Quick Hit Ellyn Fortino Thursday January 29th, 2015, 12:51pm

Study: Several U.S. Corporations 'Fleecing' Uncle Sam, Spending More On CEOs

A number of large U.S. corporations spent more on executive compensation than federal income taxes in 2013, according to a recent analysis by the Institute for Policy Studies and the Center for Effective Government.

Seven out of the 30 largest U.S. corporations examined for the "Fleecing Uncle Sam" report -- including Boeing Co., Ford Motor Co., Chevron Corporation, CitiGroup Inc., Verizon Communications, JPMorgan Chase & Co. and General Motors Co. -- spent $121 million on total compensation for their seven CEOs in 2013. On average, that's $17.3 million per CEO.

The seven firms reported over $74 billion in combined U.S. pre-tax income in 2013, but they collectively raked in nearly $1.9 billion in U.S. corporate income tax refunds that year. As such, the average effective tax rate in 2013 for the seven corporations was negative 2.5 percent, the analysis found.

"If the seven giant, highly-profitable corporations that paid their CEOs more than Uncle Sam had paid the full statutory corporate tax rate of 35 percent, they would've owed $25.9 billion in federal taxes," the report states. "Instead they received $1.9 billion in refunds, for a total difference of $27.8 billion."

Among other key findings, 29 out of the 100 top-paid U.S. CEOs earned more in 2013 than what their respective firms spent on federal income taxes. That figure ticked up from 25 out of 100 highest-paid CEOs in 2010 and 2011, when the two left-leaning think tanks conducted similar compensation surveys.

Together, the 29 CEOs pulled in $920 million in 2013, or an average of $32 million per top executive. Combined U.S. pre-tax profits for those 29 companies, including American Airlines Group Inc., Goodyear Tire & Rubber Co., T-Mobile US, Inc. and others, reached $24 billion in 2013, while the firms raked in $238 million in total tax refunds that year. Their average effective tax rate was negative 1 percent, the findings showed.

"Our corporate tax system is so broken that large, profitable firms can get away without paying their fair share and instead funnel massive funds into the pockets of top executives," said report co-author Scott Klinger, the Center for Effective Government's director of revenue and spending policies.

Also, 12 of those 29 companies with top-paid CEOs did not report profits in 2013, according to the report.

"For the firms that were unprofitable in 2013, it's hard to imagine why they had a CEO on the top 100 highest-paid list," the report reads. "The CEOs from these money-losing firms collectively received $439.3 million in compensation (in 2013), an average of $36.6 million per executive, which is more than three times the $11.7 million national average for large company CEOs."

Notably, the 29 corporations also operate 237 total subsidiaries in tax havens, the think tanks found. The firm with the most subsidiaries in such jurisdictions was Abbott Laboratories with 79. