*NationalMedianWage or something (i.e. back to 1950's levels).

 

[justin150]

I absolutely agree with the intent, I have long wanted such a law... however, it is just way to easy to bypass such legislation. I'm pretty sure they just need to do something simpler like increasing the top-rate tax to 95% over 100*NationalMedianWage or something.

The evidence from other countries is that tax rates of that level are counter-productive. Of course that assumes that the tax has, as its primary purpose, the raising of revenue. Not all taxes are designed that way, some are designed to change behavior such as taxes on cigarettes or alcohol. Income tax though has always been a tax whose purpose was to raise revenue. The UK had a top rate tax of 83% in the 1970s (with a 15% surcharge for "unearned" income such as interest and rents). When it was reduced to 60% in the early 1980s revenue from higher rate tax payers increased (as it did when reduced to 40% a few years later).

The problem with really high income tax rates is that they do change behavior, just not necessarily in the way that politician expect!

 

[didfet]

Sorry to dampen the enthusiasm of a lot of people here, but it reminds me of François Hollande's (in)famous 75% super-tax on the rich... A very good idea to get elected, but in the end a big economic failure.

 

[Haravikk]

Sorry to dampen the enthusiasm of a lot of people here, but it reminds me of François Hollande's (in)famous 75% super-tax on the rich... A very good idea to get elected, but in the end a big economic failure.

That's not really a clear case against the general idea; increased taxation won't work if a concerted effort isn't also made to tackle tax avoidance and other issues.

For example, here in the UK we could slap a 100% tax on the highest paid and it'd yield hardly anything, because most of them already don't pay any additional tax anyway due to various schemes, if they're even based in the UK at all (most of the richest are "residents" of various tax havens despite being physically in the UK most of the time), etc.

 

[skinjester]

This seems like a great way to get companies to relocate. It's not like California isn't already a mess of high taxes and anti-business laws, just keep pushing, eventually they will leave.

On that note, move on over to "flyover country" we like having jobs and generally aren't fans of these business hating, wealth demonizing, NeoMarxist ideals that seem to be pushing California residents out of the state. We'd be happy to have you.

Thanks

 

[Cloudgazer]

Sorry to dampen the enthusiasm of a lot of people here, but it reminds me of François Hollande's (in)famous 75% super-tax on the rich... A very good idea to get elected, but in the end a big economic failure.

That's not really a clear case against the general idea; increased taxation won't work if a concerted effort isn't also made to tackle tax avoidance and other issues.

For example, here in the UK we could slap a 100% tax on the highest paid and it'd yield hardly anything, because most of them already don't pay any additional tax anyway due to various schemes, if they're even based in the UK at all (most of the richest are "residents" of various tax havens despite being physically in the UK most of the time), etc.

You're mistaken on the last bit.

The rules on residency are very strict, and you cannot be physically present in the UK most of the time and not be resident.

https://www.bdo.co.uk/en-gb/insights/ta ... ing-the-uk

The superrich are in fact mostly resident in the UK, they're just not domiciled here.

https://en.wikipedia.org/wiki/List_of_p ... _in_the_UK

In fact, in general we are the tax haven.

 

[sadsteve]

People have been predicting that companies would flee CA for low-tax Kansas or Alabama for decades. Not only has it not happened, more companies have moved to CA.

If your primary focus is on your tax rate, you deserve to go out of business. Paying a lot in taxes is suggestive that you're doing things right - look at Apple. The highest US taxpayer for like 20 years running. Your focus should be on talent and growth, and that's why companies still choose to set up in the most insanely expensive and tax heavy California - because those taxes are doing a LOT of work for employers. UC and Stanford is still the top engine for worker talent in the US. CA's infrastructure isn't wonderful, but it's better than anywhere else in the US, and we're actively investing in it now rather than trying to avoid that.

CA is the top agriculture state, top manufacturing state, and the tech capital of the world. And since the 70s everyone has said we're fucking this up. Uh huh.

California is also number 1 in unfunded pension debt. Over 1 trillion dollars.

