Whether you love or hate the structure of America's tax code, the simple fact is it often benefits already handsomely paid executives relative to normal 9-to-5 employees.
As the
Christian Science Monitor reports:
The current top tax rate on "ordinary" work income sits at 35
percent. But dividends and capital gains from the buying and selling of
most assets face only a 15 percent top rate. That's why in 2006,
America's top 400 paid just 17.2 percent of their $263 million average
incomes in federal tax.
Millions of middle-class American families, once
you tally income and payroll taxes, pay far more of their incomes in
tax. One particularly striking example from billionaire investor Warren
Buffett: In 2006, he paid 17.7 percent of his income in total taxes.
His secretary, who made $60,000, paid 30 percent of hers.
When an executive receives outrageous, undeserved stock compensation, they not only take advantage of their shareholders but often times they also take advantage of every normal taxpayer too.
(It is important to note that not all stock options, for instance, skirt normal income tax rates. Nonqualified stock options require the exerciser to claim the difference between the strike price and the market price as income.)