That there should be a universal salary cap

JackSprat

There should be a fixed universal salary cap.

DEFINITION - UNIVERSAL

Applies to everyone. For the purposes of this argument, I shall limit to one country.

DEFINITION - SALARY

A fixed regular payment typically paid on a monthly or biweekly basis but often expressed as an annual sum.

DEFINITION - CAP

A maximum limit.

CONCEPT OF SALARY

A salary is a form of remuneration provided to an individual, often in the exchange of services. Many governments have tried to effect minimums on compensation provided to individuals, but this is not done from a salary perspective. This is done based on a per hour, perspective. Minimum wage is not a minimum salary.

SALARY CAPS EXIST

When it comes to other government protections, such as unemployment insurance, there is a maximum that is provided, and that maximum is universal to all recipients of that benefit in that country. In the US the weekly payments could be as high as $790 and as low as $225 https://howmuch.net/articles/unemployment-insurance-benefits-by-state. Those are universal limits in that jurisdiction. In Canada, the maximum is $547 (CDN) a week. https://www.unemploymentcanada.ca/how-much-e-i-will-i-receive-2/ These amounts are based on what has been contributed, up to a maximum.

So we already see that there is a principal of a salary cap in place. Now with coronavirus, Various governments have created plans with maximum limits of what can be claimed, based on a couple of circumstances. This is a weekly, biweekly, or monthly amount. It has a cap. Therefore we see another example where salary caps are adopted and used by the government. https://www.mainepublic.org/post/whats-it-you-1200-checks-13-weeks-unemployment-payments-and-more

SUMMARY

What we see with coronavirus, there is an essential commercial foundation of liquidity that is required to keep the economy alive. The government sees this and has responded accordingly.

Chasm

I would like to thank my opponent for accepting this debate and his opening arguments, which because of technical error are continued with my agreement in the comments section, along with my citations.

I will open by directly addressing the key points of my opponent’s speech, for I fear he has made a fundamental misunderstanding of what a universal salary cap is intended to be. A salary cap is a government intervention to put a maximum on the amount an individual can earn over the course of a year. For example, in 1942 President Roosevelt proposed a 100% income tax on income over $25,000 dollars and in 2017 it was proposed by the leader of the UK Labour Party, Jeremy Corbyn, that CEOs could only be paid per hour a maximum of 20 times what their lowest paid employee would be paid. [1] While he is correct to draw some distinction between wages and salaries the truth is that both are nearly identical. A contract with a salary will set the number of hours expected to work per week, with the provision the employee may need to work longer hours unpaid to complete all their tasks. So while wages and salaries are subtly different metrics one is only the product of another. Therefore, a salary cap is a government policy used to create a maximum annual income for an individual from working.

This is why my opponent was wrong to suggest that salary caps exist already, when their only existence comes from Egypt unsuccessfully trying to implement one. [2] His first paragraph refers to government protections, which do not count as a salary because a salary is generally agreed to refer to payment for work. [3][4][5] Besides, these are minimum incomes to prevent destitution among the unemployed, no those earning the most in the economy. His second paragraph refers to checks given by the US government to every citizen and again to unemployment protection. These are not salaries as they are not for any work. Furthermore, they are minimum incomes not maximum ones!

His summary sadly continues to make this error. He states that “salary recipients should have a salary guaranteed by law” and that those who do not have salaries “should have a guaranteed salary”. Firstly, all salaries right now, from the lowest to the highest, are guaranteed by contract law. Secondly, he is confusing a universal basic income (a minimum income guaranteed to all citizens) with a universal salary cap (a limit on what the highest earners can earn per year).

Sadly, this leaves me with very little to go off when forming my arguments for this round. However, working under the correct definition that a salary cap places a universal limit on earnings for the highest-paid I will advance an argument.

My opponent limited the universality to within the borders of a single country (a salary cap for the USA rather than one for the world). However, this is likely to severely damage the government’s finances. Firstly, it is very likely that firms would relocate to countries that do not have this limit. It is already the case that some firms use complex international tax structures to reduce the taxes they would have to pay in a country. For example, Amazon paid no federal tax on $11.2bn profits in 2019. [6] If we implemented this policy in an effective manner those whose incomes would be lowered would likely leave the country financially, meaning they would not pay any tax to the government. These highest earners pay the most income tax, a vital source of government revenue. If they leave governments will end up effectively taxing lower earners more and having less to spend, something which already impacts the most disadvantaged most. A universal salary cap does not reduce inequality, it exacerbates it. Secondly, a country could not attract foreign CEOs to move to it, decreasing the quality of leadership and innovation in that country. This will stunt economic growth, with the many negatives that go alongside that.