 

[latoya]

[*]High incomes are a negative in economies because the wealthier someone is, the more likely they are to save their money rather than spend it, which means instead of being out paying for jobs, goods etc., it gets tied up in the financial markets, which these days are basically an entirely separate economy designed to never trickle down to anyone else; it sort of does to a degree in some ways, but nowhere near the scale or effectiveness that neoliberals pretend.
.

you realize that the "savings" of high wealth individuals is typically invested, which is exactly where new businesses, growth, and then jobs come from? Person puts money in a bank, the bank gives it to a small business loan so that someone can start a business, that business hires people to make money. Investment funds work on the same principle. Financial markets have dividends. This is all factual and empirical.

 

[scarletjinx]

[*]High incomes are a negative in economies because the wealthier someone is, the more likely they are to save their money rather than spend it, which means instead of being out paying for jobs, goods etc., it gets tied up in the financial markets, which these days are basically an entirely separate economy designed to never trickle down to anyone else; it sort of does to a degree in some ways, but nowhere near the scale or effectiveness that neoliberals pretend.
.

you realize that the "savings" of high wealth individuals is typically invested, which is exactly where new businesses, growth, and then jobs come from? Person puts money in a bank, the bank gives it to a small business loan so that someone can start a business, that business hires people to make money. Investment funds work on the same principle. Financial markets have dividends. This is all factual and empirical.

Um, since the '80's, we've embarked on an experiment with supply side economics theory. It has, by far, failed to result in better outcomes than previous policies of Keynesian economics have resulted. The "factual and empirical" numbers do not support your assertion.


https://en.wikipedia.org/wiki/Supply-si ... inequality

(& too many other links to bother with)

Wealth inequality and the national debt has dramatically increased into historic levels as a result of economic policy that favored high wealth individuals. When wealth is concentrated at the top, it does not circulate; high wealth individuals' savings are more likely put in investment vehicles than spent on actual investments of goods, services, people, infrastructure.

Wall Street may help gain wealth; however rent seeking is a dismissive term because it is an acknowledgement that that economic behavior does not add value.

Those in the middle and lower socioeconomic classes, however, spend a greater proportion of any increase in their wealth, in deferred needs or desires, which in turn circulates through the economy, stimulating businesses and jobs. So, throw away your copy of Atlas Shrugged or whatever your bible is and look at actual facts to determine the actual economic policies that work.

 

[real mikeb_60]

[*]High incomes are a negative in economies because the wealthier someone is, the more likely they are to save their money rather than spend it, which means instead of being out paying for jobs, goods etc., it gets tied up in the financial markets, which these days are basically an entirely separate economy designed to never trickle down to anyone else; it sort of does to a degree in some ways, but nowhere near the scale or effectiveness that neoliberals pretend.
.

you realize that the "savings" of high wealth individuals is typically invested, which is exactly where new businesses, growth, and then jobs come from? Person puts money in a bank, the bank gives it to a small business loan so that someone can start a business, that business hires people to make money. Investment funds work on the same principle. Financial markets have dividends. This is all factual and empirical.

I haven't run across any small business that's found it reasonably easy to get a loan from a bank. Especially a loan with an interest rate they could afford (despite the bank paying essentially zero interest to depositors). To get a loan, they usually have to find a locally-based bank that is also quite picky about who it rents money to. Or a credit union. That last is the most likely source for a really small business just trying to get started, and the least likely place to benefit from deposits by high net worth individuals. Of course, there's that old saw: you can't get a loan from a bank unless you don't need it.

Further: when the government gives money to the rich, which they don't really need to live on, they almost always "invest" it in the stock or bond markets, or a derivative of those. Companies do get funding from those markets, but most people aren't contributing to that - the companies only get the money from the initial sale of the stock or bond, not the continuing play in the market. What's actually happening is that money is tied up in gambling that the price will go up (or down, if they're shorting a stock), so there's a profit, and/or that the company will pay out some of its profits as dividends. Practically none of that money is actually circulating in the economy.

