Emmanuel Macron (Report, April 16) wants to end “abusive” executive pay through EU negotiations. There is a more effective way to end this travesty.
In 1963, the top rate of income tax in the US was 91 per cent for “married filing jointly” incomes above $400,000 ($3.8mn in 2022 dollars). This effectively functioned as a “cap” on chief executive compensation. No compensation committee could rationally justify salaries much above this level. It was also the era when chief executive compensation was 21 times the typical wage paid to workers.
Changes to the tax code since then have turned all of this on its head. In America the current chief executive pay ratio is over 300 and climbing. It seems that there is no number or ratio which is a “natural limit”.
Just as there is now a global “minimum corporate tax”, the way to limit “abusive” executive pay is by getting a worldwide commitment to tax everything above a chosen value at 90 per cent. One cannot increase equality with a tax code which currently does exactly the opposite.
Denver, CO, US