January 21, 2006
Reforming the Rich
By William
F. Buckley
On the matter of
reform in publicizing executive salaries, a few observations:
The way it is being
handled now is marginally inexcusable, and unquestionably disgraceful.
A case can be made, using prime libertarian doctrine, that what
an executive is paid is of concern to only three parties: the
executive himself, the stockholders and the employees. What stands
in the way of explanations that fundamentalist is that there are
means of paying these huge salaries which are substantially this
side of full disclosure.
Begin with the plain
fact that official communications from large companies are quite
simply unreadable. Add to this that there are means of compensating
executives that avail themselves of loopholes. Loopholes are often
welcome. They are a means of circumventing those strangulations
by which government seeks to put its big thumb in the way of enterprise.
To file our corporate literature in such a way as to avoid suspicion
of prejudice against women, minorities, aliens, cripples, pregnant
women or imported goods is a challenge even to resourceful corporate
communications officers.
Then there is the
matter of tax avoidance. The executive with this in mind gleefully
disguises his compensation in ingenious ways, which have the effect
of exposing to high taxation not himself, but the company that
hires him -- until the blessed day when he retires and scoops
up his deferred compensation, plus his options of one kind or
another. You don't really have the components of libertarian exchange
necessary to expose what he is earning so that a stockholder can
weigh what is being paid for executive services. Action by the
SEC designed to reveal what actually is going on is welcome.
There is a healthy
reluctance to concede that Mr. Jones is really worth $5 million
per year in compensation, which is what he is getting, viewed
in a truly strong light. It's another matter -- and one that society
needs to get used to -- when an individual is earning something
ordained by the public itself in recognition of his uniqueness.
If it is a baseball player who enchants a great public, or a chanteuse
whose records sell by the millions, or an author who writes "Gone
With the Wind," the public should acknowledge that it has
only itself to blame for egregiously high returns.
But when it is the
vice president of a glass manufacturer, a salary blatantly inordinate
gives rise to suspicions of dissimulations exercised, advantages
taken, corporate boards compliant. These, then, have the effect
of discrediting the whole capitalist apparatus, and everyone should
feel the need to avoid that. A lot of what is being talked about
is not illegal, but much that isn't illegal can be disgraceful,
and a free society has a legitimate stake in trying to do something
about that.
What needs to be acknowledged,
when on a reformist tear, is that industrious and talented men
and women are constantly and understandably concerned with that
direful weapon available to society, which is confiscatory taxation.
There are people alive, though they are getting old, who can remember
when you ran into a taxation rate of 91 percent. And this, ladies
and gentlemen, was so under a Republican administration. Dwight
Eisenhower was president when that tax rate was on the books,
and the public was rescued from it by John Kennedy, in the '60s.
Tax rates that high
are excursions in class warfare. The distortions they bring on
damage society and fuel defiant behavior, encouraging everything
from immigrations to the Cayman Islands, to active distortions
of reality through brummagem corporate filings.
It is both just and
sensible, when reforming what we deem hypocritical and disgraceful,
to take tax rates into consideration. That factor is supremely
relevant in the matter of death taxes. People will reorganize
their lives, when approaching the end of them, in order to avoid
death taxes that right now rise nearly to 50 percent. True reforms
of the kind now being contemplated must take into account what
it is that prompts behavior we are concerned with, which is huge
taxation. A New Yorker moderately successful in his professional
life will very soon be paying more than 50 percent of his earnings
in local, state and federal taxes.
When that happens,
a reasonable part of human energy will go into devising arrangements
of the kind we are attempting to discourage. The prospect of handing
over reform to the John Birch division of the Democratic Party,
which sees a capitalist scavenger under every bed, will guarantee
that nothing truly useful will be accomplished.
Copyright
2006 Universal Press Syndicate
