Money motivates people. The way this is supposed to work is if someone works more, they make more. If they work less, they make less. In times like the 50's and 60's, people making less got by alright. Executive salaries were within range, yet we still managed to compete very well. The median standard of living was much better.
Non-CEO executive pay is somewhat inflated. CEO pay for large corporations is bloated. Whereas a typical executive may make 200,000-1,000,000, CEO's can make 15,000,000-1,000,000,000. Amongst other things, this can create ethics considerations. People can get more ruthless as the stakes get higher.
Between 1954 and 1963 there were 24 tax brackets which remained consistent. The highest earners (200,000 and up for single filers) were taxed at 91%. The effective rate for this bracket was more like 50-60%, vs. an effective rate of 20-30% for the top bracket today.
The current income tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 37% is for 626,351 and up (single taxpayer). There's a lot of 626,351 and up. There should be more brackets for the up part. Maybe a 40% for 1,000,000-5,000,000, 45% for 5,000,000-10,000,000, 50% for 10,000,000-15,000,000, 55% for 15,000,000-20,000,000, 60% for 20,000,000 and up (single taxpayer). Something like that anyway.
Things such as tax rates can be used to control incentives. Different things motivate people: money, power, control, egos, competition. When it's money, it's sometimes a matter of relative standing. They'll compete based on standing, they don't need 50,000,000 to motivate them. With lower CEO salaries, costs can be controlled, and savings can be passed on to workers or consumers.
Most of the pay packages for upper executives is usually stock. Stock as pay is taxed as income.
