New tax proposal combines social engineering and class warfare. Congressional Democrats want to use the tax code to penalize large corporate severance packages. But this should be a matter for stockholders to decide, not headline-seeking politicians. The Wall Street Journal, meanwhile, explains that the middle class often feels the brunt of tax schemes designed to punish the so-called rich:
One of the ways the Senate bill does this is to place a cap on the amount of "deferred compensation" that a company can award its top executives in a given year. The cap is equal to $1 million or the executive's average salary for the previous five years, whichever is lower. But rather than simply tax any deferred compensation above that threshold as income, it imposes an additional 20% penalty tax on deferred comp above the limit. The Joint Committee on Taxation predicts this provision will bring in $800 million over the next decade. We'll go out on a limb and predict it brings in an amount closer to $0.
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