Reed Hastings: Please Raise My Taxes

http://www.nytimes.com/2009/02/06/opinion/06hastings.html

by robg • 17 years ago

7 12 17 years ago

anamax2• 17 years ago

What's stopping Hastings from paying more now, without any change in the law?

I suspect that he could even make "pay more" a condition of employment at NetFlix.

I'll bet good money that Hastings is arranging things so a huge fraction of the money he makes goes to entities that won't pay a dime in taxes when he dies, that he's going to exempt himself from the estate tax.

tjic• 17 years ago

Reed writes:

  The reality is that the boards of public companies hate
  overpaying for anything, including executives. But 
  picking the wrong chief executive is an enormous 
  disaster, so boards are willing to pay an arm and a leg 
  for already proven talent

So if it currently takes $2 mill / year in an executive's pocket to get him on board, and that means $3 mill / year pretax (because, as Reed points out, the current tax is roughly 33%), then why, with a higher tax rate, is it going to take any less to get the same executive on board?

The only different between a 33% marginal tax rate and a 50% marginal tax rate, of course, is that now the board have the pay the same executive $4 million pretax to get the same after tax dollars in his pocket ... and the bitching and moaning about high executive salaries will ramp up in proportion.

Reed is a pretty smart guy, but this is a pretty stupid editorial.

gravitycop2• 17 years ago

why, with a higher tax rate, is it going to take any less to get the same executive on board?

The difference is that with a pay cap, no matter where an executive works, he gets paid the same. He has no incentive to compete against his peers. Within a high tax-bracket (with no pay cap), instead, executives have incentive to compete, because their salaries are able to differ from one-another.

katz• 17 years ago

Or executives may have an incentive to go to the UK or Australia.

American companies compete with international companies for executives.

markwweaver• 17 years ago

The way I understood it, the pay cap is only for companies that take government money. So companies that are already in trouble are going to be the ones that can't attract the new executive talent they need to survive. If a company that takes government money can't turn itself around and still fails, then all the bailout did was postpone the failure - and the government loses its investment - a bad deal all around.

indiejade• 17 years ago

Or CEOs could be the philanthropists themselves. If you contract out your building cleaning, for example, start there -- start with the people on the bottom who show up to clean your bathrooms or vacuum your carpets. Find them, ask them if they could use a raise. Then find your next lowest-paid employees, maybe the interns or "temp" people or the part-time workers, give them a raise.

"Paying up" in hopes that prosperity will trickle down has proven to not work very well.

azgolfer• 17 years ago

Or he could his money in a bank, where it would be lent to new business, used to build houses, etc. Or in a new business as stock, or venture capital. Capitalism - what a great idea !

He seems to think government bureaucrats will do a better job investing the money after they take it from him. Which in itself creates an incentive not to earn more money.

anamax2• 17 years ago

I'm surprised that Hastings didn't mention that there's already a "luxury tax" on CEO salaries over $1M.

Ordinarily, salary is a deductible biz expense. However, there's a cap - if Netflix wants to pay Hastings $2M/year, it can only deduct the first $1M.

This cap doesn't apply to performance-based pay or options.

Curiously, options and the like for CEOs and so on didn't become popular until that cap was imposed.

Oh, and he's wrong about tax rates. CA's top rate is over 9% (it hits that at around $50k) and the fed top rate is almost 40% and there's a phase out of deductibility of state taxes. If he's paying around 30%, he's not working for salary.

AndrewWarner• 17 years ago

No offence to Reed, but he can pay more taxes without anyone elses permission.

What he realty wants is for YOU to pay more taxes.

All the people who say "raise my taxes" are saying that.

lrm242• 17 years ago

Easy to say when you already have f*ck you money. Why does he not take it upon themselves to make things better, rather than suggesting that he, along with EVERYONE ELSE, should do it. What's good for you, isn't always good for me. I don't like everything you do. Stay out of my business. Don't tread on me. Sheesh.

gislebertus• 17 years ago

It's called "paying back your investors."

If I get rich, it won't be because I'm some superman. It'll be because I had good teachers, good public health, a stable banking system, adequate military and police protection, etc.

If I'm making $10 million a year, I'll gladly pay half of that to support the institutions and people who helped me get rich.

During the United States' golden age, 1945-1975, rich people were taxed heavily. Nowadays, when the country is in decline, they're relatively lightly taxed. No coincidence.

Greed is bad. Selfishness is bad. Community is good. Public investment is good.

As for, "Don't let the bureaucrats take your money!", our government can work well. It has worked very well in the past. It just hasn't lately because it's been run according to conservative ideas such as "Don't let the bureaucrats take YOUR money!"

Your money is not all your money, it's partly our money, because we all helped you make it. Pay back your investors.

Reed Hastings: Please Raise My Taxes

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