Bill Ford Jr. admirably took a pay freeze 5 years ago stating he would not take a salary until Ford was profitable. Well Ford is profitable and Bill Ford Jr. $4 million in salary and an additional $12 million in stock options. He is also donating a million dollars of this compensation.
While I have no problem with the top guys making money, especially when the company's profits were $2.7 billion, the issue I have is with the people who suggest that the top 1% pays too much in taxes. Thanks to the stock options Bill Ford Jr. will have decreased his tax bill by almost $2.5 million. Yes, by simply taking stocks instead of a salary he will only pay a 15% tax on his gains instead of the 35% he should pay. This 15% tax rate is equal to the tax rate on individuals making between $8,375 and $34,000. Keep in mind the poverty line in the US stands at $11,161. This means Bill Ford Jr. is going to take the bulk of his earnings and only pay the rate of someone who is below the poverty line.
There is a claim that anyone can participate in the stock market and everyone benefits from this tax loophole but the fact is the majority of stocks are owned by the top wage earners (the top 5% holds nearly 90% of all stocks) and the little guys have very little access to this. Because of this loophole the middle class is forced to make up the difference in lost tax revenue.
Back in the Clinton era the government would have received an additional $1.56 million from the sale of Bill Ford Jr's stock options. The Bush era tax cuts brought about huge tax savings for the rich that the middle class can not access. These tax cuts are a huge contributor to the Federal Deficit and our National Debt.
If you look at the Clinton years you will see that even with the increased tax rates and higher capital gains tax rates people still spent their money and invested in the stock market. The actual taxes are not the deterrent to spending as much as the perception of uncertainty. The rich will spend if they are confident in what is coming. If they are concerned that the economy will take a down turn they hold on to their money. This is the problem with Trickle down economics. It relies on consumer confidence. The poor will spend all of their money regardless of the economy but the rich like being rich and they didn't get that way by spending all of their money.
The Capital gains tax rate is one of the many tax loopholes the rich use to continue to expand the wealth gap. Until the middle class realizes that the deck is stacked for the rich they will continue to pay a much greater percentage of their income in taxes and watch the rich get richer.
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