Corporate America is suddenly OK with paying taxes…?

Last May, the the wall street journal released a bomb report on trends in US CEO compensation. According to LogAccording to analysis, the median CEO salary of U.S. S&P 500 companies hit a record high of $14.7 million in 2021, with the top 25 CEOs earning at least $35 million and the top nine earning each. at least $50 million.

The Log just published a news Numbers which add another shocking layer to our continued abhorrence of national executive compensation. It turns out that our biggest companies, companies that have been claiming for years that corporate taxes discourage hiring and R&D, don’t hesitate to pay higher taxes – as long as they can line their pockets. CEOs in the process.

Over the past three years, the new Log analysis shows about three dozen large companies paid a combined total of just under $2.1 billion corporate taxes on executive compensation that they could not claim as legitimate business expenses. One such company, Tesla, paid more than $447 million in a recent three-year period for non-deductible compensation, or 40% of the company’s total tax expenditures.

How did all this happen? One of the Few Progressive Elements of the Extremely Regressive GOP Tax Cuts and Jobs Act of 2017 limit corporate tax deductions for all forms of executive compensation at $1 million. Previously, this $1 million deductibility cap did not apply to stock options and other forms of “performance-based” compensation. In other words, the more bonuses companies gave their executives, the less they paid in taxes. The 2017 law closed this perverse loophole.

If S&P 500 companies really cared about keeping their tax bills low, if they really cared about having enough cash to hire new workers and explore new products, they wouldn’t keep paying higher taxes to clog up their highs. leaders. By my own calculations, for every $100 a corporation spends on non-deductible executive compensation, the corporation and its executives pay a combined total of $58.81 in business profits and corporate income taxes. individuals at the federal and state levels. In other words, to keep their best executives on the easier streets, companies pay state and federal taxes on their non-deductible compensation at a rate of nearly 60%.

On the other hand, for every $100 a corporation uses to raise a worker’s annual salary from $40,000 to $50,000, the corporation and its employee would only pay $26 combined in federal and state taxes. Tax rates are even lower for companies that choose to use their money to raise wages for minimum wage workers to $15 an hour or hire additional workers at an annual salary of $40,000.

Why do companies pay their managers so generously when paying workers would be much more profitable? Two words: corporate greed. Companies like to claim that they pay their executives generously because the competition in the market leaves no choice: to attract the “talent” of senior executives, companies must pay the best rates. But the facts do not confirm this.

Comments are closed.