25 Nov CEOs Making More Than the Taxes Their Cos Pay
CEO’S MAKE MORE THAN WHAT?
I don’t understand. I must have read the headline wrong. “CEOs Making More Than the Taxes their Companies are Paying”. Well, at least the lame duck congress will have something to keep itself busy. However, it remains to be seen which tax loopholes to plug and what tariffs to institute and, ultimately, 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 CEOs made an average of $36 million – more than 3 times the $11.7 million national average for large company CEOs. 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 and 2013. Three companies made the list of paying their CEOs 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 in which the corporation is headquartered.
To think that some of these companies aren’t even making money and yet, their CEOs are receiving obscene amounts of money, means the company is going to return to profitability via cost cutting down the pay grade scale. This will result in families at the middle-management level and below operating households with lower income. Lower income means money cannot be spent on consumer goods. Necessities only – which isn’t an environment that inspires economic growth.
As I read on, the article said THESE 7 US COMPANIES DIDN’T PAY TAXES. IN MANY CASES, THEY RECEIVED REFUNDS. So it’s a bit disingenuous 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 million
- US Corp Tax REFUND: $82 million
2) Ford Motors
- Pre-Tax Income: $6.52 billion
- CEO Alan Mulally: $23.2 million
- US Corp Tax REFUND: $19 million
- Pre-Tax Income: $4.67 Billion
- CEO John Watson: $20.2 Million
- Pre-Tax Income PAID: $15 million
- Pre-Tax Income: $6.4 Billion
- CEO Michael Corbat: $17.6 Million
- Pre-Tax Income REFUND: $260 million
- Pre-Tax Income: $28.83 billion
- CEO Lowell McAdams: $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
WHAT ABOUT THE SHAREHOLDERS
- Perhaps I just feel better when I see US 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 rigueur amongst corporations in this country).
- The corporate costs of the Affordable Care Act, as well as the Costs associated with Derivative Reform, were legitimate reasons 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 activity. In order to do so, you should at least have to pay a toll to your headquarter government.
THE ADVANTAGE OF INCORPORATING IN THE U.S.
- Have you ever wondered what the advantages are of incorporating in the US 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: