The Progressive

NewsWire

A project of Common Dreams

For Immediate Release
Contact: Phone: (202) 588-1000

Public Citizen Applauds Senators for Introducing Legislation to Eliminate Taxpayer Subsidization of Wall Street Bonuses

Stop Subsidizing Multimillion Dollar Corporate Bonuses Act Would Close Loophole Which Allows Companies to Write Off CEO Bonus Pay

WASHINGTON

Public Citizen commends U.S. Sens. Jack Reed (D-R.I.) and Richard Blumenthal (D-Conn.) for their newly introduced groundbreaking legislation, which would close a serious loophole in the tax code that allows corporations to deduct executive bonus compensation from their taxes.

In an era when executive compensation has risen 725 percent since 1978 -- 127 times faster than worker compensation -- the loophole in section 162(m) of the federal tax code is particularly appalling. The code limits corporate tax deductibility for executive compensation to $1 million, but the law includes no limit in deductibility for performance pay, or CEO bonuses. Partly due to this, bonus pay has become a significant driver of excessive corporate executive pay.

A study by the Economic Policy Institute estimates that between 2007 and 2010 alone, taxpayers subsidized more than $30 billion in executive performance pay because of the loophole.

The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S.1476), introduced yesterday by Sens. Reed and Blumenthal, will close this loophole and put an end to taxpayer subsidized executive bonuses. The public deserves nothing less.

Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.

(202) 588-1000