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February 9, 2011 at 5:47 pm #597894
beachdrivegirlParticipantI saw this article in the Puget Sound Business Journal which mentions 14 different nonprofit hospitals in Washington that had executives making $1 million or more in 2009. The state is now looking into these salaries and the tax breaks these nonprofit hospitals are receiving.
http://www.bizjournals.com/seattle/morning_call/2011/02/nonprofit-hospital-exec-pay-scrutinized.html
I will be following this story closely because it intrigues me.
February 9, 2011 at 7:06 pm #716862
DPMemberYes, please do follow up on this story for us, BDG.
These fancy-pants execs claim that they deserve their lush salaries and bonuses because of their superior “networking” and management skills.
Puhh-leeez!!
But how to address this problem? It’s difficult to regulate salaries in the private sector, and besides that there are ethical issues. But we could solve this problem relatively easily, with a progressive tax structure.
With a progressive tax, we wouldn’t need to bother ourselves about how much people get paid. But if they get paid by the wheelbarrow, then let them also be taxed by the wheelbarrow.
Next time around, let’s everybody vote for “I-1098” (or whatever it’s called).
February 9, 2011 at 8:49 pm #716863
mpentoParticipantI think there should be a maximum allowed of 5 times more than the lowest salary paid by the organisation. This includes all those other payments too. Usually if you mess with their salary suddenly bonus, befits and expenses are required to run the business efficently or some other BS.
February 9, 2011 at 9:14 pm #716864
skeeterParticipantDP – keep in mind this is not the private sector we are talking about. This is the nonprofit sector. Nonprofits have a different set of standards and rules.
Beachgirl (who I hope to meet someday!) you should keep in mind that the state might have a B&O tax issue, but the far bigger issue is the organization’s tax exempt status with the Federal Government. Nonprofits/tax exempt entities are prohibited from certain transactions, including excessive compensation. You might find this interesting:
February 9, 2011 at 9:48 pm #716865
SmittyParticipant“I think there should be a maximum allowed of 5 times more than the lowest salary paid by the organisation.”
Does this apply to Arianna Huffington as well as it sounds like something she would champion – at least prior to her AOL millions.
February 9, 2011 at 10:18 pm #716866
DPMemberYou’re right and I’m wrong, skeeter. Non-profit does not equal private.
According to the transcipt from the OP, the law states that non-profits are forbidden from paying their execs “excessive compensation.” Excessive compensation is then defined as pay that’s out of synch with what public servants in Washington make in similar jobs — whatever “similar jobs” means.
Apparently there are tools in place to cut these non-profit exectuive salaries down, but it can get messy. (And that’s why I still like progrssive income taxes better for doing this.)
From the OP’s KUOW-link transcript:
. . . the last time the state tried to penalize a nonprofit for paying its executives too much, it didn’t go so well for the state.
The year was 1986.
The Department of Revenue wanted to ding Group Health Cooperative for paying too much to its executives. They argued all the way to the state Supreme Court.
Group Health’s expert witness testified that the executives weren’t overpaid when compared to executives at a variety of government institutions. He said the Group Health paychecks were within 5 or 10 percent of the middle of the market for comparable public service executives.
The court sided with Group Health. The key question, then as now, is what exactly does “comparable” mean?
Let’s hope this situation is easier to remedy than the Group Health one. I don’t know about the rest of you, but I can’t think of any Washington State government employees who make anywhere near a million bucks a year.
But we’ll see what the hospital execs can come up with in their defense.
Should be interesting.
February 9, 2011 at 10:59 pm #716867
GenHillOneParticipant“They’d also have to provide proof to tax collectors that the paychecks aren’t out of line with comparable pay in the public sector.” – glad to hear this. While yes, some seem out of balance, it really needs to be apples to apples, don’t you think? Comparing to government/public service (???) or even all non-profits (I WANT the head of a hospital to make more than the head of a symphony) doesn’t work. It certainly seems fair to compare hospital execs to hospital execs, for profit or not. Non-profit hospitals need to be able to compete and attract top leadership too.
February 10, 2011 at 7:39 am #716868
k8tMemberHere is a link to a segment I heard on NPR in December discussing salaries of local non profit hospital executives. The payment of country club fees on top of large salaries seemed a little “excessive”.
February 10, 2011 at 3:02 pm #716869
redblackParticipantthis is america, k8t. there’s no such thing as “excessive.”
February 10, 2011 at 5:35 pm #716870
DPMemberWhatever happened to the idea of public service? Or loving what you do and working for the sake of being productive, regardless of the pay?
If you’re in charge of a hospital, you have been entrusted with the health of thousands of patients and the happiness of thousands of employees as well. Healing the sick and looking out for the interests of a huge public organization is not just an awesome responsbility, it’s an honor.
No matter what the job, though, doing that job well should always be your top priority, with money being somewhere further down the list.
These hospital execs have gotten it backwards in my opinion.
Same goes for symphony directors, football coaches, rock stars, and assorted other demigods. They all need to be reined in, one way or the other.
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