CEOs Pay Higher Than Company’s Taxes Owed Causes Stir
The controversy of rich CEOs continues. A recent report by the Institute of Policy Studies shows that one fourth of the 100 highest paid CEOs in the US earned more last year than the company that they head paid in federal income tax. The companies also seemed to spend more on lobbying than taxes.
The study was conducted to evaluate the extent to which CEO compensation led to the economic crisis and persist today. Several companies included in the report, however, disputed its methodology and claim the company has paid any and all taxes that it owed. Especially since it didn’t include major chunks of income taxes paid in 2010 for previous years, state, local or foreign taxes or even deferred taxes.
IPS argues that US taxes paid are the closest approximation in public records to what companies may have actually paid last year, and said deferred taxes may or may not have been paid. On top of that, different institutions have different accounting methods, and the accounting used by the SEC differs from the number that is recorded on an IRS tax return. Also, the IPS number and Boeing number don’t mesh with the IRS number either.
A spokesman for Boeing said the number the study used – U.S. federal current tax expense of $13 million is a far cry from the $360 million reported as its net income tax payments in 2010. He said the company also received over $370 million in credit from the government in 2010 for overpayment of past taxes. He added that 5,000 US jobs were created at Boeing this year, mostly thanks to federal tax breaks. About two-thirds of companies studied kept taxes down by taking advantage of offshore subsidiaries in “tax havens” like Bermuda, Luxembourg and Singapore.
Compensation for the 25 CEOs whose pay surpassed the company’s tax burden averaged $16.7 million in take-home pay. The top three companies “guilty” of paying more in CEO salary than company income taxes are eBay, Boeing, and General Electric. The CEO of eBay earned $12.4 million, and the company reported a $131 million refund on its 2010 taxes. Boeing’s CEO reportedly earned $13.8 million. The company sent in $13 million in federal income taxes but spent $20.8 million on campaign spending and lobbying. General Electric’s [GE] CEO came out on top by taking home $15.2 million. GE got a $3.3 billion federal refund, and spent $41.8 million on lobbying and political campaigns.
By Keri Rozansky
