As the FT notes this morning:
FTSE 100 bosses were given a 16 per cent pay rise on average last year, catapulting their earnings to 118 times that of the median UK worker and widening the income gap between executives and ordinary staff.
Bosses on the blue-chip index were paid a median £3.91mn each, a £530,000 rise from the previous year, according to an annual study by the High Pay Centre think-tank.
The suggestion from the Bank of England that greedflation does not exist rings somewhat hollow in the face of evidence like this that it is alive and well and living in UK boardrooms.
It's time for much higher rates of tax on incomes of such level.
It's also time that the Bank of England stopped talking nonsense on this issue.
The separation of these people from reality has to end.
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I don’t wish to appear flippant, but far from being separated from reality, the FTSE 100 pay rises seem to me at least to be based in reality! They’ve certainly been making the most of that reality.
And what is that reality? Well, interest rises do not curb inflation. Interest rate rises help to ensure that the rentier sector benefit from inflation, however it is caused. It ensures that they do not miss out.
What was it Eamon de Valera said
No man is worth ten thousand a year
If anything more relevant now than in the 1930’s
The FTSE 100 index has also been a poor performer for a good few years now.
Here’s the historical performance data.
https://uk.investing.com/indices/uk-100-historical-data
No sign that we are all in this together from FTSE 100 bosses. They seem to get paid regardless of company performance. Greedflation is alive and well in the City. No change there then.
It is politically difficult to have extremely high levels of income tax. Furthermore, at an “instinctive” level, it seems unfair for the state to take a large proportion of “earnings”.
An alternative would be to have highly progressive employer tax, perhaps starting at the employee level of higher tax. Employer tax could increase without limit, being greater than 100% of employee earnings. This sets it appart from income tax.
For example, one might have employer tax of 10% when employee earnings were above £50k. This could increase by, for example, a further 10% for each additional £50k. By the time earnings were £30m this would be a huge employer tax. (Perhaps this is too much – come up with your own figures).
The argument for high pay is that it is necessary to get the best talent. Frankly this seems unlikely. But, with a progressive employer tax, if that was really the case then employers could still pay high pay for a few. However, I strongly suspect that if the company had to pay a lot more it would think long and hard before giving the current absurd CEO salaries.
From the employee perspective, however, they would never be charged a really high rate of income tax. This should avoid complaints and make it more politically acceptable.
Why is it instinctively wrong?
Your proposal also makes no sense. The incidence of the charge you propose will be on the employee, just as employer’s NIC is. The net result is the same. Employees aren’t daft.
If we go back 4 years we see the story from then:
“21 Aug 2019 · The average FTSE 100 CEO earns 117 times more than the average UK worker (based on median, full-time salaries)”
The ratio is now 118, and there are fewer workers, more pensioners and more people living on pots of savings no doubt or off work long term sick.
Disgusting