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Executive Excess 2012: The CEO Hands in Uncle Sam’s Pocket

August 20, 2012

This article is re-posted from the Institute for Policy Studies. Editor’s note: The following information is shared here so as to provide readers with yet another example of how the system screws us over. We are not advocating for a reform in the system or simply more equity in pay between workers and CEOs. Our readers have to make up their own minds on what to do with this information.

Nationwide, budget cuts have axed 627,000 public service jobs just since June 2009. Schools, health clinics, fire stations, parks, and recreation facilities—virtually no public service has gone unsqueezed. Tax dollars haven’t seemed this scarce in generations.

Yet tens of billions of these scarce tax dollars are getting diverted. These tax dollars are flowing from average Americans who depend on public services to the kingpins of America’s private sector. They’re subsidizing, directly and indirectly, the mega-million paychecks that go to the top executives at our nation’s biggest banks and corporations.

Exorbitant CEO pay packages have, of course, been outraging Americans for quite some time now. Every new annual CEO pay report seems to bring a rash of predictably angry editorials and calls for reform. But little overall has changed. Wages for average Americans continue to stagnate. Pay for top executives continues to soar.

One key reason why: Our nation’s tax code has become a powerful enabler of bloated CEO pay.  Some tax rules on the books today essentially encourage corporations to compensate their executives at unconscionably higher multiples of what their average workers are paid.

Other rules let executives who run major corporations routinely reduce their corporate tax bills. The fewer dollars these corporations pay in taxes, the more robust their eventual earnings and the higher the “performance-based” pay for the CEOs who produce them.

In effect, we’re rewarding corporate executives for gaming the tax system. Our tax code is helping the CEOs of our nation’s most prosperous corporations pick Uncle Sam’s pocket.

In this latest Institute for Policy Studies Executive Excess annual report, our 19th consecutive, we take a close look at the most lucrative tax incentives and subsidies behind bloated CEO pay and highlight those executives who have reaped the highest rewards from tax code provisions that actively encourage outrageously disproportionate executive pay.

We also identify the top executives who have benefited the most from what have become known as “the Bush tax cuts”—the reductions in federal income tax rates on top-bracket, capital gains, and dividend income enacted in 2001 and 2003.

Among our findings:

  • Of last year’s 100 highest-paid U.S. corporate chief executives, 26 took home more in CEO pay than their companies paid in federal income taxes, up from the 25 we noted in last year’s analysis. Seven firms made the list in both 2011 and 2010.
  • The CEOs of these 26 firms received $20.4 million in average total compensation last year. That’s a 23 percent increase over the average for last year’s list of 2010’s tax dodging executives.
  • The four most direct tax subsidies for excessive executive pay cost taxpayers an estimated $14.4 billion per year—$46 for every American man, woman, and child. That amount could also cover the annual cost of hiring 211,732 elementary-school teachers or creating 241,593 clean-energy jobs.
  • CEOs have benefited enormously from the Bush tax cuts for upper-income taxpayers. Last year, 57 CEOs saved more than $1 million on their personal income tax bills, thanks to these Bush-era cuts.

What can be done to end today’s incredibly gross pay divide between top executives and average workers? In this year’s Executive Excess, we once again survey a wide range of reform notions with a “scorecard” that notes those reforms that have already been enacted, those still pending before Congress, and those proposals not yet before Congress that we believe hold the most CEO pay-deflating promise.

Read the full report: Executive Excess 2012: The CEO Hands in Uncle Sam’s Pocket (PDF)

Go to the campaign page: Executive Excess 2012 Campaign

5 Comments leave one →
  1. tanya permalink
    August 20, 2012 7:31 pm

    “We are not advocating for a reform in the system or simply more equity in pay between workers and CEOs. ”

    … then what?

  2. August 20, 2012 7:33 pm

    read the next sentence Tanya……………

  3. Shawn Ferguson permalink
    August 21, 2012 12:24 am

    You troll and you troll, and you even get your own little disclaimer, and still you try to start shit. Enough all ready, we get it! Dont you have better things to do with your time?

  4. tanya permalink
    August 21, 2012 1:51 pm

    The next sentence isn’t very clear. If it was, I wouldn’t have asked. I think that the “editor’s note” is generally a good idea, but leaving it “up to readers” is kind of a cop out. If people just read the are article as is, they will likely assume that public sector jobs (and the services they provide) are good, that work is an acceptable condition of life, and that corporations/big banks (and perhaps their allies in Congress) can somehow be changed (i.e. by changing leaders, by changing systems, etc). It was ambiguous and vague and I thought that took away from an otherwise positive direction for this site. That was my concern.

    But you know, since asking a question is “trying to start sh*t,” nevermind…

    Have fun coming up with a witty comeback Shawn!

  5. August 21, 2012 3:12 pm

    It must be nice to be able to play both sides whenever convenient…

    You actually expect me to believe that you’ve not been trolling these comment boards, posting one anonymous critique after the next? It’s contradictory right on it’s face, seeing as how a person who feels like this post is too “reform oriented” probably would have problems with all kinds of other posts on GRIID (not that it’s “otherwise positive direction”), and those posts just so happen to have trolls in the comments as well, all coming from the same perspective, same written voice, but posted under different names, never linked, sometimes nonsensical.

    It also just so happens that there are actual people in this community who engage in this type of behavior every chance they get, and in fact have a long history of doing so. And we’re supposed to just sit here and pretend like you’re “tanya”, a concerned reader? Give me a break.

    People want to talk about “building a community” locally, and then behave in anonymous backbiting. You can’t build a community without fostering positive human relationships. This is not how you build relationships and/or allies. Say what you want about the fucked up dynamics of the state, but these types of relations will never foster a community strong enough to bring it down. And (even more ironically), this behavior is extremely oppressive, especially to newcomers. Ever heard of flak? It was probably in reference to how those in power keep media in check. Look at what’s happening here. I wish I had a nickel for every time I heard a Grand Rapids based “liberal” whose just starting to question their own philosophy say, “I want to go to this radical event/workshop/whatever, but every time I do I feel so judged by the people there”. That’s the reputation anarchists have in this town, and your comments on this site are just one example of why.

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