I have very mixed feelings about this one. On the one hand, I think the $8.6M is far too large. On the other hand, it’s tough to attract top talent when you don’t pay competitive wages.
<
p>The Herald claims they went to 26 meetings a year. That’s not really enough information. How long are these meetings? Are they doing work in between? Are these folks fund raising board members [like many non profits] or are they there because they have specific knowledge, experience, and skills?
<
p>I’d love for everyone involved in medicine to take a pay cut, starting with the top. But, how do you get there, and how big a role are these salaries in the big picture? Those 18 board members make about $1.4M a year combined… with a “total membership of nearly 3M” that means we’re talking about these salaries adding a nickel a month to people’s premiums. Are the board member salaries an example of a big problem, or are they a scapegoat which distracts us from the real problems?
<
p>
<
p>Personally, I think one way to fix the problem of paying competitive wages is higher taxes on the very rich — both income, cap gains, dividends, and parachutes of any kind. If your marginal rate is 50% instead of 25%, then the difference between a $100,000 salary gap is now $50,000 after taxes instead of $75,000, making the job offer more competitive.
nopoliticiansays
Judging from the reaction from my conservative friends, they are scapegoats, because people are equating “non-profit” with “ACORN”.
<
p>I would agree with you, a higher tax rate would very likely lower such salaries; if the rate was 80% over $2 million, odds are his salary would be a lot closer to $2 million (though his benefits might be greater). I don’t see that as a bad thing because I doubt that he’s spending the extra $6 million in our general economy, odds are he’s got it parked with a financial planner who is investing it in oil futures right now, causing prices to skyrocket.
<
p>Conservatives like to claim that high taxes discourage work. That is not quite true — high taxes discourage compensation. Many people have no natural limit as to how much they will take — like the billionaire hedge fund traders — even though they could never reasonably spend that much in their lives. Company owners have shown that they would throw people out of work if it means wringing more profit from their company. So maybe if that profit isn’t as attractive to take, and if people are forced to think of themselves being an employee rather than a short-term mercenary, better decisions would be made.
sethjpsays
Conservatives like to claim that high taxes discourage work. That is not quite true — high taxes discourage compensation.
<
p>This may be true, but the taxes have to be really, REALLY high for them to discourage compensation. After all, the taxes only discourage compensation if the make the marginal take home pay so insignificant that it no longer becomes a relevant factor in executives’ decisions as to where they choose to work. Eighty Percent, as large as that may seem, doesn’t cut it.
<
p>Let’s look at your example of taxing everything over $2 million at 80%.
<
p>The first $2 million in income would yield roughly $1.2 million in take home pay. (I’m ignoring FICA, deductions, exemptions, etc. in order to simplify things.) Each $1 million after that would add another $200k. And $200k is a big enough fraction of $1.2 million that it’s going to act as a significant incentive.
<
p>In fact, if you assume that a 10% difference in pay is a significant deciding factor (and I’m not sure any of us wouldn’t seriously consider an offer that involved a 10% raise!), your hypothetical CEO would have to be taking home over $2 million — meaning she would have to be being paid over $6 million under your model — before an additional $1 million in salary might start to fall into the realm of incidental.
<
p>Sure, $6 million is better than $8.6 million, but it’s not “a lot closer to $2 million.”
stomvsays
Sure more money is good, but other factors in the job matter too. Location, hours, excitement, tangible benefits, perks, parachutes, launching pads, etc. As taxes go up, the wages have to be much more significantly different for the after-tax wage to be significant.
<
p>Of course, as marginal taxes go up, compensation packages start becoming salary-poorer but loaded with more perks and bennies. Is that better?
sethjpsays
… that location, hours, perks, etc. are important factors in whether one accepts a job offer. I’m merely arguing against NoPolitician’s claim that an 80% tax on all income over $2 million would result in high end salaries tending to cap out in the neighborhood of $2 million. The math just doesn’t support that argument.
<
p>As for whether it’s better to have execs taking home huge salaries or having access to amazing perks, I honestly haven’t thought enough/don’t know enough about the matter to have a worthwhile opinion.
