CEO’s Making More Than the Taxes their Cos Pay

CEO pay higher than the Taxes their Cos Pay

I don’t understnd?  I must have read the headline wrong.  “CEO’s making more than the Taxes their Companies are Paying”.   Well at least the lame duck congress will have something to keep themselves busy.   However, it remains to be seen which tax loopholes to plug and what tarriffs to institute and ultimtely which US corporations will remain with vast revenues sitting abroad.

Validating information requires reading multiple sources on the subject.  Many of the articles in this case related back to the Findings of the Center for Effective Government and the Institute for Policy Studies who together published an annual study called “fleecing Uncle Sam” (click to read entire report).   Here are some of the interesting stats the study showed:

  • 29% of the 100 highest paid CEO’s received more in pay last year than they “paid”in taxes.  On average, each CEO made $32 million. 
  • The combined 29 companies operate 237 subsidiaries in tax havens.  The company with the most subsidiaries in tax havens is Abbott Laboratories with 79 subsidiaries.  The Pharma’s CEO made $4 million more than ABT’s tax bill in 2013.
  • Of the 29 firms, only 12report losses – yet, the CEO’s made an average of $36 million  nore than 3 times the $11.7 million national average for large company CEO’s.   Citigroup, receiving the largest tax refund of $250 million paid it’s CEO $18 million in 2013.
  • The study has been done for three years: 2011, 2012, 2013.  Three companies made the list of paying their CEO’s more than they paid in taxes in all three years.  The three proud corporations are Boeing, Chesapeake Energy and Ford Motors.
  • Taxes should be one of the benefits a corporation brings to a community.  In addition to providing jobs and perhaps a product or service of which they could be proud, Tax revenue is a huge “gift” to the city ni which the corporation is headquartered.

To think that some of these compnaies aren’t even making money and yet, their CEO’s are receiving obsense amounts of money means the company is going to return to profitability via cost cutting down the pay grade scale.   This will result ins families at the middle management level and below operating households with lower income.  Lower income means money cannot be spent on consumergoods.  Necessities only.  Which isn’t an environment which inspires economic growth.

As I read on, I noticed that THESE 7 U.S. COMPANIES DIDN’T PAY TAXES.  IN MANY CASES, THEY RECEIVED REFUNDS.  So it’s a bit disengenuous to say the CEO received MORE than was paid to the IRS.  

The top seven companies reported $74 billion in profits and received a combined tax refund of $1.9 billion, giving them an effective tax rate negative 2.5%.

 

1) Boeing   (BA)

Pre-Tax income $5.95 billion

CEO James McNerney $23.3 milliono

US Corp Tax: REFUND $82 million

 

3) Ford Motors

pre-tax income  $6.52 billion

CEO Alan Mulally: $23.2 million

US Corp Tax: REFUND  $19 million

 

3) Chevron

Pre-Tax Income:  $4.67 Billion

CEO JOhn Watcon: $20.2 Million

Pre tax income PAID $15 million

 

4) Citicgroup

Pre-Tax Income:  $6.4 Billion

CEO: Michael Corbat: $17.6 Million

Pre tax income REFUND: $260 million

 

5) Verizon

Pre-Tax Income: $28.83 billion

CEO Lowell MccAdams $15.8 million

US Corporate Income Tax REFUND: $197 million

 

6) Jp Morgan Chase

Pre=tax Income $17.23 Billion

CEO Jamie Dimon: $11.8 Million

US  Corporate Income Tax REFUND: $1.3 Billion

 

7) General Motors

Pre-Tax Income $4./88 Billion

CEO Daniel Ackerson: $9.1 million

US Corporate Income Tax REFUND: $34 Million.

 

Perhaps I just feel better when I see U.S companies spending retained earnings and Free Cash Flow on growth areas, organic or otherwise.  Growing via Capex or Merger each have their unique issues, but in the end are more productive than repurchasing shares (which has been the latest de rigeur amongst Corporations in this country).

The corporate costs of the Affordable Care Act as well as the Costs associatated with Derivative Reform were legitimate reasons to keep                                                                                                                                                                                                                                                                                                                                       costs were another legitimate reason to keep hiring light on the ground.

But that’s no longer the case.  We know these costs and they’re getting paid.  Our friends at Interpol, CIA and other entities stand ready to put their fingers in the loopholes the corporate auditors make.  Moving Revenue and Costs around may no longer be such a fluid acticvity.  In order to do so, you should at least have to pay a toll to your headquarter government.

 

Have you ever wondered what the advantages are of incorporating in the U.S. if indeed, other countries make it so cheap to do business?  Well, I did – and I ended up with a few interesting articles to read:

THE RATIONAL EXUBERANCE OF strucuring vc startups

tax haven incorporation for us headquartered firms

Startup Ltd.

 

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