While austerity hits everyday Americans, seemingly scarce tax dollars are being squeezed from their pockets to fund exorbitant CEO pay, according to a report released Thursday from the Institute for Policy Studies (IPS).
According to the thinktank's 19th consecutive Executive Excess report, The CEO Hands in Uncle Sam's Pocket, "Our nation’s tax code has become a powerful enabler of bloated CEO pay."
For example, the report states that "26 U.S. corporations last year gave their CEO more than they paid in taxes to Uncle Sam." The CEOs at those corporations received a staggering $20.4 million in average total compensation -- a 23% increase above the previous year.
Among the CEOs detailed in IPS's report are these five who received more in compensation than their corporations paid in federal income tax:
|Name of CEO||Corporation||2011 CEO Compensation||2011 Federal Income Tax Bottom Line for Corporation|
|Vikram Pandit||Citigroup||$14.9 million||$144 million refund|
|Miles D. White||Abbott Laboratories||$19.0 million||$586 million refund|
|Randall Stephenson||AT&T||$18.7 million||$420 million refund|
|James McNerney||Boeing||$18.4 million||$605 million refund|
|Robert Benmosche||American International Group||$13.9 million||$208 million refund|
|Aubrey McClendon||Chesapeake Energy||$17.9 million||$13 million payment|
Corporations are also dodging taxes through the use of tax havens such as Cayman Islands and Bermuda through which "corporations can shift around profits, avoid accountability, and reduce tax obligations." The report found 537 tax-haven subsidiaries operating last year from the 26 corporations paying more in CEO compensation than in federal income taxes.
In addition to gaming the system to allow excessive CEO compensation, tax loopholes and the Bush tax cuts are allowing these corporations to save millions. The report states that the Bush tax cuts allowed 57 CEOs to save more than $1 million on their personal income tax bills. And the top five 2011 beneficiaries of the loophole that allows no limit on how much “performance-based" compensation corporations can deduct from their taxes "had a combined $232 million in deductible 'performance-based' pay. Absent this loophole, the tax bills for these companies would have jumped $81 million, or an average of more than $16 million per CEO." With the loophole, however, corporations are essentially incentivized to give CEOs high "performance-based" pay.
The chart from the report lists some of the CEOs making millions from the Bush tax cuts:
The four most direct tax subsidies for excessive executive pay is costing taxpayers $14.4 billion per year, the report states -- an amount that could be used to reinvigorate the public sector by providing services such as health care for 7,370,673 low-income children for one year, or VA medical care for 1,843,510 veterans for one year or 241,593 clean-energy jobs for one year.