Start here: The Washington Postreports on the 75 percent tax rate imposed on all earnings over $1.23 million a year, a campaign pledge that newly elected French President Francois Hollande has now delivered. The Post reports that the tax boost on France's wealthiest (up from a previous marginal rate of 48 percent) will do little to boost France's diminished coffers but that "it will help give Hollande political cover to cut government spending and open the labor market." So there's that.
Then read Hamilton Nolan's chin-scratcher for Gawker on what a maximum income cap for the U.S. The right-y capitalists among you may already be recoiling, but hear him out:
Let's have a maximum annual income of, oh, $5 million, pegged to inflation. All income above that would be taxed at 99 percent. Our precious national sports stars, celebrities, and corporate executives could still be fabulously wealthy. The daydreaming poor could still have a nice big number about which to hopelessly dream. Five million dollars a year. Five million! Anyone with $5 million can invest it conservatively enough to earn 5 percent a year and still be making $250K per year without lifting a finger. In other words, $5 million provides you with the means to live as a member of the one percent without ever touching the principal. It's everything that any reasonable person could ask for, financially speaking.
So there's that. Then read Derek Thompson, who steals the ball and runs with it for The Atlantic.
The first thing to point out is that a maximum income is, objectively, not a "better idea" than an offensively high marginal tax rate, because a maximum income is an offensively high marginal tax rate. It is the most offensively high marginal tax rate, of 100%, applied at $5,000,000 and one cent. If a 75% tax rate will push financiers out of Paris, a 100% tax rate will catapult them into Belarus.
But wait, how would this idea even work? What would it do? We don't know what would happen if we applied a top marginal rate of 100% because something like this has never been tried in an advanced economy that I'm aware of. But for the super-rich, it certainly sends a clear message: Don't work so hard. And if you want to work hard, do it some place else.
So there's that! But then read Matthew Yglesias at Slate, where he posts his objections to both cases. Yglesias calls Nolan's 99 percent marginal tax rate for the highest salaried "a bad idea" and "a tax rate that would put you on the wrong side of the Laffer curve." But he says that Thompson's rebuttal is off:
Thompson levels three objections. One is tax evasion, which I'll grant him though it's a kind of weak objection, the other is incentives to work hard, and the last is inflation. The hard work is, I think, the most wrongheaded. Tim Cook's not going to forget that he wants to go down in history as the guy who took over Steve Jobs' company and made it even more awesome just because of some lame $5 million cap on compensation. We actually have practical experience of a world where CEO pay was, in practice, constrained by super-high tax rates. People still worked! They worked for honor, for glory, for power, and for status. Those are probably the exact same reasons they work hard now—people are just competitive.
It's the next point that ought to get architects excited. Yglesias writes that under a maximum-income-cap dispensation, a corporation would simply spend less money on executive compensation, diverting funds to "weird nonsense," as Yglesias puts it. Weird nonsense including corporate offices, corporate interiors, and research and development. For architecture today, "interiors" and "R&D" offer similar opportunities—think of SOM's partnership with Rensselaer Polytechnic to develop the Center for Architecture Science and Ecology or a dozen other similar shops that have opened in the last few years. Consider, too, the tax breaks available for "weird nonsense." Or in President Barack Obama's more elegant words: "We need 100,000 people in 100,000 garages trying 100,000 things—in the hope that five of them break through."
The Washington Post Wonkbook blogger Dylan Matthews has good things to say about the way such an income cap could be implemented in the U.S.: You don't want to impose an actual cap, and the marginal tax rate at which growth slows is well below 99 percent, and even before growth slows, the allocation of capital takes a stutter-step. But back to a simpler point about the distribution of corporate profits. Now, it's certainly the case that corporations could find ways to spend vast sums of money that don't involve architects at all. But insofar as a corporation wants to spend on prestige, few can deliver that service like architects. And insofar as a corporation wants to spend on development that will open new frontiers for profit or for savings, increasingly it's the case that few can deliver that service like architects.