July 28, 2022 - Douglas Myser

Tax code has not caused corporate change. One of the provisions of a change to the tax code, was to increase taxes on the Executive Compensation of Corporate Officers. It was intended by Congress to rein in excessive compensation packages that can cause problems in the marketplace. Prior to the change, Corporations were allowed to deduct over $1 million if their compensation was tied to performance, but the intent of the tax change was to stop that. Yet, since the change, a company can deduct the first $1 million but over one million it has to pay a 31 % corporate rate on anything more. Congressional estimates projected the new tax rate would generate $9.2 billion over ten years for the government. So far, the billions that have come in has shown that the tax hasn't put any kind of dent into the compensation packages at all. Tax code has not caused corporate change.

The problem with such exorbitant compensation is that when Executives earn that much and feel that they get so much from performance, they often do what is not in the interests of the United States, such as offshore the company's profits to hide from paying IRS taxes, or take the manufacturing out of the United States, even if it an industry that really is a National Security issue, yet not deemed such by a too late to the game Congress and National Security Agency. A good example of this is the pandemic, and the medical equipment, another is the computer chip industry. Sometimes these Executives also feel the need to completely gut a company, destroying thousands of jobs, while pocketing millions in performance bonuses for doing the same.

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