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Excerpt: "Tax dollars are flowing from average Americans who depend on public services to the kingpins of America's private sector. They're subsidizing, directly and indirectly, the mega-million paychecks that go to the top executives at our nation's biggest banks and corporations."

American politics are controlled by the 1%. (photo: Winner Take All Politics)
American politics are controlled by the 1%. (photo: Winner Take All Politics)


How Our Tax Dollars Subsidize Exorbitant Executive Pay

By Sarah Anderson, Chuck Collins, Scott Klinger and Sam Pizzigati, Institute for Policy Studies

17 August 12

 

ationwide, budget cuts have axed 627,000 public service jobs just since June 2009. Schools, health clinics, fire stations, parks, and recreation facilities-virtually no public service has gone unsqueezed. Tax dollars haven't seemed this scarce in generations.

Yet tens of billions of these scarce tax dollars are getting diverted. These tax dollars are flowing from average Americans who depend on public services to the kingpins of America's private sector. They're subsidizing, directly and indirectly, the mega-million paychecks that go to the top executives at our nation's biggest banks and corporations.

Exorbitant CEO pay packages have, of course, been outraging Americans for quite some time now. Every new annual CEO pay report seems to bring a rash of predictably angry editorials and calls for reform. But little overall has changed. Wages for average Americans continue to stagnate. Pay for top executives continues to soar.

One key reason why: Our nation's tax code has become a powerful enabler of bloated CEO pay. Some tax rules on the books today essentially encourage corporations to compensate their executives at unconscionably higher multiples of what their average workers are paid.

Other rules let executives who run major corporations routinely reduce their corporate tax bills. The fewer dollars these corporations pay in taxes, the more robust their eventual earnings and the higher the "performance-based" pay for the CEOs who produce them.

In effect, we're rewarding corporate executives for gaming the tax system. Our tax code is helping the CEOs of our nation's most prosperous corporations pick Uncle Sam's pocket.

In this latest Institute for Policy Studies Executive Excess annual report, our 19th consecutive, we take a close look at the most lucrative tax incentives and subsidies behind bloated CEO pay and highlight those executives who have reaped the highest rewards from tax code provisions that actively encourage outrageously disproportionate executive pay.

We also identify the top executives who have benefited the most from what have become known as "the Bush tax cuts"-the reductions in federal income tax rates on top-bracket, capital gains, and dividend income enacted in 2001 and 2003.

Among our findings:

  • Of last year's 100 highest-paid U.S. corporate chief executives, 26 took home more in CEO pay than their companies paid in federal income taxes, up from the 25 we noted in last year's analysis. Seven firms made the list in both 2011 and 2010.

  • The CEOs of these 26 firms received $20.4 million in average total compensation last year. That's a 23 percent increase over the average for last year's list of 2010's tax dodging executives

  • The four most direct tax subsidies for excessive executive pay cost taxpayers an estimated $14.4 billion per year-$46 for every American man, woman, and child. That amount could also cover the annual cost of hiring 211,732 elementary-school teachers or creating 241,593 clean-energy jobs.

  • CEOs have benefited enormously from the Bush tax cuts for upper-income taxpayers. Last year, 57 CEOs saved more than $1 million on their personal income tax bills, thanks to these Bush-era cuts.

What can be done to end today's incredibly gross pay divide between top executives and average workers? In this year's Executive Excess, we once again survey a wide range of reform notions with a "scorecard" that notes those reforms that have already been enacted, those still pending before Congress, and those proposals not yet before Congress that we believe hold the most CEO pay-deflating promise.

Read the full report: Executive Excess 2012: The CEO Hands in Uncle Sam's Pocket (PDF)

Go to the campaign page: Executive Excess 2012 Campaign


 

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+12 # BradFromSalem 2012-08-17 10:01
Why would anyone be surprised by this information is beyond me. These Corporations are routinely deeply involved in discussions on what tax breaks to legislate. This is the logical result of consulting the party to be taxed on what their tax rate should be.
When it comes to Corporate interests, our conflict of interest investigators have been completely defunded making them impotent to discover what little of our conflict of interest laws remain.
This all then becomes a vicious cycle as now that corporations are writing the laws via ALEC and various industry lobbyists they can further defund the government by paying less taxes.
 
 
-17 # Dumbledorf 2012-08-17 10:38
This article fails to mention the scourge of private property taxation; the 100,000 people who will lose their homes this year alone because of inability to pay these exorbitant, extortionate and unconstitutiona l. Nor doe this article mention the absurd salaries in many areas where public school principals and administrators are making 2, 3 and even $400,000.00 a year salaries off of the backs of simple homeowners and depleting their life savings just to enrich themselves. Why isn't this property tax scam being reported? This is a true crime against humanity and even more abhorrent than the CEO's taxpayer theft. To deny a person their own home over a tax??? How can we as freedom loving people allow, in all good conscience, 100,000 Americans to lose their homes because they cannot afford to pay a recurrent profile tax, that violates the law of the land and basic common sense and decency????
 
 
+15 # BradFromSalem 2012-08-17 11:22
Dumbledorf,

I am pretty sure that school principals are not making 400K or even 200K. That may be true of some large city school superintendents , but I would think that is an appropriate salary for that type of job.

But what is more disturbing in your post is your assertion that the property tax is illegal. I am pretty sure that the legality of that tax has been reaffirmed by the courts on numerous occasions. That being said, you are correct in your assessment of it being an unfair tax. It is unfair much in the way that a Sales tax is also an unfair regressive tax; which unfortunately is legal. Lastly, your topic, while important, is not really germane to the article since the property tax is one of the few that do not enrich corporations.
 
