Subsidizing the CEOs…

This is an excellent article from the Institute for Policy Studies discussing CEO compensation and taxes.  It clearly shows how we, the taxpayers, are subsidizing the CEOs of America.  Let the corporations take huge tax breaks (oh, were you waiting for some trickle-down?) and then let the executives bathe in money while we make cuts in every social program.  That seems like a basis for a great society doesn’t it?  (or is that dripping in sarcasm?)

The article…

Executive Excess 2012: The CEO Hands in Uncle Sam’s Pocket

By Sarah Anderson, Chuck Collins, Scott Klinger, Sam Pizzigati

How our tax dollars subsidize exorbitant executive pay

Executive Excess 2012Nationwide, 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)


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6 responses to “Subsidizing the CEOs…”

  1. nonviolentconflict says :

    Reblogged this on NonviolentConflict.

  2. lowerarchy says :

    If we want a world where everybody truly feels equal, then let’s reflect that in the economic sphere.

    We suggest a One World, One Wage policy.

    It’s a simple plan. Everybody gets paid the same salary. So cleaners get the same as bankers, teachers are equal to dinner ladies and mums valued as much as soccer stars.

    So we run society just like a big co-operative – because that’s what we are.

    • List of X says :

      Sorry, that’s a really bad idea. The CEO pay packages are outrageous but at least income inequality gives you an incentive to get education and try to improve yourself. Why would anyone but a few would want to spend 20 years of life on education to be a heart surgeon, when you could just learn to read and count and be a cleaner with the same salary?

      • lowerarchy says :

        Because they’d be bored. Which would you like to do most?

      • lowerarchy says :

        Because they’d be bored. Which would you like to do most?
        Have you ever worked as a cleaner?
        Also, education would be free in a more equitable system so that those that could benefit most wouldn’t be excluded by class and economics.

      • List of X says :

        I am actually fine with my job. I have not worked as a cleaner, but did have to wash the floors in one of my jobs.
        Free education is something that I would support, but never the same salary for everyone. For an experiment, you can try asking people what would you do if they would get the same salary for anything. I’m pretty sure the most answers will be “nothing”, or they would pick the jobs that they think are easy, interesting or prestigious (or, most likely, all of the above). But how many of those jobs are out there, anyway?
        Also, do you want your clothes cleaned by a cleaner who will get the same salary no matter how badly he cleans your clothing? Do you want your car fixed by a mechanic who cares little about the quality of his work because his salary is guaranteed? Do you realize that people will seek out those who do better jobs and will pay them a premium, thus defeating the purpose of equitable compensation?

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