29% Of Largest Corporations Pay More To CEO Than Uncle Sam
CEG says the U.S. corporate tax system is in desperate need of reform
A recent report from the Center for Effective Government (Fleecing Uncle Sam) highlights that many large U.S. companies pay little to no corporate taxes, and a few even get tax rebates from the federal government. Moreover, in a particularly disturbing statistic, among the 100 largest corporations in the U.S., 29 paid their CEOs more than they paid in federal income taxes in 2013. This number is up from 25 out of the top 100 in CEG’s 2010 and 2011 surveys on corporate taxes.
Corporations – Other key findings regarding corporate taxes
The authors of the CEG report, Scott Klinger and Sarah Anderson, also point out that:
The 29 CEOs in question here made $32 million on average last year. The companies they worked for reported $24 billion in U.S. pre-tax profits, and yet somehow claimed $238 million in tax refunds, an effective tax rate of negative 1%.
In order to accomplish this tax miracle, the 29 firms operate 237 separate subsidiaries in tax havens. The corporation with the largest number of tax haven subsidiaries was Abbott Laboratories (NYSE:ABT), with a grand total of 79. Of note, Abbott’s CEO compensation was $4 million more than its IRS bill in 2013.
Among the 29 firms, only 12 reported U.S. losses last year. Curiously, the CEO pay at these 12 unprofitable firms came out to $36.6 million on average, more than triple the $11.7 million average for large cap CEOs in the U.S..
Too-big-to-fail Citibank, which ironically owes its existence to taxpayer bailouts, received the largest tax refund in 2013. Citigroup Inc (NYSE:C) paid its CEO a cool $18 million while taking home an IRS refund of $260 million last year.
Boeing Co (NYSE:BA), Chesapeake Energy Corporation (NYSE:CHK) and Ford Motor Company (NYSE:F) paid their CEO more than the IRS in 2010, 2011 and 2013.
Corporations – U.S. corporate tax system broken
Klinger and Anderson end their report with an exhortation to Congress to reform our broken and unjust corporate tax system. “For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success reflects the deep flaws in our corporate tax system. Rather than more tax breaks, Congress should focus on addressing these deep flaws by cracking down on the use of tax havens, eliminating wasteful corporate subsidies, and closing loopholes that encourage excessive executive compensation.”