As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: Twenty-five hugely profitable U.S. companies paid their CEOs more last year than they paid Uncle Sam in taxes.
That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.
The report has been a catalyst to getting more people engaged in street heat and grassroots lobbying to press Congress to stop abuses. After reviewing the report, US Representative Elijah Cummings called for Congressional oversight hearings into excessive compensation and aggressive tax avoidance.
These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.
Instead of paying their fair share, these companies spent millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.
Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions—and then feign losses from their U.S. operations at tax time.
Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.
Here are a few examples of these champion tax-dodgers:
- Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract — while lobbying to preserve antiquated tax breaks for oil and gas industry.
- Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay's 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.
- Insurance brokerage giant Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda—a favorite locale for insurance companies seeking to avoid both taxes and regulation.
These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.
They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.
The UK’s Progressive Tea Party
Imagine a parallel universe where the Great Crash of 2008 inspired ordinary people to take on corporate tax evaders. The name of this parallel universe is Britain.
These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.
The only way corporate tax dodging will get on the agenda of Congressional deficit cutters is if public puts it there. US Uncut is bringing the issue to town hall meetings around the country, urging elected officials to shut down corporate tax dodging.
Others are pressing their members of Congress to join Rep. Cummings in his call for Congressional oversight hearings on runaway CEO pay and corporate tax avoidance, and to cosponsor and pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans—and generate $100 billion revenue per year. In the face of growing fiscal austerity, there's a growing sentiment aht these companies should contribute to the solution and pay their fair share of U.S. taxes.
- For more action information and the new Institute for Policy Studies report,
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