Mike the Mad Biologist

Wealth, Taxes, and Inequality: IBM’s Chairman, Then and Now

Posted by Mike on December 23, 2010
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It’s safe to say that Thomas Watson Sr., the first chairman of IBM (International Business Machines), truly revolutionized computing. While I’m sure Sam Palmisano, the current chairman of IBM, is a smart guy and has done some good things, I haven’t heard anyone claim he’s a technological revolutionary. So I found this post about Watson’s and Palmisano’s compensation and taxes very interesting (italics mine):

The newly released 1943 data make for absolutely stunning reading. We have simply never had clearer evidence of just how much America used to expect out of individual wealthy Americans — and just how little, by comparison, we expect out of our wealthy today.

We learn, for instance, that 1941′s top executive at IBM, Thomas Watson, collected $517,221 in compensation that year, about $7.7 million in current dollars. Watson paid 69 percent of his total 1941 income in federal income tax.

Last year, today’s chief exec at IBM, Sam Palmisano, took home $24.3 million for his executive labors. We don’t know how much income above that sum Palmisano reported in 2009, or exactly how much of that total he paid in taxes.

But we do know that the 13,374 Americans who reported incomes over $10 million in 2008, the latest year with IRS stats available, paid an average 24.1 percent of their taxable incomes in federal income tax.

In other words, IBM CEO Palmisano last year took home, after adjusting for inflation, over three times more than his predecessor Thomas Watson took home in 1941. Yet Watson in 1941 paid almost three times more of his income in federal income taxes than Palmisano likely paid in 2009.

Clearly, high taxes and lower CEO compensation prevent innovation. Or something.

Something to keep in mind when the wealthy cry wolf.

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Comments

  1. #1 Silent Service
    December 23, 2010

    Yep, and we gave them fuckers an extension on their tax break. We are geniuses.

  2. #2 Ken
    December 23, 2010

    I’m sure Palmisano is writing innovative code and designing innovative chipsets and developing innovative advertising campaigns, every single day.

  3. #3 D. C. Sessions
    December 23, 2010

    In Palmisano’s defense, he appears to be a very good chairman for IBM and has done a great job.

    TJ Watson he isn’t.

  4. #4 Roman
    December 23, 2010

    To be fair, IBM is a bit bigger than it was in 1941.

  5. #5 wolfwalker
    December 26, 2010

    Of course, one can also note that in 1963-64, President Kennedy proposed, Congress passed, and Johnson signed, a major cut in income tax rates. Within five years we had the start of the transistor revolution. In 1981, President Reagan proposed and Congress passed another major income-tax-rate cut, and within two years we had the start of the personal-computer revolution. Obviously a direct cause-and-effect relationship, yes?

  6. #6 Nelson
    December 29, 2010

    Sorry Wolfwalker, but your direct cause-and-effect relationships are not borne out by history. The transistor was invented in 1947 and were hitting the commercial mainstream in 1960-61 as the next big thing. You seem to have confused transistors with integrated circuits, which came about because of Kennedy’s Man on the Moon mission, not because of any tax cuts.

    And the Apple II personal computer was first offered for sale in 1977. The only cause-and-effect from Reagan’s tax cuts was the doubling of the national debt and the reduction of the national “safety net.” Oh, and the increase in the gap between rich and the poor.

    Republicans had control of the White House and presided over the deregulation of the banks/finance in the 1920′s AND in the 2000′s and both times we had the largest depression/recession in our country’s history. Direct cause-and-relationship, yes?