In an Op-Ed piece in the New York Times today, Chief Executive Reed Hastings (pictured) recommends raising the tax rate for those with incomes over $1 million, allowing the government to keep half. There’s method to his madness. It’s his way of protesting the idea of capping pay for executives at public companies. Allowing executives to make eye-popping compensation would be a way of collectively celebrating their economic success.
“Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans.”
50 percent sound draconian? Here’s a question: what was the average tax rate paid by those in the highest bracket in the thirty years following World War II?Answer: 82.8 percent, according to figures found on the National Taxpayers Union Web site. OK, there are several footnotes involved, but even accounting for all of them, the figure is still well north of 50 percent.
It’s hard to imagine how folks stayed motivated during that time, isn’t it?
Give Hastings credit for being in the forefront of other issues. His company, Netflix, started accounting for stock compensation on its balance sheet years before it became mandatory.
And there wasn’t a whiff of backdating scandal at Netflix because it long ago adopted a policy of periodically granting stock options on a monthly basis, essentially making the issue of timing grants moot.