Twenty-six U.S. companies paid their CEOs more than they paid the federal government in taxes in 2011, according to a new study from The Institute for Policy Studies.
The twenty-six top-earning CEOs noted in the study, titled The CEO Hands in Uncle Sam’s Pocket, were paid an average of $20.4 million last year by companies that are profuse with profit, yet pay little or no federal taxes. The list includes well-known corporations such as AT&T, Boeing, Viacom, Motorola, Walmart, Halliburton, and Exxon Mobil. It also includes Citigroup and AIG, both of which still exist due to taxpayer bailouts.
These same firms made more than $1 billion in U.S. pre-tax income, yet received tax benefits actually netting them an average of $163 million. The twenty-six corporations discussed in the study have 537 subsidiaries in tax havens throughout the world, making up but a chunk of the $21 – $32 trillion secreted away across the globe.
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According to the study’s authors, the national tax code empowers this reverse-Robin Hood process. There is no limit on deductions of “performance-based” compensation, allowing high CEO pay to reduce a corporation’s tax bill, triggering incentives towards “short-term compensation grabs and aggressive tax dodging,” says report co-author Chuck Collins. “The more they dodge, they more they get paid.”
The corollary decline in government revenue leads to cuts in critical government services and programs across the country — budget cuts have led to the loss of 627,000 public service jobs since June of 2009, for example — further exacerbating wealth inequality. The study notes the “four most direct tax subsidies for excessive executive pay cost taxpayers an estimated $14.4 billion per year…. That amount could also cover the annual cost of hiring 211,732 elementary-school teachers or creating 241,593 clean-energy jobs.”
Additionally, fifty-seven CEOs saved over $1 million on their personal tax bills last year, trickling up from the Bush tax cuts. And the billionaire hedge fund managers who oversaw the Wall Street crash four years ago are paying a lower tax rate than their secretaries because the profit share of the investment funds they manage is taxed at only a 15 percent capital gains rate, while their secretary’s wages are taxed at a much higher rate. Another convenient dodge allows executives to receive giant stock windfalls by claiming deductions at a higher rate than what they actually report in their financial statements’ option value.
The full CEO Hands in Uncle Sam’s Pocket study can be viewed here.