Everyone except corporations and the politicians they own seem to realize we need corporate tax reform. To that end, the Institute for Policy Studies
and the Center for Effective Government
have put together a study about corporate tax practices and realities—and it is a doozy:
Of America’s 30 largest corporations, seven paid their CEOs more last year than they paid in federal income taxes, according to a new report by the Institute for Policy Studies and the Center for Effective Government.
The report, Fleecing Uncle Sam, also looks at the 100 highest-paid CEOs in 2013, finding that 29 received more in pay than their company paid in federal income taxes – up from 25 out of the top 100 in our 2010 and 2011 surveys. These 29 companies operate 237 subsidiaries in tax havens.
Opponents of corporate tax reform point out the United States' high corporate tax rate
(35%) but frequently forget to mention the fact that, with all their evasive maneuvering and tax loophole lobbying, corporations have paid about 19.9% in taxes between 2008-2012. And they don't create wealth for anyone but themselves:
Corporate stock repurchases have the effect of boosting earnings per share. Higher earnings per share in turn boost stock prices. And since CEO pay is largely dependent on stock price, this pathway leads to soaring levels of CEO pay, even while average worker pay continues to stagnate.
Merging with competitors also boosts corporate profits, but rather than leading to more jobs, mergers commonly lead to layoffs as redundant employees are cast off and join the army of unemployed Americans facing an uncertain future.
Corporations have also fought for – and won – lucrative loopholes and tax credits that have taxpayers picking up the normal costs of business that corporations used to pay for themselves.
The study is damning. It is everything you imagine it is. You can read some of the infuriating highlights below the fold.
Of America’s 30 largest corporations, seven (23 percent) paid their CEOs more than they paid in federal income taxes last year.
- All seven of these firms were highly profitable, collectively reporting more than $74 billion in U.S. pre-tax profits. However, they received a combined total of $1.9 billion in refunds from the IRS, giving them an effective tax rate of negative 2.5 percent.
- The seven CEOs leading these tax-dodging corporations were paid $17.3 million on average in 2013. Boeing and Ford Motors both paid their CEOs more than $23 million last year while receiving large tax refunds.
- 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 top 100 in our 2010 and 2011 surveys.
- Together, these 29 CEOs made nearly $1 billion last year, or $32 million on average. Their corporations reported $24 billion in U.S. pre-tax profits and yet, as a group, claimed $238 million in tax refunds, an effective tax rate of negative one percent.
- Combined, the 29 companies operate 237 subsidiaries in tax havens. The company with the most subsidiaries in tax havens was Abbott Laboratories, with 79. The pharmaceutical firm’s CEO paycheck was $4 million larger than its IRS bill in 2013.
- Of the 29 firms, only 12 reported U.S. losses in 2013. At these 12 unprofitable firms, CEO pay averaged $36.6 million—more than three times the $11.7 million national average for large company CEOs.
- The company that received the largest tax refund was Citigroup, which owes its existence to taxpayer bailouts. In 2013, Citi paid its CEO $18 million while pocketing an IRS refund of $260 million.
- Three firms have made the list in all three years surveyed. Boeing, Chesapeake Energy, and Ford Motors paid their CEO more than Uncle Sam in 2010, 2011, and 2013.