End Wealth Supremacy
15 years after the collapse of Lehman Brothers, Wall Street is as predatory as ever. But a more democratic economy could be rising all around us.
A new report analyzes the cost of removing Obamacare limits on the tax deductibility of executive compensation, based on pay data at the top 5 insurers.
The House Republican plan to replace the Affordable Care Act would give health insurance companies a huge tax break on their executive compensation, encouraging them to dole out even larger pay packages to their already overpaid top managers.
The plan would re-introduce a tax loophole that allows corporations unlimited deductions for executive pay — as long as the pay is in the form of stock options or other so-called “performance” compensation. Obamacare eliminated this loophole for health insurance companies, imposing a strict $500,000 limit on deductions for the expense of each executive’s compensation. This set an important precedent for reducing taxpayer subsidies for CEO pay.
To better understand the taxpayer savings from the Obamacare CEO pay reform, the Institute for Policy Studies has analyzed executive pay at the five largest U.S. publicly held health insurance companies in 2015, the most recent year for which data are available for all five firms, in the report The CEO Pay Tax Break in the Republican Health Care Proposal.
Instead of re-introducing this perverse “CEO bonus loophole” for health insurance companies, lawmakers should expand the Obamacare deductibility cap to all major U.S. corporations. This would save taxpayers at least $50 billion over 10 years while encouraging more reasonable executive pay levels.