US Corporate Giants Pay More to CEOs than in Federal Taxes
Seven of the biggest U.S. corporations received billions of dollars in tax refunds from the Internal Revenue Service, while dolling out an average of US$17.3 million to CEOs.
While Congress is set to renew a slew of corporate tax breaks, new research published Tuesday found some of United States’ biggest companies pay their CEOs more than they give up in federal taxes.
The study’s authors warned the data illustrates “deep flaws in our corporate tax system.”
Published by the Institute for Policy Studies and the Center for Effective Government, the research found that seven of the biggest U.S. corporations were refunded US$1.9 billion by the IRS, despite collectively declaring over US$74 billion in domestic pre-tax profits. On average, each company paid its CEO around US$17.3 million. The study found if the group of companies had paid the full 35 percent marginal statutory tax rate, the federal government would have enjoyed a windfall US$25.9 billion in extra taxes, instead of handing out billions of dollars in refunds to the seven corporate giants.
The companies included in the study were oil corporation Chevron, communications company Verizon, financial giants JPMorgan Chase and Citigroup and manufacturers Ford, General Motor and Boeing.
Scott Klinger, from the Center for Effective Government told CBS those billions in tax refunds and corporate profits aren’t going towards creating U.S. jobs. Instead, he argued most big corporations are using free cash to reward stockholders with dividends and stock buybacks.
“We’ve seen this narrative that corporations are being disadvantaged by the tax systems, and there are a few companies that pay pretty high rates, like retailers, but there are others that use offshore tax loopholes and other extender bills to their full advantage,” he stated.
All but one of the companies studied have responded by maintaining they adhere to the U.S. tax laws.
Only JPMorgan Chase hadn’t commented at the time of writing, but Ford and General Motors told Reuters they paid lower taxes than usual in 2013 due to financial losses in past years.
Boeing told Reuters most of its 2013 taxes were differed due to production and development investments, while Verizon denied it pays its CEO figures anywhere near its federal tax contribution.
The report was released as corporations continue to urge legislators to renew dozens of elapsed tax breaks by the end of the year.
According to Guggenheim Securities senior policy analyst Chris Krueger, Congress is likely to renew a package of 55 tax breaks during the so-called lame duck congressional session, which ends in December.
“The fate of the 55 expired special interest tax breaks … will be the marquee legislative fight of the lame duck session,” Krueger stated.