Thursday, February 23, 2012
In defence of high private sector salaries
A quick thought amid all the kerfuffle about high private sector salaries. Working in the public sector, I like it when private sector people are paid insanely high salaries. The marginal rate of taxation is over fifty percent, which means that more of the money ends up going towards the Treasury and onwards to pay my salary (and everyone else's) than actually ends up in the employee's pocket. Somehow the public sector unions have it in their heads that this is bad for their members: whereas it is plainly the reverse, because the highly paid pay the taxes which fund our salaries. In fact, it's in the interest of public sector workers to see private sector inequality rise, since this would increase the overall level of income taxation paid for any given overall quantum of remuneration.The flip-side of this, of course, is that one way to shrink the State may be to encourage, in as State-free a way as possible, less inequality in market incomes. It's odd to think that quite possibly, these two issues have shaken out on the 'wrong' sides of the debate in quite the way they have.