CEO pay rises as tax payments drop
For 25 large corporations, the top boss took home more money than the entire company paid in federal income taxes, one study shows.
But what about when a CEO's salary is fatter than the entire federal income tax bill for the company? Or better yet, what if their companies didn't pay any 2010 federal income taxes at all? Is this becoming the new normal?
That's what some of the largest U.S. companies managed to finagle last year, according to a new study from the Institute for Policy Studies. The study found that 25 of the 100 highest-paid CEOs took home more money than their company paid in federal income taxes. The average pay of those 25 CEOs was $16.7 million.
Actually, it wasn't hard to take home more pay than what went to Uncle Sam. That's because most of those 25 companies didn't pay any federal income taxes, the institute found. Instead, they received tax refunds averaging $413 million.
Some of the companies are popular stocks with investors, since they pay dividends in tough times and are becoming global powerhouses. Those include Boeing (BA) and Verizon (VZ).
A generation ago, CEOs might have felt ashamed to be paid so much when their companies weren't contributing to the public infrastructure, said Chuck Collins, a senior scholar at the Institute and one of the report's authors. They didn't game their taxes or their workers, he added. They just tried to make a better widget and they built it to last.
"Now, you have a generation of companies that sort of compete on accounting gymnastics," he said. "That's not good for business."
The Institute's report is bound to be controversial. Companies don't like to talk about the federal taxes they may or may not have paid. Consider the drama that erupted in March when The New York Times reported that General Electric (GE) didn't pay any U.S. taxes and instead claimed a tax benefit of $3.2 billion. The top corporate tax rate in the U.S. is 35%, but many companies use shelters, accounting loopholes, credits and other strategies to pay far less.
GE was outraged at the assertion, but wouldn't clarify what its federal income tax bill indeed was. The Times stood by its article, and at the end of the day we didn't really know who to believe.
GE was one of the companies named in the report. The Institute's offered numbers similar to what the Times reported, claiming GE received a $3.3 billion refund on its U.S. federal income taxes. Its chief executive, Jeff Immelt, received $15.2 million in 2010 compensation. President Barack Obama named Immelt in January to lead his Council on Jobs and Competitiveness.
GE says the Institute's study is inaccurate. "GE pays what it owes, including significant income taxes in 2010 for previous years," said spokewoman Deirdre Latour. "The study also ignores all the state and federal taxes the company pays." Latour did not specify the amounts GE paid in those tax categories.
Another company mentioned in the report was Stanley Black & Decker (SWK), whose CEO John Lundgren took home $32.6 in total compensation last year (that includes $25 million in stock awards). The company did not profit last year, and in fact reported a loss of $183 million in pre-tax income. That resulted in the company receiving a $75 million refund on its federal income taxes.
The company did not respond to a request for comment. But Verizon told The New York Times that the report's numbers were misleading, because it cited the company's tax benefit without acknowledging the billions of dollars in deferred taxes to be paid in the future.
Corporate America seems to be dismissing the institute's findings. It's a left-leaning organization, one that Collins says tries to bring unconventional wisdom to debates about foreign policy, the economy and the environment.
But the report does highlight some truths. The U.S. corporate tax rate is too high and there are too many loopholes, shelters and ways around the system. The study is useful for investors, because while CEO compensation is a hot topic, a company's tax bill is less discussed while still important to the bottom line.
I LIKE THE PART ABOUT BILLIONS OF DOLLARS IN DEFERED TAXES TO BE PAID IN THE FUTURE. THE 'FUTURE' IS OPEN ENDED. I WISH I COULD SAY TO UNCLE SAM...HERE'S MY IOU WILL PAY IT BACK SOMETIME IN THE FUTURE. THATS AKIN TO SAYING KISS OFF I AINT PAYING YOU ANYTHING.
GET THE TAXES PAID NOW OR IMPOSE THE SAME PENALTIES AND INTEREST CHARGES YOU AND I WOULD GET FOR NON/LATE PAYMENT OF TAXES.
1. Term limits for ALL public offices (local, state, or federal) dependent upon the position held
2. Simplified tax code with a "flat tax" type structure
Undeniable proof that "Trickle down" economics DOES NOT and WILL NOT work! These companies are given tax breaks to help them expand, but instead of passing the savings on to their employees the CEO's choose to pocket the money for themselves and send the jobs overseas. I'm not impressed with how the Democrats are running this country but expect more of this under a Republican administration.
