One thing that has come out of the financial crisis is the questioning of executive pay packages.  It seems that they were excessive, which is probably true, however the government thinks that they need to do something about it for some strange reason.  Whilst the government does and probably should determine minimum and award wages (and sets them far too low in my opinion) most salaries are market determined and up to employers an employees to negotiate – sometimes with some help from unions.  The focus has always been on making sure wages are not too low, rather than too high.  Essentially the market will determine what is too high.  Until now.

The US is looking at introducing a salary cap and I have heard (but not been able to verify) that the UK has actually done the same for some years.  Apparently all these corporate fat cats can not be trusted to determine their own salaries and the government needs to interfere.  Australia is not following suit entirely, but trying something more subtle – a so called ‘fat cat tax.’  And for some reason all of these things seem like a good idea.  Especially to Australians.  I feel the term ‘tall poppy syndrome’ coming on in this discussion.

Lately looking at the rhetoric surrounding new tax increases – such as changes in the luxury car tax, insurance premiums on bank deposits over $1million, increased income tax – the discourse is largely moral and I think that it’s wrong.  In an attempt to justify why people should have their money and assets taken from them, there seems to be a lot of name calling – fat cats, corporate greed, elite, rich, luxury, high income earner.  None of them are meant to have good connotation, and have an element of moral judgment.  It seems, that if you have amassed wealth for yourself, you must be corrupt, dishonest and greedy, because no normal person would want to do well for themselves, would they?  And if you’re corrupt, dishonest and greedy, you deserve your money taken off you.  Heck, they’re lucky we don’t throw them in jail.

I find it somewhat disturbing.  I also find it quite Marxian, but I’ll leave that for now.  The fact of the matter is, we actually do want people to head up companies, start companies and grow their wealth.  The reason for this is that it provides jobs for the rest of us (me included, especially as one of those other evil people – a consultant) and that what is given back to the community by way of taxation and benevolent donations actually benefits every one.  What we don’t want to do is discourage enterprise and people making money, or create a legislative and tax environment where people are actually more inclined to send money and make investments abroad.

On top of that the assumption that wealthy people or high income earners are corrupt is probably not a valid one.  There are plenty of benevolent people with money, and there are, I’m sure, many business owners and leaders who are actually good people when you can get them away from their office for more than 5 minutes.  By the same token there are plenty of morally corrupt people without a dollar to their name.  But we’re not about to put a tax on people for being bastards.  This whole rich = evil, poor = honest discourse really needs to be challenged, especially as it’s increasingly becoming the basis for government decisions.  Moreover, despite running our government and taxation systems on this basis for decades, it still really hasn’t addressed any inequalities in circumstance.