US bosses earn more than their company's tax bill, report claims
A new study into the accounting machinations of corporate America claims that 25 of the country's largest companies last year paid more to their chief executives than they paid Uncle Sam in taxes.
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After examining the financial filings of 100 of the country's biggest publicly traded companies, the Institute for Policy Studies said in a report released yesterday that a quarter of them had lavished more on the boss while exploiting a maze of policies to claim hundreds of millions of dollars in tax credits.
Many are household names such as Boeing, eBay, Verizon and Bank of New York Mellon. The latter paid its top executive, Robert Kelly, $19.4m (£12m) in 2010, but secured a $670m tax benefit. At Cablevision, James Dolan pocketed $13.2m while the cable TV giant received a tax benefit of $131m. The tax benefits given to the corporations can be taken as a refund or used as write-off against earnings in future years and company officials said they still expected to pay a small amount of cash taxes.
"We have no evidence that CEOs are fashioning, with their executive leadership, more effective and efficient enterprises," the study said. "On the other hand, ample evidence suggests CEOs and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before – at a time when the federal government needs more revenue to maintain basic services for the American people."
The new report will add fuel to the already raging debate about wealth inequality in America and sap credibility from the corporate captains who complain – with Republican encouragement – that US corporate tax rates are too high. Republicans, meanwhile, continue to resist raising taxes on the rich as part of any deal to close the budget gap.
Earlier this week Congressman Elijah Cummings, a leading Democrat, asked committee chairman Darrell Issa, a Republican, to hold a hearing on CEO compensation. The time had come, he said in a letter, to "examine in detail why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high".
Some of the companies named in the report have criticised its methodology, noting, for instance, that companies can negotiate tax refunds for one year on condition that they pay what they would have owed in future years. The financial data in the report was taken from the companies' regulatory filings, which can differ from tax returns.
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