<
p>I’d be interested in your thoughts, though. Is there an argument to be made that one is better than the other?
edgarthearmeniansays
and Larsen feeding at the trough? (and mucking up a poor system at the same time). Universal Medicare would obviate so much of this waste and create a level playing field for all of us. We don’t need these wasteful businesses if we all have medicare.
mark-bailsays
medicare. It’s nice to see something we can agree on.
edgarthearmeniansays
My problem is that by nature I am conservative in that I don’t see all of those wonderful outcomes that liberals see.
mark-bailsays
I’m actually less of an idealist than I might seem. I try to balance both the good and the bad see if there is a margin of benefit.
Really, Medicare only pays for in-patient procedures and drug costs over 4000$
<
p>If you want out patient care, check ups, etc etc you must have a supplemental policy ( called healthcare insurance) to pay for it
<
p>right now i have access to in patient and out patient care, small co-apys for drugs, and access to specialist without prior approval ( thank you blue cross blue sheild)
<
p>you want me to go on Universal Medicare? thanks but no thanks!
Exactly what Jill Stein and the Green-Rainbow Party would give us.
mark-bailsays
for and work toward. I have no doubt about that. Unless the Green Party had a significant share of the legislature, however, they wouldn’t be able to deliver anything but rhetoric.
This is why our politicians keep doing this to us. We know they do it, yet we keep putting down anyone who dares to run offering a better alternative, because we won’t vote for him/her, because that might hurt the politician who is doing it to us. Rinse, repeat.
<
p>Why do you assume the Greens would do the same if they were in office? They aren’t the same. They aren’t bought by corporate donors.
kbuschsays
So why don’t you guys run for legislative seats instead of these quixotic, drunk-with-purity runs for governor?
lightirissays
is unlikely to change. I think, personally, that it’s organic with these folks, something innate in their personalities. Whatever it is, it tends to compel them to repeat the same unproductive behaviors. Judean People’s Front? People’s Front of Judea?
<
p>They’ll be drunk-dialing the next election for governor. Count on it.
edgarthearmeniansays
I’m surprised at you. You sound like Rush Limbaugh talking about “liberals”–:):)
kbuschsays
My comment has the title it does because the Greens have stayed firmly in the quixotic but pure column for so very long. I doubt there are many liberals on this site who wouldn’t prefer to see the Greens attain some actual political power, but they seem to eschew that. So the fact that we liberal Democrats keep having the same conversation with the Greens over and over certainly suggests something is stuck.
<
p>It doesn’t seem at all unreasonable to suggest that there is some combination of structural and social psychological problems that keeps them mired where they are.
mark-bailsays
Gale Candaras (D-Wilbraham) is not as liberal as I am, but she supported marriage equality and cares about mental health and women’s issues.
<
p>My congressman is John Olver (D-Amherst); I don’t want to lose him either.
<
p>Ellen Story (D-Amherst) is my state rep. I like her a lot. She is liberal. She may have had a Green challenger; she had a Tea Party challenger.
<
p>If a Greenie could get elected and earn a good reputation in Amherst or even Northampton, s/he might have a shot at a legislative post. Other than that, I don’t see it as happening.
<
p>Shirley, I think most of us see things as you do. We differ, however, in that most of us don’t believe elected officials can remain above “politics” and be effective.
somervilletomsays
Edgar is right on the money with this. Please see my personal example of what this garbage means for those of us on the receiving (paying) end.
choles1says
To be transparent, I am a BC/BS subscriber and, on the whole, I think they are fairly responsible as a health care insurer.
<
p>But…this is a great example of a non-profit in name only and a case study of the limitations of the various federally approved forms of non-profit organizations. Non-profits should not – need not – compensate volunteer members of their Boards of Directors, other than for direct expenses associated with attending Board meetings. It would be a gesture of good faith for a non-profit organization which has incurred an operating deficit in any year for a compensated Board to waive or return payments made to them.
<
p>Second, perhaps the AG’s review should also include the provisions of law creating the various classes of non-profits. If a non-profit acts like a for-profit, compensates senior managment as if it is a profit-making enterprise, pays of the Board of Directors, makes a practice of agreeing to expensive employment contracts, perhaps it should be more treated as a private enterprise and not some charitable or educational entity. Given its extensive real estate holdings in the Commonwealth, perhaps it should be asked or required to pay real estate taxes, for example.
<
p>This is a failure of the Board to prudently oversee and to manage the senior managers in a tough economic and health care environment, and it would be interesting to compare BC/BS practices with other health care insurers in Massachusetts.
stomv says
I have very mixed feelings about this one. On the one hand, I think the $8.6M is far too large. On the other hand, it’s tough to attract top talent when you don’t pay competitive wages.
