When Broadband Companies Hire Low-Wage Contractors, They Put My Life at Risk
New federal funding will expand access to broadband, but we need to make sure the job gets done right — by skilled union workers, not low-wage contractors.
Executive Pay
Mega-Million CEOs: Our Tax Dollars at Work
The old robber barons exploited workers and gouged consumers. Today's robber barons are making millions off a new class of victims: average American taxpayers.
Boeing makes airplanes. But airplanes haven’t made Boeing CEO James McNerney phenomenally rich. Tax avoidance has.
In 2011, the Institute for Policy Studies reported last week, Boeing registered over $5 billion in pre-tax profits. Yet the company didn’t pay Uncle Sam a cent in corporate income tax. Boeing actually collected a tax refund — a “net tax benefit,” to use the technical accounting jargon — worth $650 million.
This sort of tax gamesmanship has been going on at Boeing for years. Over the past ten years, the aircraft giant has only paid income tax in two. The biggest individual beneficiary of this dancing around the tax code: Boeing chief exec McNerney. He took home $18.4 million in compensation last year.
In 2011, for the second consecutive year, Boeing paid McNerney more in personal compensation than the company paid in federal income taxes.
The worst part of this story? Boeing hardly stands alone. Some 25 other major U.S. corporations, the Institute for Policy Studies reports in its latest annual Executive Excess, last year paid their CEOs more than they paid Uncle Sam.
Among these big-time tax avoiders: Ford Motor, International Paper, AT&T, Halliburton. All together, these 26 all-star tax manipulators reported $28.2 billion in corporate profits last year and received nearly $4.3 billion in tax refunds.
The CEOs at these 26 corporate giants averaged $20.4 million in 2011 compensation, even more than Boeing chief exec McNerney took home.
“In effect, we’re rewarding corporate executives for gaming the tax system,” note Sarah Anderson, Scott Klinger, and the rest of the Executive Excess research team. “Our tax code is helping the CEOs of our nation’s most prosperous corporations pick Uncle Sam’s pocket.”
CEOs do that picking via a variety of tax-avoiding stratagems. Boeing’s McNerney has been partial to the “Research and Experimentation Tax Credit,” a subsidy that “first crept into the tax code as a temporary measure during the 1981 recession,” the new Executive Excess observes.
This “temporary” provision essentially lets taxpayers subsidize research and development that major companies like Boeing would be doing anyway. Boeing, as a prime defense contractor, gets a double dip on tax dollars. The company both claims the “Research and Experimentation Tax Credit” and bills the Pentagon directly for research costs.
Over at AT&T, CEO Randall Stephenson swears by a 2009 “accelerated depreciation” tax break that last year saved his company $5.2 billion.
The more corporations like AT&T save in taxes, the new Executive Excess points out, “the more robust their cash flow and eventual earnings.” And “the more robust these cash and earnings numbers, the higher the ‘performance-based’ pay for the CEOs who produce them.”
The 2011 take-home for AT&T’s Stephenson: $18.7 million. The tax treatment of CEO paychecks this large only adds insult to average taxpayer injury. AT&T and other corporations can deduct off their income, as a “legitimate” business expense, all the “performance” pay they shovel into top executive pockets.
The more CEOs “earn,” in other words, the less their companies have to pay in federal corporate income taxes.
The current U.S. tax code, the new Institute for Policy Studies study goes on to note, also includes three other “direct tax subsidies for excessive executive pay.” These four loopholes together cost taxpayers $14.4 billion a year, enough to “cover the annual cost of hiring 211,732 elementary-school teachers.”
Another study released last week, prepared by Temple University tax expert Steven Balsam for the Economic Policy Institute, puts the cost to taxpayers of just one of these four provisions — the tax deductibility of excessive executive pay — at $30.4 billion for the tax years from 2007 through 2010.
The Institute for Policy Studies has been releasing annual Executive Excess reports since 1993, a span of time that has seen CEO pay rise almost every year. CEOs are now making 380 times the pay of average U.S. workers. Back in the 1970s, the CEO-worker pay gap seldom went over 40 times.
If current trends continue, CEOs a decade or so from now may be taking home, on average, more in a morning than their workers take home in a year.
But current trends, the new Executive Excess stresses, don’t have to continue. A vast array of CEO pay reform initiatives are now either pending before Congress or getting discussed by lawmakers and regulators in other nations.
We don’t, in short, lack for ideas on how to rein in outlandish executive pay. We lack only the political will.
Sam Pizzigati co-edits Inequality.org. Among his books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His latest book, The Case for a Maximum Wage, will appear this spring. Follow him at @Too_Much_Online.
