A new study finds that multi-million dollar CEO’s are putting more money into their pockets at the taxpayer’s (that would mean us) expense.
The Institute for Policy Studies has found that:
Nationwide, 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.The true culprit here is not these robber-barons but our tax code, which enables such malicious inflation of greed to occur in the first place:
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.
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.Also as Raw Story states:
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.
Lanai, a tiny resort island in Hawaii, has 18 miles of secluded beaches, no traffic lights and a population of just over 3,000. This summer, Larry Ellison, the CEO of Oracle, a California-based software company, bought 98% of the island for a sum reported to exceed $500m.And Ellison is not the only one (again from raw story).
The Institute for Policy Studies, a Washington DC thinktank, says that a chunk of the money Ellison spent buying Lanai should have paid for elementary school teachers and clean energy jobs, instead of fulfilling the billionaire CEO’s vacation fantasies. That’s one conclusion of their new report, “The CEO Hands in Uncle Sam’s Pocket: How Our Tax Dollars Subsidize Exorbitant Executive Pay”, which points out that Oracle took advantage of a 1993 loophole in tax law to designate $76m of Ellison’s income as “performance-related pay”, which allowed him to avoid paying any taxes on the money.
Dozens of US CEOs have cashed in on this major tax incentive at an estimated cost to US taxpayers of $9.7bn last year. Statistics provided by National Priorities Project suggest that the same amount of money could have paid for 142,625 elementary school teachers, or healthcare for 4.96 million low-income children.Some of the other findings that were reported by IPS:
• 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 entire report can be read at the IPS website, linked to above.
• 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.