by Robert Reich

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In early1993, I had a meeting with the late Lloyd Bentsen, then Bill Clinton’s Treasury Secretary, and Bob Rubin, who then headed the National Economic Council, to decide what to do about Clinton’s campaign promise to stop corporations from deducting from their taxes executive pay in excess of $1 million. Bentsen and Rubin argued Clinton’s promise would be met if corporations retained the deduction as long as executive pay in excess of $1 million was related to corporate performance – for example, if tied to stock options. I argued the $1 million cap should have nothing to do with corporate performance because the goal was to hold down executive pay. I was outvoted. The rest is history: Stock options exploded, as did CEO pay. Corporations are now deducting more than $5 billion a year for executive stock options. Since a tax deduction is the economic equivalent of a government handout, you and I and every other taxpayer are subsidizing widening inequality by providing corporations with at least $5 billion a year for executive stock options. Clinton’s original campaign proposal – no deduction of any executive pay in excess of $1 million -- should have been implemented. It still should, even if it is more than 20 years late.

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