It’s easy to be envious of those who make more money, but when you’re calling for government involvement based on that, you interfere with the American dream.
The August 30 “USA Today,” in an article by Adam Shell, referred to an effort by a left-wing organization to change the tax code, specifically “to close the loophole allowing private investment managers to pay lower tax rates than ordinary Americans.”
As BMI has previously reported, the use of the word “loophole” is one of the top errors journalists make when covering taxes. Using the term implies that the money rightly belongs to the government and that the person or organization taking advantage of a tax break is acting immorally or even illegally.
“To say the pay gap between Wall Street’s top titans and average Americans is widening would be an understatement,” wrote Shell.
Shells’s story cited an August 29 study by the Institute for Policy Studies (IPS) and United for a Fair Economy (UFE) that criticized the compensation of private-equity and hedge-fund manager executives. The report also recommended government involvement to prevent the “pay gap between CEOs and workers” from widening.
“[W]hat we are talking about though in terms of proposals in Congress is allowing shareholders to vote every year on these pay packages and also fixing the loopholes that are in our tax policies that actually encourage excessive CEO pay,” said Sarah Anderson, an IPS director, on CNBC’s August 29 “The Call.”
Shell’s USA Today story called private-equity firms and hedge funds the “poster children of financial excess.” “Lawmakers, labor unions and corporate governance advocates have taken aim at private investment funds this summer,” wrote Shell.
Most corporations’ executive pay is set by their board of directors, but
However, more reasonable voices underscored that this type of compensation is what the marketplace dictates.
“[T]he question is what are you getting for [higher executive compensation] and that is what this report doesn’t show,” said David John of the Heritage Foundation on CNBC’s August 29 “The Call.” “I’m willing to pay someone 10 million bucks if he’ll earn me a hundred million bucks.”