Progressive taxes have been criticized for punishing success--taking disproportionally more from the successful while providing them less. What if, instead, taxes were regressive--baseline taxes were assessed for government services (health inspections, defense, infrastructure), while the remainder of taxes were based not an ability to pay, but an ability to provide?
If people who made less than some amount were taxed at 100%, but given health care, basic shelter, rationed food and utilities, they'd have incentive to look for work (if not just out of boredom), eventually earning a small paycheck--enough for a TV, computer, or car.
Such a tax system would essentially vary the level of socialism based on ability to provide and not punish people who are successful. What's especially clever is that during a recession, as paychecks shrink, increased taxes force people to cut back, providing a safety net like an insurance company would--based on risk.
A regressive tax might sound unfair, but if it's unethical to tax a couple's second paycheck higher than the first, and it's unethical to let poor people die of starvation, the only compromise is a regressive tax that imposes a command economy on those that refuse to participate in the free one.
Wednesday, March 4, 2009
Companies are clever. When times get tough, they start cutting pay...except for actual pay. That's disheartening and sends a sign that times aren't just tough, they're coming to an end. Instead, they have clever alternatives that employees hardly notice.
Stock options are great for employers. They're great for attracting workers, give the workers an incentive to say (they call them golden handcuffs for a reason), just don't pay that much. When the bear starts wandering down Wall Street, they get better. As they drop in value, companies see fewer options exercised for less money. Thanks to Sarbox, they see a drop in expenses, all while employees blame themselves for not exercising at the peak.
Kiss these goodbye! Big companies use complex equations with more factors than factorial to set bonuses. Lucky for them, the factors are easy to manipulate, so despite your perfect performance, a 3% drop in company-wide customer satisfaction drops bonus pay into a lower tier.
Even the Silicon Valley entitlement of free bottled water can be on the chopping block when it's time to make cuts. Expect cutbacks in the breakroom, supply cabinet, and cafeterias, and don't be surprised when your subsidized ride to work gets thrown under the bus.
Not only do these cost money, they take you away from work. Team building works best when the bulls are running. Fear works best in a bear market.
Not the lavish executive meal catering, but sandwiches or pizza at mandatory lunch meetings.
Nothing says "Merry Christmas" in a depression like a pot luck sans luck. December layoffs are practically verboten, anyway, so might as well cut what fat (and oh, what good frosting it was) they can.