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Regulating Compensation: Where Does It Stop?

If I combine the range of comments from many sides of this compensation bubble, let's see if we can agree on a set of principles that might govern the excesses of the few with the money of the many.

I would invite comment from anyone on why the following is or is not a good idea.

1. Reinstate Glass-Steagall. None of these shops (Citigroup, B of A, etc.) should have ever been allowed to dally in businesses about which they knew nothing. AIG has (had) 111,000 employees. It's an insurance company. How can it effectively manage its core business while allowing thse AIG FP geniouses to manipulate the financial markets with CDO's and CDS's?

2. Eliminate bonus structures altogether. Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top? Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 401k and I am only required to deal with the payroll effects of 60k. If we want to stimulate productivity, then structure compensation the old fashioned way. Provide a salary/commission structure, but don't play games that allow some to escape taxation by fiddling with the code.

3. If we are stuck with an income tax, level the field and fix the code by eliminating subsidies. Free market preachers always talk about existing in a world without artificial props. Eliminate oil and gas subsidies. While we're at it, eliminate import tariffs that stifle free trade.

For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, let's treat everyone as the workers they are. Those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system is an obscenity that is finally being recognized through this crisis. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$106 K cap on wage contributions to Social Security? Then, at the tail end of the SS contribution cycle, these same wealthier individuals garner an elevated SS income based on their historic salaries. If we are to cap SS contributions, then why not put a means test on the back end when those same SS scoflaws come to the trough for their share?