America’s CEOs are truly in a league of their own when it comes to pay and power.
Total CEO pay at the largest 292 corporations averaged 325 times what the average worker made in 2010, a far higher ratio than in any other Western nation. This figure had actually declined from an incredible 525 times the typical worker’s wage in 2000. But the CEOs of the Top 100 are truly in another stratosphere. They averaged an astounding 1,723 times what their workers earned in 2007, according to Les Leopold’s excellent book, The Looting of America.
The Washington, D.C.-based think tank Institute for Policy Studies has come up with a different, but equally stunning, way of gauging CEO pay by making a simple comparison. For its new report, Executive Excess 2011, the IPS placed the compensation packages of America’s Top 100 CEOs alongside the tax bills of their corporations, and discovered that
Of last year’s 100 highest-paid U.S. corporate chief executives, 25 took home more in CEO pay than their company paid in 2010 federal corporate income taxes.
U.S. corporations and their stooges in Congress, including some Democrats, frequently whine that the U.S. corporate tax rate is far too high for U.S. firms to remain competitive. In fact, the multitude of loopholes mean that the official 35% tax rate is almost never imposed. Corporate tax rates for U.S. firms are actually among the lowest among the 30 advanced nations belonging to the Organization of Economic Cooperation and Development, reports Citizens for Tax Justice:
According to a 2007 study by the Bush Treasury Department, between 2000-2005 US corporations paid only 13.4% of their profits in corporate income taxes, well below the Organization of Economic Cooperation and Development (OECD) average of 16.1%.
Just in case those figures are too complex for the average congressperson to comprehend, the IPS study offers some very memorable facts:
• ZERO OR LESS TAX BILL: Fully 25 of the 100 firms paid no U.S. corporate taxes for last year, and in fact gained tax refunds.
• MORE ON LOBBYING THAN TAXES: No less than 20 of the 25 firms spent more on lobbying than they paid in taxes, no doubt because in some cases the lobbyists helped craft the obscure language of the tax legislation and regulations. The “investment” of these giant corporations thus paid off very handsomely.
• DONATION TO CANDIDATES MORE THAN TAX BILL: Campaign contributions were similarly a great investment for 18 of the 25 no-tax firms which “gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.”
• SKY-HIGH PAY: The 25 tax-dodging CEOs the IPS report spotlights “averaged $16.7 million in pay last year, well above the $10.8 million Standard & Poor’s 500 CEO average.”
• TAX-HAVEN HEAVEN: The use of these tax havens” — like the Cayman Islands, Bermuda, and Panama — which collude with corporations in concealing assets from the IRS — proved to be another highly profitable maneuver.
These tax havens provide U.S. firms with the privilege of setting up a foreign “subsidiary” — often consisting of merely a mailbox — to which it can assign ownership of brand names, logos, and other valuable “intellectual property rights.”
The U.S. branch of the corporation is then charged huge fees for the use of this intellectual property, thereby dramatically reducing the firm’s profits on paper. The advantages of the tax havens made them popular with 72 percent of the no-tax corporations.
This point underscores the dangers in the proposed NAFTA-style “free trade agreement” with Panama, one of three that President Obama has been promoting. The FTA with Panama, if approved by Congress, would erect a permanent shield for US corporations using Panama as a tax haven, according to Global Trade Watch.
Eighteen of the 25 firms operate subsidiaries in offshore tax havens, for a combined total of 556 tax haven subsidiaries. Of the seven companies that reported losses in U.S. pre-tax income, five have a combined total of 267 tax haven subsidiaries and a sixth, Nabors Industries, is headquartered in Bermuda.