The latest tax proposals in Congress are an okay first step, but don't go far enough to address one of the biggest enablers of dynastic wealth.
Corporations don’t dodge taxes. People do. The people who run corporations. And these people — America’s CEOs — are reaping awesomely lavish rewards for the tax dodging they have their corporations do.
The latest annual executive compensation report from the Institute for Policy Studies, released today, tells an old story — with a stunning new twist.
The old story: The pay gap between what CEOs and workers in the United States take home continues to widen. Last year, S&P 500 CEOs walked off with 325 times more pay than average American workers, up considerably from the 263-times gap in 2009.
The new twist: Many of America’s major corporations are now actually paying their CEOs more in compensation than they pay in federal taxes.
“Ample evidence suggests,” notes the new IPS report, Executive Excess 2011, “that CEOs and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people.”
Among the report’s other key findings:[pullquote]Of last year’s 100 top-paid corporate CEO, 25 took home more in pay than their company paid in 2010 federal income taxes.[/pullquote]
• Of last year’s 100 highest-paid corporate chief executives in the United States, 25 took home more in CEO pay than their company paid in 2010 federal income taxes.
• These 25 CEOs averaged $16.7 million, well above last year’s $10.8 million average for S&P 500 CEOs.
• The 25 firms that paid their CEOs more than Uncle Sam last year reported average global profits of $1.9 billion. Only one of the firms reported negative global returns. Eighteen of the 25 firms last year operated subsidiaries in offshore tax haven jurisdictions. The firms, all combined, had 556 tax haven subsidiaries.
• The most profitable of the 25 firms: General Electric. GE last year ranked 14th among U.S. firms in global profitability. GE received a $3.3 billion tax refund, despite reporting a whopping $5.1 billion in U.S. pre-tax income.
• Of the 25 companies that paid their CEO more than Uncle Sam, 20 also spent more on lobbying lawmakers than they paid in corporate taxes. Eighteen gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.