Pay and Price Controls

I read today that the Obama administration is going to issue new regulations which attempt to limit obscene executive pay.

The concept is good, but the way they are trying to achieve it will only meet with limited success. A good analogy is the now defunct 55 mph (88.5 km/hr) speed limit which was instituted to try and encourage conservation of fossil fuels. A much more effective tactic would have been to impose a $4- per gallon federal tax on gasoline and diesel. And then mandate that ALL of this tax go to fund mass transit.

The same goes with excessive compensation rates. These people are smart and agressive. They are not beyond using all sorts of exotic and legally questionable tactics to get around these rules. So just make the income tax rate much more progressive. If one’s annual income is above $600,000- then the marginal tax rate should go way up. Not just a point of two, but a LOT. This should be at the end, after all the tax shelters, deductions, exemptions, etc., just like the alternative minimum income tax.

The government can use this revenue to fund health insurance for the poor and other socially worthwhile goals like reducing the national debt.

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