CEO Pay Exceeds Taxes Paid by Big Firms

Of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes, according to a think tank re...
Matthew HellerNovember 19, 2014
CEO Pay Exceeds Taxes Paid by Big Firms

Seven of the 30 largest U.S. corporations paid their CEOs more in compensation than they paid the IRS in federal income tax last year, reflecting “deep flaws” in the corporate tax system, a new report says.

According to “Fleecing Uncle Sam,” a report published Tuesday by the Institute for Policy Studies and the Center for Effective Government, all seven of the firms — Boeing, Ford Motor, Chevron, Citigroup, Verizon, J.P. Morgan and General Motors — were highly profitable, but collected $1.9 billion in refunds from the IRS, giving them an effective tax rate of negative 2.5%.

The firms’ CEOs collectively received $121 million in pay last year, the report says, an average of $17.3 million per CEO.

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“For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success, reflects the deep flaws in our corporate tax system,” the report argues.

The study also found that of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes — up from 25 out of the 100 in 2010 and 2011 surveys by the same think tanks.

Of those 29 companies, 20 have a presence in tax havens like Bermuda and the Cayman Islands, the authors noted, with Abbott Laboratories alone having 79 subsidiaries in low- or no-tax jurisdictions. Miles White, the pharmaceutical firm’s CEO, received $4 million more in pay than the company’s IRS bill in 2013.

Corporate tax reform has been a victim of partisan gridlock in Washington, although leaders of the new Republican majority in the Senate have said they would be willing to take up the issue. Circumventing the gridlock, the Obama administration has tightened the rules on tax-lowering inversion deals.

The authors of the new study come down squarely on the side of reform, saying Congress should address the flaws in the current system by “cracking down on the use of tax havens, eliminating wasteful corporate subsidies and closing loopholes that encourage excessive executive compensation.”

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