17 August, 2012
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Twenty-six big U.S. companies, including AT&T, Boeing and Citigroup, paid their CEOs more last year than they paid the federal government in tax, according to a study prepared by the Institute for Policy Studies.
Major companies paid less or no taxes on profits, as they took advantage of the tax deductions and credits designed to free up money for companies to spend in ways that stimulate the economy.
On average, these 26 companies generated pre-tax net income of more than $1 billion in the US, the study revealed. Meanwhile CEOs of these 26 firms received on average $20.4 million in total remuneration last year, 23% more than in 2010.
CEO of Boeing James McNerney Jr. got $18.4 million in pay last year while his company received a tax refund of $605 million. The study also laid into Citigroup for paying CEO Vikram Pandit $14.9 million while the bank received $144 million in net tax benefits.
According to the study, the US corporate tax code allows companies to pay big bonuses to executives so they can cut their tax bills while the Treasury gets less money in a time, when the national economy has a trillion debt burden. “Our nation’s tax code has become a powerful enabler of bloated CEO pay,” the report said.
The companies questioned the study, saying their calculations didn’t respond to reality. “The report selectively ignores our real total tax expense of $1.4 billion and total federal expense (of) $1.25 billion,” said John Dern, a Boeing spokesman.
The tax deductions were implemented to “help stimulate the economy and create and maintain new jobs; which is exactly what we have done,” Dern said, pointing out that company added 11,000 US jobs in 2011.
The researchers used the companies’ own figures based on accounting rules to calculate taxes paid. Regulators require companies to disclose forecasts for their tax bills to investors. However, real tax filings the companies make to the government are private and can differ from the estimate.
Meanwhile, many chief executives are unlikely to enjoy huge bonuses this year, according to a separate study, prepared by consulting firm
Johnson Associates. Wall Street bonuses will be flat and possibly rise by 5%, in part due to high-profile scandals at some big banks, in part to weaker-than-expected revenues.
“Libor scandal, errant trades, and other high profile errors and losses weighs on an already hampered investor confidence, and payouts of firms experiencing specific issues,” Johnson Associates said.
- Study: Companies paid more to CEOs than in US tax (bostonherald.com)