 

[Demondeluxe]

I am trying to figure out the problem this tax resolves. I don't see it resulting in an improvement in the wages of employees. The company will either pay the tax (the executives continue to make the big bucks), they will find a loophole, or maybe the executives salaries come down. But how does the CEO making less money improve the life of the employee?

edit: It appears to me that it is cheaper to pay the tax then to increase the pay of the employees to avoid it.

That's because it was never about the workers. It's a tax scam. If they set the penalty low enough that it's cheaper than paying the staff more money, and not particularly beneficial to cut salaries at the top. Corporations do these analysis all the time, since it's probably also cheaper to pay the fine than to relocated, the city cashes in on the money. Corrupt government at it's finest, pretty standard for the Democratic People's Republic of California from what I understand.

 

[WaywardScythe]

It seems more and more obvious that the methods for checking corporate power through the legal system in America have been nearly exhausted. Additionally corporate control of media and skill in psychological manipulation (learned from advertising) preclude popular movements except in the most egregious cases of corporate failure. And even then many slip through the cracks. Even more unfortunately, corporate hoards of money offshore (hundreds of billions of dollars) are large enough to pose actual security threats to smaller sovereign nations (Apple could run the Manhattan project several times over in secret with offshore money reserves). It may be time to seriously and publicly consider the least palatable tool available to us as US citizens. The best case scenario would be that simple discussion conveys the seriousness of the issues at hand, that behaviors will change seeing that the consumer base is even willing to talk about such an option. If not then the number one most important thing to remember is that it's a scalpel, not a hammer. It must be wielded with clear limits and clear goals in mind. The wielder must understand, nearly fully, every consequence of every usage.

If this seems extreme, well it is. Hopelessness will make people consider very extreme options.

We've had decades of proof that spending billions of dollars tilting at windmills in a broken legal system doesn't work. But at this point, the alternative may not be any cheaper in terms of things that matter, but maybe at least it will bring the inevitable quicker.

 

[C.M. Allen]

It seems more and more obvious that the methods for checking corporate power through the legal system in America have been nearly exhausted. Additionally corporate control of media and skill in psychological manipulation (learned from advertising) preclude popular movements except in the most egregious cases of corporate failure. And even then many slip through the cracks. Even more unfortunately, corporate hoards of money offshore (hundreds of billions of dollars) are large enough to pose actual security threats to smaller sovereign nations (Apple could run the Manhattan project several times over in secret with offshore money reserves). It may be time to seriously and publicly consider the least palatable tool available to us as US citizens. The best case scenario would be that simple discussion conveys the seriousness of the issues at hand, that behaviors will change seeing that the consumer base is even willing to talk about such an option. If not then the number one most important thing to remember is that it's a scalpel, not a hammer. It must be wielded with clear limits and clear goals in mind. The wielder must understand, nearly fully, every consequence of every usage.

If this seems extreme, well it is. Hopelessness will make people consider very extreme options.

We've had decades of proof that spending billions of dollars tilting at windmills in a broken legal system doesn't work. But at this point, the alternative may not be any cheaper in terms of things that matter, but maybe at least it will bring the inevitable quicker.

The French Revolution did not really make France any 'better.' It just swirled the mess around. As evidenced by the state of the US now, the American Revolution (and it's second cousin, the Civil War) didn't really make a dent in the issue either. Russia has been through 3 failed governments in the last century and a half (including its current one). Italy and Greece are both in sorry shape. Great Britain is in a precarious position of backsliding into nationalist extremism. And then there are the number of middle-eastern powers that have overthrown their governments only to fall right back into the same corruption and inequality as before. In the end, revolutions take the support and cooperation of wealthy and corrupt powers to overthrow other wealthy and corrupt powers, so all revolutions really accomplish is replacing one group of wealthy and corrupt people with another group of wealthy and corrupt people. Whichever group of wealthy and corrupt comes out ahead after a revolution (in whatever form it takes) aren't going to just 'surrender' their wealth and give up their wicked ways. No, they're going to use the newly created power vacuum to double down on their greed and power lust. The song remains the same. If nothing is done about the institutional corruption and inequality, nothing you try to build on it will end any different than what came before it, no matter how good the intentions may start out. It's just planting crops in a poisoned field.