Income inequality is an issue that is becoming more widely known despite it being pretty common. While there is not much that can be done to make it more reasonable, there are little things that can be done to make executives more mindful of it. I suggest that the White House proposes to Congress a small change to the tax code as it relates to executive bonuses.
Any bonus (including stock options) paid to the top 3% of any company, excluding sales bonuses, will be identified as executive bonuses. These executive bonuses will be taxed at their normal rates if the other employees (the other 97%) within the company receive bonuses of the same percentage (on average). The executive bonus totals should not be included in the calculation of the non-executive employee bonuses. If the executive bonus as it is calculated as a percentage of salary paid to the executives exceeds what is paid to the non-executive employees (as a percentage of salary as well), the excess executive bonus paid out should be taxed at a rate of 75%.
For example, if a company or corporation gave their non-executive employees a 4% bonus, yet the CEO received a 10% bonus, the extra 6% executive bonus would be subject to a 75% tax. If the bonuses paid throughout the company were equal, all employees would pay taxes at their normal tax rate on this bonus income.
The idea behind this proposal is not to generate revenue for the government. It is to highlight the issue that if a company is successful, it is usually through the hard work of the entire company and not only a result of the leadership. It will not correct the vast income inequality on its own, but it will redistribute bonuses throughout the company between all employees who have contributed to the company's success.
I trust that Congress would craft the changes to the tax code to limit exclusions and provide a law that accomplishes this small effort to achieve more equality between corporate bonuses.
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