When I wrote this column in March (called “Conservative Economics 101”), readers seemed to like the whole thing EXCEPT that one proposal enraged a number of them. Here’s what they didn’t like: “For ALL of an executive’s compensation above, say, $500,000 per year –– including the current value of stock options, and including bonuses and anything set up as “contract” work rather than wages — have the company pay its half (6.9 percent) of what the executive’s Social Security taxes would be if those taxes weren’t capped as they presently are at $102,000 annually. (The executive would not be made eligible for any additional retirement benefits, though.)”
I argued to correspondents that you needed some sort of populist item to help get the overall plan to pass, and that, really, a corporation should not be able to consider salaries of more than $500,000 as a normal business expense, anyway — that of course compensation should be allowed to be higher, but that it shouldn’t be utterly without cost to the corporation.
Well, now the Washington Post reports about how the “executive compensation” portion of the godawful bailout bill will work: For any corporation that participates in the bailout plan, NO deductions (from corporate income tax) will be allowed for ANY executive compensation above $500,000. That’s a 35% loss/extra cost, not just the 6.9% I had suggested back then. And the item was popular among liberals AND conservatives, both.
The biggest problem is that this provision was used as bait not for all the good, conservative economic policies I advocated in my column, but instead as bait o gain support for a godawful bailout. Ugh. If you don’t use rather harmless populism every once in a while as bait for something good, it sure will be used as bait for something bad. Conservatives need to learn that lesson.
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