The Rich: Getting Richer

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You often hear the question of compensation for ordinary workers counterposed with the idea of profits. The reality, however, is that the total share of GDP that goes to workforce compensation remains eerily steady in the 56-59 percent range year after year.

What does change is what Kevin Drum points to, the share of compensation going to executives. In particular, pay is becoming more concentrated in the hands of the top managers. The rich, in other words, are getting richer. Exactly why this is happening is a matter of some dispute. The general timing of the explosion in CEO pay is, somewhat paradoxically, coincident with a revolution in corporate governance (“shareholder value”) that on paper should have reduced the ability of managers to self-deal.

But whatever the reason, that’s the trend. And it means that additional taxes on rich people, whether in the form of a surtax, in the form of curbing itemized deductions, or in the form of modifying the tax exempt status of employer-provided health benefits would be an appropriate countermove. That’s where the lion’s share of the wealth generated recently has wound up, so it’s a reasonable place to go hunting for revenue.