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Executive Pay: The Sin Tax of the Future

Executive pay is about to become the new sin tax.

Executive Pay continues to be one of the most heated discussions in America.  In addition, the US Government is in serious debt ($16.5 trillion) and running a deficit each year ($500 billion); the gap between the average worker and CEO has jumped from 46x in 1983 to 331x currently (AFL-CIO analysis of S&P 500 companies); a law was recently passed in Obamacare to tax executive pay for insurance companies over $500,000; the media is constantly running stories on the pay gap problem; all of which will create the perfect storm to redistribute corporate and shareholder dollars to the US Government.

There is currently legislation on both sides of Congress led by Representative Lloyd Doggett of Texas called the "Stop Subsidizing Multimillion Dollar Corporate Bonuses Act." The Act would amend Code Section 162(m) of the IRS and would have two major affects on executive compensation:

1) It would apply the $1 million maximum tax deduction to all current and former employees of a publicly traded company (currently, it is only applied to the CEO and the top four executives with the exception of the Chief Financial Officer); and
2) Remove the exception of performance-based compensation and commission-based remuneration from the tax deduction.

To read more on this article click here.


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