Last year, as Americans across the country grappled with the widespread effects of the Great Recession, tax dodging by corporations and the wealthy cost the average U.S. taxpayer $434, even as corporate profits soared 81 percent. In fact, according to a new report from the Institute for Policy Studies, “corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes”:
Of last year’s 100 highest-paid corporate chief executives in the United States, 25 took home more in CEO pay than their company paid in 2010 federal income taxes.Included amongst the 25 are well-known corporate behemoths like General Electric, Boeing, Verizon, and Ebay. Prudential CEO John Strangfeld, in one example, made $16.2 million last year while his company reaped a $722 million tax refund. Bank of New York Mellon CEO Robert Kelly received $19.4 million, after his bank got a $670 million tax refund.
These 25 CEOs averaged $16.7 million, well above last year’s $10.8 million average for S&P 500 CEOs. Most of the companies they ran actually came out ahead at tax time, collecting tax refunds from the IRS that averaged $304 million.
CEOs in 22 of these 25 firms enjoyed pay increases in 2010. In 13 of these companies, CEO paychecks ratcheted up while the corporate income tax bill either declined or the size of the corporate tax refund expanded.
Eighteen of the 25 companies that the IPS studied operated subsidiaries in offshore tax havens. In fact, “the firms, all combined, had 556 tax haven subsidiaries last year,” including 128 for just one company (the reinsurance corporation Aon).
Currently, corporate taxes have plunged to historic lows, with many of America’s largest companies literally paying no federal income taxes. Meanwhile, according to researchers at Northeastern University, corporate profits accounted for 88 percent of real national income growth since 2009, while wages and salaries made up less than 1 percent. In 2010, executive pay grew by 27 percent while wages grew by only 2 percent.
The IPS also found that “of the 25 companies that paid their CEO more than Uncle Sam, 20 also spent more on lobbying lawmakers than they paid in corporate taxes. Eighteen gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.”