<
p>The Herald claims they went to 26 meetings a year. That’s not really enough information. How long are these meetings? Are they doing work in between? Are these folks fund raising board members [like many non profits] or are they there because they have specific knowledge, experience, and skills?
<
p>I’d love for everyone involved in medicine to take a pay cut, starting with the top. But, how do you get there, and how big a role are these salaries in the big picture? Those 18 board members make about $1.4M a year combined… with a “total membership of nearly 3M” that means we’re talking about these salaries adding a nickel a month to people’s premiums. Are the board member salaries an example of a big problem, or are they a scapegoat which distracts us from the real problems?
<
p>
<
p>Personally, I think one way to fix the problem of paying competitive wages is higher taxes on the very rich — both income, cap gains, dividends, and parachutes of any kind. If your marginal rate is 50% instead of 25%, then the difference between a $100,000 salary gap is now $50,000 after taxes instead of $75,000, making the job offer more competitive.
nopolitician says
Judging from the reaction from my conservative friends, they are scapegoats, because people are equating “non-profit” with “ACORN”.
<
p>I would agree with you, a higher tax rate would very likely lower such salaries; if the rate was 80% over $2 million, odds are his salary would be a lot closer to $2 million (though his benefits might be greater). I don’t see that as a bad thing because I doubt that he’s spending the extra $6 million in our general economy, odds are he’s got it parked with a financial planner who is investing it in oil futures right now, causing prices to skyrocket.
<
p>Conservatives like to claim that high taxes discourage work. That is not quite true — high taxes discourage compensation. Many people have no natural limit as to how much they will take — like the billionaire hedge fund traders — even though they could never reasonably spend that much in their lives. Company owners have shown that they would throw people out of work if it means wringing more profit from their company. So maybe if that profit isn’t as attractive to take, and if people are forced to think of themselves being an employee rather than a short-term mercenary, better decisions would be made.
sethjp says
<
p>This may be true, but the taxes have to be really, REALLY high for them to discourage compensation. After all, the taxes only discourage compensation if the make the marginal take home pay so insignificant that it no longer becomes a relevant factor in executives’ decisions as to where they choose to work. Eighty Percent, as large as that may seem, doesn’t cut it.
<
p>Let’s look at your example of taxing everything over $2 million at 80%.
<
p>The first $2 million in income would yield roughly $1.2 million in take home pay. (I’m ignoring FICA, deductions, exemptions, etc. in order to simplify things.) Each $1 million after that would add another $200k. And $200k is a big enough fraction of $1.2 million that it’s going to act as a significant incentive.
<
p>In fact, if you assume that a 10% difference in pay is a significant deciding factor (and I’m not sure any of us wouldn’t seriously consider an offer that involved a 10% raise!), your hypothetical CEO would have to be taking home over $2 million — meaning she would have to be being paid over $6 million under your model — before an additional $1 million in salary might start to fall into the realm of incidental.
<
p>Sure, $6 million is better than $8.6 million, but it’s not “a lot closer to $2 million.”
stomv says
Sure more money is good, but other factors in the job matter too. Location, hours, excitement, tangible benefits, perks, parachutes, launching pads, etc. As taxes go up, the wages have to be much more significantly different for the after-tax wage to be significant.
<
p>Of course, as marginal taxes go up, compensation packages start becoming salary-poorer but loaded with more perks and bennies. Is that better?
sethjp says
… that location, hours, perks, etc. are important factors in whether one accepts a job offer. I’m merely arguing against NoPolitician’s claim that an 80% tax on all income over $2 million would result in high end salaries tending to cap out in the neighborhood of $2 million. The math just doesn’t support that argument.
<
p>As for whether it’s better to have execs taking home huge salaries or having access to amazing perks, I honestly haven’t thought enough/don’t know enough about the matter to have a worthwhile opinion.