No investigations into what and who caused the financial collapse?!? No prosecutions and no end to the looting?!? Tax payer money (TARP) handed to the looters who then pocketed it?!? The proceeds of the looting taxed at 15%?!? The looters standard of living continuing to soar while their victims continue hemorrhaging jobs and homes?!? Shared sacrifice going forward??? It should have been: "we've been sacrificing for three years while the looters continued to prosper; now its their turn!!!" Instead, Obama just gave the store away. No revenue = No money for work programs like a WPA or a CCC.
TAX THE LOOTING RICH!!! No more discounts! Drop the deductions! Lose the loopholes! Shut the shelters! End the off-shoring! Close the Caymans! Sanction the Swiss (UBS & Credit Suisse)! ELIMINATE the cap on Social Security Tax! These out-sourcing Globalists do not need or deserve discounts!!!
I hope these ceo's never get a good night's sleep. greedy sob's ****s think they can take it with them. Our government allows these bandits/corps to pay no taxes and then they let them send the jobs out of the country. They should be penalized for sending them out of the country. Corporations are full of it saying oh they will pay taxes in the future, it is just an excuse for their crooked ways.
Our congress sucks a big one and they all have their heads of corporations asses. If one objects then the rest of the good ole boys and gals shut them down so they don't lose their gravy train. Corporation & ceo's should not be allowed to make massive contributions to campaigns. They should only be allowed to contribute $100 Maximum to each candidate.
CEO salarys compared to their workers in 1965 was about 24-1. In 1989 it was about 70-1, and then in 2005 it was 262-1. By comparison the median wage in 1979 was $15.91/hour (adjusted for inflation to 2001 dollars). By 1989 it only rose to 16.63, thats .07 per year increase. 1995 it was a whopping 16.71, .08 cent raise in 6 years.
That is just the salaries, if you add in the fact that most of the companies these ceo's work for do not pay taxes, it is down right disgusting.
The fact that CEOs are not paying as much in taxes as they receive in salaries proves one thing: They take more out of this country and put nothing or next to nothing back. How can any economy sustain itself with that kind of greed?
Americans have to stop assuming Big Business and Corporate America has the ONLY right to wealth. Americans have to stop assuming Big Business has the right to gouge prices three, four, five or six times a year. Is there some reason Americans can't figure out when something is priced outrageously? When what they think they need is more only what they want?
For more than 2 decades now, we've watched Big Business savage consumers, their employees and taxpayers. They just assume they can ride herd over us and we will sit back and take it. When they aren't price gouging, they are begging for more, more, more tax exemptions, tax credits and tax breaks until the US Government is the sole source of their revenue for paying off their debts. Then, they go after their employees. They post ads for jobs that make the claim that benefits are offered...until you read the fine print...offered...just not paid for by the company. Paid for by employees almost entirely.
Don't wonder how they managed the world's highest CEO salaries.
Thank you so much Speaker of the House John Boner (Boehner). You got exactly what you wanted in the debt talks. The rich will continue to get richer, there will be no job growth because they will outsource all their jobs to foreign countries who pay their workers low wages, and middle class of America will continue to pay the majority of the taxes so you and corporations like this can give yourself an annual pay raises and slap yourselves on the back in congratulations of what a great job you are all doing.
I only can hope Americans wake up and vote slime like you out of office.
10 years of tax cuts at a cost of zillions of dollars to our country and with stupid attempt to balance the shortfall of paying for 2 wars and aftermath of several natural disasters on those who have the least--all in the name that this will allow the corporations to create more jobs. Well where are the jobs they created in the US--we all know they created jobs in 3rd world countries so they could make even more $ by paying minimal wages and no benefits-but where are the jobs they were to create in the US???
First of all, No...Business are not just in business to make huge profits they can spend solely on CEO salaries and high risk investments. Businesses can't survive without consumers, employees or taxpayers. That's a fact some Americans want us all to forget.
So, if business only exists to buy and sell other businesses and then turn that into some bizarre high risk game of venture capitalism, how are they NOT responsible for the mess this country is in?
They have no right to operate a business in this country tax free, dump their debts on taxpayers, close financial gaps with price gouging whent risky investments sour or refuse to give employees raises when their salary is obviously out of control. How dare they? They dare because we allow it. We've become a nation of enablers.
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