Thursday, February 5, 2009

Pay Restrictions 'a joke'

Executives at Goldman Sachs Group Inc., JPMorgan Chase & Co. and hundreds of financial institutions receiving federal aid aren’t likely to be affected by pay restrictions announced yesterday by President Barack Obama.

The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need “exceptional” assistance in the future. The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions unless they have to come back for more.

Another depressing sign. Personally, I would use the outrage over Wall Street pay to enact new legislation affecting all executive compensation. This would include more heavily taxing stock options, and creating a new tax bracket, of, say, $600,000, and increasing the top tax bracket from 35% to 49%... Of course, this would raise a lot of revenue, so I would then also cut taxes for people who make less than $60,000...

I think this method is much preferred to the government saying, only in a few select firms that get large bailouts "you can't make over $500,000". Top people in those firms will just leave to go make millions at other firms, after all...

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