Sarah Anderson's Five Equations

Improved Essays
Sarah Anderson et al. answered “Yes” to the issue “Are U.S. CEOs paid more than they deserve?” in her article. She pointed out that the U.S tax code allow top corporate executives and financial leaders to avoiding paying their fair share of taxes and allow corporation to claim unwarranted deductions for exorbitant executive pay. Corporations could over pay corporate executives which including CEOs so that they could avoid paying income taxes. According to research at Equilar, which find out that top executives’ deferred compensation plan balances increased by 54.3 percent last year with a median value of 4.5 million dollars. The research also found out that stock option “in-the-pocket” value is much higher than the grant date estimate. She …show more content…
An investment fund manager saves about $200,000 in tax through converting top executives ordinary income into capital gain. Equilar found that deferred compensation plan balances increase 54.3 percent which means that top executive pay keeps increasing. Tax law allows corporations to deduct the cost of executive compensation from their income taxes, as a business expense as long as this compensation remains reasonable. This law encourages corporations to take the maximum executive pay to offset income taxes. There are weaknesses in Sarah Anderson et al’s article. She uses CEOs pay package which includes salary, bonus, perks, and stock awards to approve her point. But this is not the reason to say that CEOs pay are not reasonable. CEOs are the ones who responsible for the business and they needs to take care business from all aspects. Even though they did not personally take live risk, the pressure they assume are much more than what we can image. The article mentioned that the federal government encourage high executive pay and executive compensation could offset income tax. We should not only take money into consideration. This tax law might be a method that government use to promote businesses and economy to a higher level, which may be better for the

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