Thursday, October 22, 2009

Top wages has been more of a problem than excessive profits

Good to read that the Obama Administration is starting to try and reign in executive pay at the banking organizations that are using bailout monies.

I also read (buried in an article on healthcare reform) another good idea.

Limit the amount of money for the salary of an executive that an insurance company can claim as a business expense on its corporate income taxes.

Yes, often the worse ripoff that corporations do is not profits. It's salaries for the top workers.

Rhetoric of the traditional left rails against corporate profits, but a more sophisticated analysis of this issue is due. In many cases, a corporation isn't making a profit. It's even going bankrupt, but still someone is making huge money. The money is bloated salaries to "workers." Not all the workers of course, just the top executives.

On the books of a corporation, executive salaries can be listed as business "expenses" rather than profits. I think in many cases the executive salaries can be treated as wages.

A tricky way to basically steal money. That's what so many corporate executives and real high paid professionals are best at. Weaseling their way into big money. Figuring out how to play the system to their personal advantage. Smooth sellers.

Even though I'm no expert on corporate finance, that's what it looks like to me. I'm glad to see at least some attempt to address the issue of overpaid executives.

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