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Netflix CEO's modest proposal: Tax me more!

Reed Hastings isn't fond of the proposed Obama compensation cap, so he instead offers an interesting alternative. Whether it will get a hearing is another question.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
2 min read
Reed Hastings, Netflix CEO Netflix

Reed Hastings, chief executive of video rental site Netflix, floated a ballsy proposal in Friday's New York Times, volunteering the idea that he and other highly paid wage earners ought to pay more in taxes.

Even if it's got a snowball's chance of going anywhere for now, the idea still merits consideration.

I'm the chief executive of a publicly traded company and, like my peers, I'm very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I'd like to offer a suggestion:

President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third.

Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools, and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans.

All this takes place against the backdrop of the president's proposal this week to put a $500,000 compensation limit on executives of companies seeking a bailout.

Hastings' proposal seeks to satisfy both sides of the debate over pay scales for executives overseeing companies that are bailout recipients. Writing about the compensation cap proposed by Obama, he had this to say:

It's a terrible idea. We all want the taxpayers' money returned, and capping compensation (for) bailout recipients will just make it that much harder for those boards to hire and hold on to the executives who can lead their companies to compete and thrive.

Perhaps a starting place for "tax, not shame" would be creating a top federal marginal tax rate of 50 percent on all income above $1 million per year. Some will tell you that would reduce the incentive to earn, but I don't see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job, anyway.

That last clause is beyond contestation. The thrill of being the boss is a huge motivation. The gluttons being outed on Wall Street are a class unto themselves.

Silicon Valley marches to a different beat. You'll find the occasional carpetbaggers--during the dot-com bubble, they were all over the place--but most hung out a shingle in order to create something new and exciting.

Don't get me wrong. Many of these folks take home enormous compensation packages. But we're talking about real bonuses in return for real performance. I think that Obama's jumping mad because the financial fat cats were taking home real bonuses for fictional profits. There's a big difference.

I give Netflix's boss credit for trying to refocus the debate. Of course, no technology firms have lined up at the trough to receive public funds. So at this stage, at least, the idea remains theoretical--that is, barring the (unlikely) economic collapse of the tech industry as well.