<
p>I’d be interested in your thoughts, though. Is there an argument to be made that one is better than the other?
edgarthearmenian says
and Larsen feeding at the trough? (and mucking up a poor system at the same time). Universal Medicare would obviate so much of this waste and create a level playing field for all of us. We don’t need these wasteful businesses if we all have medicare.
mark-bail says
medicare. It’s nice to see something we can agree on.
edgarthearmenian says
My problem is that by nature I am conservative in that I don’t see all of those wonderful outcomes that liberals see.
mark-bail says
I’m actually less of an idealist than I might seem. I try to balance both the good and the bad see if there is a margin of benefit.
roarkarchitect says
10 percent of all Medicare payments are fraudulent
<
p>Medicare isn’t a panacea either.
mark-bail says
efficient.
gp2b3a says
Really, Medicare only pays for in-patient procedures and drug costs over 4000$
<
p>If you want out patient care, check ups, etc etc you must have a supplemental policy ( called healthcare insurance) to pay for it
<
p>right now i have access to in patient and out patient care, small co-apys for drugs, and access to specialist without prior approval ( thank you blue cross blue sheild)
<
p>you want me to go on Universal Medicare? thanks but no thanks!
stomv says
shirleykressel says
Exactly what Jill Stein and the Green-Rainbow Party would give us.
mark-bail says
for and work toward. I have no doubt about that. Unless the Green Party had a significant share of the legislature, however, they wouldn’t be able to deliver anything but rhetoric.
sabutai says
Then again, when this happens and people end up surprisingly elected, it often gets real awkward, fast.
shirleykressel says
This is why our politicians keep doing this to us. We know they do it, yet we keep putting down anyone who dares to run offering a better alternative, because we won’t vote for him/her, because that might hurt the politician who is doing it to us. Rinse, repeat.
<
p>Why do you assume the Greens would do the same if they were in office? They aren’t the same. They aren’t bought by corporate donors.
kbusch says
So why don’t you guys run for legislative seats instead of these quixotic, drunk-with-purity runs for governor?
lightiris says
is unlikely to change. I think, personally, that it’s organic with these folks, something innate in their personalities. Whatever it is, it tends to compel them to repeat the same unproductive behaviors. Judean People’s Front? People’s Front of Judea?
<
p>They’ll be drunk-dialing the next election for governor. Count on it.
edgarthearmenian says
I’m surprised at you. You sound like Rush Limbaugh talking about “liberals”–:):)
kbusch says
My comment has the title it does because the Greens have stayed firmly in the quixotic but pure column for so very long. I doubt there are many liberals on this site who wouldn’t prefer to see the Greens attain some actual political power, but they seem to eschew that. So the fact that we liberal Democrats keep having the same conversation with the Greens over and over certainly suggests something is stuck.
<
p>It doesn’t seem at all unreasonable to suggest that there is some combination of structural and social psychological problems that keeps them mired where they are.
mark-bail says
Gale Candaras (D-Wilbraham) is not as liberal as I am, but she supported marriage equality and cares about mental health and women’s issues.
<
p>My congressman is John Olver (D-Amherst); I don’t want to lose him either.
<
p>Ellen Story (D-Amherst) is my state rep. I like her a lot. She is liberal. She may have had a Green challenger; she had a Tea Party challenger.
<
p>If a Greenie could get elected and earn a good reputation in Amherst or even Northampton, s/he might have a shot at a legislative post. Other than that, I don’t see it as happening.
<
p>Shirley, I think most of us see things as you do. We differ, however, in that most of us don’t believe elected officials can remain above “politics” and be effective.
somervilletom says
Edgar is right on the money with this. Please see my personal example of what this garbage means for those of us on the receiving (paying) end.
choles1 says
To be transparent, I am a BC/BS subscriber and, on the whole, I think they are fairly responsible as a health care insurer.
<
p>But…this is a great example of a non-profit in name only and a case study of the limitations of the various federally approved forms of non-profit organizations. Non-profits should not – need not – compensate volunteer members of their Boards of Directors, other than for direct expenses associated with attending Board meetings. It would be a gesture of good faith for a non-profit organization which has incurred an operating deficit in any year for a compensated Board to waive or return payments made to them.
<
p>Second, perhaps the AG’s review should also include the provisions of law creating the various classes of non-profits. If a non-profit acts like a for-profit, compensates senior managment as if it is a profit-making enterprise, pays of the Board of Directors, makes a practice of agreeing to expensive employment contracts, perhaps it should be more treated as a private enterprise and not some charitable or educational entity. Given its extensive real estate holdings in the Commonwealth, perhaps it should be asked or required to pay real estate taxes, for example.
<
p>This is a failure of the Board to prudently oversee and to manage the senior managers in a tough economic and health care environment, and it would be interesting to compare BC/BS practices with other health care insurers in Massachusetts.
<
p>