Chiefs earn more than companies’ tax bills
It also found many of the companies spent more on lobbying than they did in taxes.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies (IPS), a left-leaning Washington think tank, quickly hit a nerve.
Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation.
In a letter to that committee’s chairman Republican Darrell Issa, Cummings asked “ “why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high,” and “the extent to which our tax code may be encouraging these growing disparities”.
IPS chose to compare chief pay to current US taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
The group’s rationale was that deferred taxes may or may not be paid, and that current US taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year.
Compensation for the 25 chief executives with pay surpassing corporate taxes averaged $16.7 million (€11.51m), according to the study, compared to a $10.8m average for S&P 500 chief executives. Among companies topping the IPS:
n eBay whose chief executive John Donahoe made $12.4m (€8.55m), but which reported a $131m (€90.3m) refund on its 2010 current US taxes.
n Boeing, which paid chief Jim McNerney $13.8m (€9.51m), sent in $13m (€8.96m) in federal income taxes, and spent $20.8m (€14.34m) on lobbying and campaign spending.
n General Electric where chief Jeff Immelt earned $15.2m (€10.48m) in 2010, while the company got a $3.3 billion (€2.27bn) federal refund and invested $41.8m (€28.81m) in its own lobbying and political campaigns.
Though the companies come from different industries, their tax breaks fall into two primary areas.
Several companies mentioned in the report took issue with its methodology and said they paid all taxes owed.
General Electric spokesman Andrew Williams called the study “inaccurate” and noted it did not include significant income taxes paid in 2010 for previous years, or state taxes paid. “GE pays what it owes,” he wrote in an email response to questions.
Boeing spokesman Chaz Bickers said the study is “simply wrong”.
Instead of Boeing’s reported “US federal current tax expense” of $13 million which the IPS used, he said a better approximation of the company’s taxes paid would be the $360m it reported as its net income tax payments, most of which, he says, was federal.
“On federal cash tax payments last year we paid in the hundreds of millions,” Bickers told Reuters.
The company also received a $371m credit from the government last year for overpayment of taxes in the past, and has added 5,000 US jobs this year, he said, in part because of tax breaks.
