Centerfield

Thanks for the link, Tully. I found the article rather interesting. There's an ancient principle (some say its Biblical) of "everything in moderation." This concept seems to have gotten lost in the shuffle of our modern capitalist society. Everyone raises hell about the millions played to CEO's of corporations that lose money, but far fewer complain about the millions paid to professional atheletes who fail to deliver the big prize. The point is, too much of any one thing is just not healthy. With the downfall of communism and the "triumph" of capitalism, we seemed to have wholeheartedly embraced the concept that "if the market will pay it, take it."

Rush signs a $100 million dollar contract, Hannity is reaping millions, Alex Rodriguez is counting the dollar signs, and the Enron execs are building $50 million dollar oceanfront estates.

There's got to be a balance. It's just not corporate execs. I'm not saying that government step in, I'm not sure I know what the solution should be, but some things are nearing the point of ridiculous.

I couldn't happen to agree with Mr. Buckley more. I classify myself as a conservative (as does Buckley) and I've often posted here arguing against increasing the (already hefty) tax burden on "the rich".... and I stand by that post.

No one should conflate that to mean that I don't think there is a gross problem of income inequity in this country. The executives Mr. Buckley sites in his article are prime examples of the egregiousness of the problem. Being renumirated with veritible fortunes for gross ineptitude, questionable ethics and severely impacting the health of thier own orgizations and thier stockholders.

I just don't happen to think that tax on income (or accumulated assets) is a just, reasonable or practical solution to the problem. Now, if you want to talk about making the SEC get serious about stringent regulation of the fiduciary responsbilties of public corporations.... and particularly the unhealthy relationship between the managers of large aggrigate funds, corporate boards and robber baron CEO's to the detriment of all the small individual stockholders (i.e. all the rest of us) then I'm 100% onboard. Same thing for questionable corporate subsidies and pork barrel contracts. Same thing for exercising some personal responsibilty as consumers about who we choose to do business with..... and which stock we invest in.

I'm dead set against class warfare against "the rich" because a great deal of "the rich" (especialy the lesser rich) are honest folks just like you and me who have worked hard all thier lives, saved and invested prudently and managed to be lucky enough to parlay that all into a modicum of luxuary.... there is nothing wrong with that! However, I'll be the first in line to hang Armani clad cutpurses like Mr. Eisner and Mr. Moonves by thier toenails. I just don't happen to think that everyone who makes over 100K should lumped in the same boat with them.... and judged guilty by association.

Tully,

Excellent article (not that I would expect anything less from Buckley).

It seems to me that CEO compensation is in the middle of something akin to a stock market bubble. Everybody has convinced themselves that these sought-after CEOs are really worth the money they are being paid, without any objective proof that they are. Maybe one day the bubble will burst. Hopefully, some of the governance reforms imposed in the wake of Enron, TYCO, and the others, will cause the boards of directors of these major corporations to be more independent, and more questioning of these enormous salary and bonus sums.

The problem is not because the money could be used to give significant pay raises to lower-level employees. On the scale of these major companies, the huge executive salaries are a drop in the bucket, as can be seen in my post here.

There are 2 real problems. One is that it does deprive money from shareholders, who shouldn't be paying for value they aren't getting. Second, many recent academic studies have shown that people are hard-wired to detect "unfairness", and will take actions to punish those who act unfairly, even if that action costs them money or other rewards and does not directly provide any benefit to them. This can eventually cause some serious social unrest.

And because someone brought up sports stars, just a quick mini-rant... Why must every state or community which has a professional football or basketball team subsidize the arena which the team plays in? The owners are making profits, the executives doing quite well, and the players reaping enormous sums of money. Why should any tax dollars go to supporting that at all? Why shouldn't all employees' salaries be cut in order to find money to pay for new stadiums or stadium renovations?

I generally agree about the sports stuff but to play devil's advocate to a degree. First, it's hard to compare what athletes make to what CEO's make. Even A-Rod doesn't make nearly as much as many CEOs. And the number of athletes making huge money is probably far less than the number of CEOs--and CEOs have far more impact on societal welfare than do athletes. The effect of a CEO being exorbitantly compensated for mediocre performance (or potentially manipulating the company's performance to increase his or her compensation) is much greater than an athlete being overpaid.

Second, with respect to stadiums, it is true that most academic studies have concluded that subsidized stadiums don't provide significant economic benefits to cities. On the other hand, I suspect if you asked citizens in places that built new ballparks (Baltimore, Cleveland, etc.) downtown, most would probably say they are glad to have the stadiums. So, while I agree in a perfect world, taxes would not go to subsidize sports, in the actual world, publicly funded stadiums do provide some benefit to the public and I think that, in general, the places that built these stadiums are probably overall better off than if they had not built them.

I don't have a problem with people being rich or making a lot of money. I have a problem with people using their wealth to manipulate the political system to obtain public policies that favor their own classes. I have a problem with people insisting that anything that reduces the wealth of an individual by an iota is class warfare and an attack on individual initiative. I have a problem with people saying that having the rich pay relatively more in order to fund programs to benefit society is inherently "socialistic." I think people that have a lot of money also have a greater responsibility to the society that allowed them to make that money. That doesn't mean "eat the rich."

MWS,

I always enjoy a good devil's advocate...