 
+10 # pernsey 2012-08-17 12:40
The right love to subsidize (corporate welfare) while they despise it for the average citizen. Why do the poor right wingers stand up for these people that are stealing their money, as in welfare for CEOs that dont really need it, but think poor people should got to hell?
 
 
+8 # BradFromSalem 2012-08-17 13:52
pernsey,

The answer to your question is easy. They blame the victim. The poor are poor because they refuse to look for a job. Notice the uptick in Racial messaging? It is designed to classify all welfare recipients as lazy n-words. So when the unemployment rate among blacks in America goes up, its not because of racism, nope, its their own fault for being a victim of racism.
Blaming the victim is easy and fun too! Watch as your local Right Wingers blame victims of abuse for being abused. Enjoy the hilarity that happens when a family is thrown from their home because their mortgage payments went through the roof while their income was cut in half. Its their own fault for not reading every word on the the 500 documents that banks force them to sign when they close a mortgage. So go ahead, blame the victim!

(pardon my sarcasm)
 
 
+4 # pernsey 2012-08-17 19:32
Your right Brad...and of course I love the sarcasm.

Its amazing to watch people be brainwashed in to voting against their own best interest. Poor people voting to take support away from themselves and give it to CEO's and they dont even know they are doing it. This always astounds me!

I have a brainwashed...F ox news watching friend they are on food stamps, social security for a health issue, and medicaid, and is living hand to mouth dirt poor, but votes republican. This person insists that they are informed because they watch Hannity and Bill Orally on Fox. Sometimes I just listen in shock as the lies and nonsense are spewed forth in conversation... and Im dumbfounded?
 
 
+4 # trevorlasvegas 2012-08-17 15:55
People are leaving. They are emigrating. Not just the rich who don't want to pay their taxes, but normal people are quietly packing thir things and going to other countries, where people are still allowed a life beyond consumerism and corporate slavery. I refuse to participate where the system is so rigged against my benefit. It's that simple. I will not return. Period. No, I'm not patriotic: all that brainwashing about duty and the US being the best country in the world didn't land with me. It's not. Turn off the tv and open your eyes. How could it be?
 
 
0 # John Steinsvold 2012-08-17 19:48
An Alternative to Capitalism (if the people knew about it, they would demand it)

Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.

I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

“Insanity is doing the same thing over and over and expecting a different result."~ Albert Einstein
 
 
+3 # ghostperson 2012-08-17 22:45
We do not have a system of capitalism, we have a system of profligate greed in which plutocrats borrow money at zero interest from the Fed, privatize profits and socialize losses under what Trevorlasvegas rightly calls "corporate slavery."
 
 
+2 # michellewey 2012-08-17 20:25
Good article. It could even go further into analyzing how executive pay is debilitating our economy and how reigning in exorbitant pay rates for CEOs could be used to make our economy healthy again. But we have been voting Corporate leaders into political positions for many years now. We have stupidly believed that a struggling economy would best be managed by a professional businessperson. How wrong an idea that has proven to be. All it has gotten us is a decimation of our Constitution, the passage of Citizens United and the farce of a political system that has become simply a tool for enriching the richest at everyone elses expense. After we re-elect Obama, the work of the left is to fight for what I call The Separation of Corporation and State. That is if we are not too busy finding ways to survive the effects of the radical methods of environmental degradation currently underway and which our planet is not capable of withstanding.
 
 
+3 # midwestgirl 2012-08-18 09:15
Ironic how much all these "Randian" apostles manipulate what legislation gets passed so they can continue to suck at the government tit (funded by our tax dollars) even more than before. Then they bloviate endlessly about how we should all pull ourselves up by our bootstraps as they try to rob us all of the monies we have paid into Social Security and Medicare during the couse of our working lives. A bigger bunch of con men and hypocrites there never was. The C Level offices are destroying everything this country is supposed to stand for and they have a long history of doing so, all for a buck. No wonder they all worship Any Rand, who railed against Social Security and Medicare as she collected her benefits till the day she died. My God, not a word she ever wrote stands up to the least bit of scrutiny yet these dodos (ie, Alan Greenspan) think she was a genius. That is the "talent" we are all supposed to believe derserves these enormous salaries. As PT Barnum said, there is a sucker born every minute.
 
 
0 # geonomist 2012-08-28 16:13
Because wealth creates envy, some reformers want to take it away via taxes and spend it on things they think are good for the poor. But let's keep peeling the onion. It’s not just loopholes that enrich a handful of CEOs. It’s also outright gifts from public treasuries -- and more.

It’s all the money that society spends for the nature it uses, for land such as parcels beneath buildings and for resources such as oil in the ground, not to mention the value of the airwaves and other natural gifts – trillions of dollars annually unduly enriching a tiny sliver. Government could redirect that spending into everyone’s pockets via a geonomic system of land dues in and “rent” dividends out. Both MLK and Tom Paine urged paying ourselves a dividend from this social surplus, our common wealth.

Once people do get their fair share of Earth’s worth, then they’ll be sufficiently endowed to afford social services of their own choosing. Politicians will lose their excuse to control the public purse. And once government shifts its revenue raising from taxing anything that moves to just using fees and dues to guide only socially-genera ted values into the public treasury -- Paine urged shifting taxes from individual efforts to a region’s land and King cited Henry George, famous for his Single Tax on land -- then politicians will lose their excuse for carving out loopholes. To make it happen, let’s think outside the box of knee-jerk taxation.
 

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