Interesting tidbit through the AFL-CIO

According to their blog, there is a new rule, proposed, by the Security and Exchange Commission, (SEC). This new rule would actually mandate a disclosure of the ratio of pay between the CEO and the average worker. This is a proposed rule, not the law yet. But it would be a good start in my view. The spread is so wide that the level of inequality can (in my view will) lead to social unrest).

Their own blog quotes AFL-CIO President Peter Trumka as follows.

This pay data is important to investors because it shines a light on the company pay ladder for all employees, not just the pay of top executives that is already disclosed under current rules. The simple fact is that large pay disparities between CEOs and their employees affect a company’s performance….Disclosure of CEO-to-worker pay ratios will give investors an important metric to analyze the compensation practices of companies.

 

And wonders never cease, it is also part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010.  This Act is opposed by businesses to no end. Ah, one more reason it is. It’s not like companies are looking forwards to disclosing this information whatsoever. 

It is one of those interesting tidbits. So how bad is our spread? Well this table, as of 2009 shows something interesting, that has not changed. In fact, it’s worst.

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And that is that while the income of most people has flattened since 1982, the top continues to go up, and inequality right now is the worst since the 1920s. 

Right now even Forbes admits there is a problem.

As long as the tax code favors the wealthy, by giving them alternatives that allows them to shift “income” into vehicles taxed at preferential capital gains and marginal rates, the income inequality gap will keep widening.

 

Before the next social revolution occurs, which may well be headed our way, Congress needs to completely re-vamp the tax code.

 

A slightly progressive flat tax, meaning a flat rate maybe starting at 15% that triggers up 2% as income triggers up every $250,000, up to a maximum flat rate of 30%, along with a progressive capital gains tax starting at 15% on income up to $250,000 a year and ratcheting up 2% for every additional $250,000 up to a maximum rate of 50%, would be worth considering.

 

It is telling that they are themselves concerned of a coming social revolution. 

In the meantime, we will see how hard the top earners fight to further defang Dodd-Frank, since it would reveal things that understandably they would not want to see. 



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