Stop Multimillion Dollar Compensations!

It would seem that our economic situation has brought me to a point of enlightenment as to why corporations pay their officers bonuses to the tune of millions of dollars. After perusing the massive amount of information at the IRS.gov site, I have found numerous reasons. However for myself to understand all of it, would most likely take me months to read and then to simplify in my writings. What little bit I have read most likely makes it just as hard for an IRS auditor to do his job properly. The IRS has numerous publications on what the auditor will need to look for and depending on the size of the corporation, impossible to do an audit on their own.


Instead there should be “some” simplification of tax laws which would allow the auditor to better deal with their audit.

1. The multimillion dollar bonuses received by the top executives should not be used as a deduction by corporations as this not only reduces the stock dividends, it also reduces the corporations tax liability since corporate income tax is at a higher rate than employee income tax. Most multimillion dollar bonuses are only paid to those who own major stock or have some other major interest in the corporation and by paying smaller stock dividends they put even more money in their pockets. The losers here are the smaller stockholders as well as the government which in turn is the taxpayers.

2. This is something I knew years ago but had forgotten. Everybody pays social security tax. But once your income exceeds a set amount you no longer pay that tax. Currently this amount is approximately $106,000.00. Most hardworking Americans do not make $106,000.00 annually and will most likely be the main beneficiaries of this program. Since this program was started to help out those who had aged and could not afford to help themselves, why not continue to collect this tax beyond the $106,000.00 earned. After all, those who currently earn more than this amount should most certainly be able to provide for their own retirement. If an argument would be presented that those making more than $106,000.00 per year would not benefit, there too could be the argument that those making less than that amount, may never benefit at all. I may never see social security when I will need it most. Certainly those who will come behind me will never see it at all, but we will still have to pay this tax!

Tax loopholes are there because they were created and not because someone forgot to word something correctly, or because something was not thought of when these complex laws were enacted. For our supposedly educated lawmakers to claim that they did not realize there were loopholes would simply mean they are lying, or uneducated idiots. A simplified tax law could be as simple as;

If you make $0-$10,000 your tax would be X% and if you make $10,001-$20,000 your tax would be X% and so on and so on. If you are a corporation based in the US and make X dollars-X dollars you would pay X% on profits before bonuses. Simple and effective and absolutely no way anyone could find a loophole. Of course to protect the investors you could also enact a law that the investors would be paid their dividends before bonuses also. If all that would cause a little problem about what profits really are, then you could define profits as any money that is leftover after they paid out for overhead, factory upgrades, non executive income and reasonable executive compensation, not bonuses. Of course then you would need to define “reasonable executive compensation” which should not require that much sense. I do realize it is not that simple, but then it doesn’t need to be so complex either!

In all, my suggestions could not be any more ridiculous than the current system in place that ensures the poor stay poor and the rich just get richer.