As for sports staidums, I think communities are also generally better off if they have large commercial properties downtown, Fortune 500 headquarters, etc. For that matter, communities are better off if they have grocery stores and retail shopping areas. But that doesn't mean that taxes should be used to pay for all those things. We have reached the point in economic development that states and communities compete with each other to subsidize private industry in order to attract individual businesses to come to their state.

I don't have a problem with states and communities competing with each other, in general, to be business-friendly (or retiree-friendly, or whatever), by adopting low business taxes, etc. But I think we open ourselves up for trouble when states compete with specific, targeted special treatment for individual businesses (be they corporate headquarters, factories, or sports temas).

When I worked for our last governor here, I helped draft an agreement to provide a variety of subsidies for several shipbuilding firms. When you worked the numbers, you could see that the state would gain more in payroll taxes, income taxes, and sales taxes than we were giving up in the subsidies. But the reason we were giving the subsidies at all was to entice the manufacturers to build federal warships here, rather than next door in Mississippi. We were competing with Mississippi to subsidize the construction of federal warships. There's something wrong with the system as a whole when that starts being something a state has to do in order to be competitive in attracting industry.

I agree wholeheartedly with your last paragraph. We should never have a maximum tax rate of 91% (as we did before Reagan), but adjusting it up or down as needs vary is not "soaking the rich". (Although at the same time, it is also not class warfare to have a tax cut where the rich benefit the most in absolute dollar terms, simply because they pay the most already.)

PatHMV,

I pretty much agree with you. My only point was that I think the citizens of these communities that built sports facilities are probably glad they are there. It's interesting, though, that I cannot convince people that building stadiums with public money is not a good long term investment. I can't even convince my wife. Here in Washington, everyone is so enamored with the idea of building a new ball park in Anacostia (a blighted area south of downtown) and with the idea that it will attract new business, jobs, etc., that no one really is considering whether the long term impact will be positive. That was really my point-regardless of whether cities are objectively better off with publicly financed stadiums, people feel better and it's something that many people use.

Baseball is a classic example of what you are talking about. Every city competes with each other to offer the best deal on a new stadium. In fact, DC was really competing with itself because there was really no place else for the Expos to go that had an existing stadium in place. Still, the powers that be felt it necessary to give them a new stadium. On the other hand, when Jack Kent Cooke, the late owner of the Redskins wanted to build a new football stadium with his own money, the then-mayor basically killed the deal because of some vague environmental concerns. Now, the Redskins play in Landover, MD, a suburb in the middle of nowhere.

Well, I'm off to the baseball game now!

Yep. Publicly-financed sports stadiums are invariably financial losers for the taxpayer. The question to consider is "Will the intangible benefits justify the financial loss?"

Note that the CEO's in question in Buckley's article all were rewarded outrageously well for losing performances. Doesn't seem to be a performance thing, does it?

Tully,

Here in Louisiana, there is a big fight over how much to subsidize refurbishing the Superdome for the New Orleans Saints... talk about not caring about performance!

Although actually their performance is impacting the debate. Outside of New Orleans itself, there is a strong voter sentiment against any subsidies, given the budget crunch we are facing. I suspect if we had a Superbowl ring (or even just getting to the big game just once) at ANY point in the team's past, public sentiment would be different.

A little off topic but since the post was about "the rich", I just listened to Senator Grassley (chairman of the finance committee)on one of Iowa's fine public radio stations. He answered a question about the estate tax with a prediction the Congress would reach a compromise of a $10 million exclusion and a 15% rate above that. Grassley said it could be enacted to take effect at the end of 2009 (his preference) or it could take effect immediately.

I miss Buckley's old TV show (on public TV, why do conservatives want to quit funding public broadcasting when they use it so frequently?). And while I have no reason to question the sincerity of his views on capitalists, I still had the feeling when reading the article that I was actually reading The Onion. FWIW I think Buckley is a representative of old money and subscribes to the theory of noblese oblige. I don't think that's reflected in current conservative orthodoxy, Tom Delay's personal philanthropy not withstanding.

Pat;
In Phoenix several years ago we were asked to approve a new stadium for the Cardinals OR THEY WOULD MOVE!!! Talk about a missed opportunity. this is the worst franchise in the NFL. On Sundays we're forced to watch them if they're away. Fortunately we never see them when home because they NEVER sell out. So did the wise electorate of Maricopa County say HELL NO!! Nope we approved a huge new stadium. But hey it will have the first roll out field along with a retractable dome.

Now in fairness they did trick us a little, they added "funding youth sports as part of the sales tax increase" in the voter initiave that passed.

So what "intangible" will we receive? the utter disdain of the rest of the NFL (and probably the entire US)

Wouldn't surprise me, Tim. If they close off all the exclusions it's not even far off from what I'd call sane. Right now those over $20 million are paying effective rates of about 11% after their exclusions. But if they close off the charitable contribution exclusion the "foundation left" will scream bloody murder.

I'm not a proponent of a progressive tax system that taxes the wealthy a great deal more than the middle class, but if ever there was an arguement for, say, a 50 percent tax rate, Mr. Buckley certainly provides grounds for it. Could Sumner Redstone get by on $10 million? I think so.

It does make you long for that 91% top tax rate of the Eisenhower era, doesn't it? Kicking in at about $3 or 4 million or so...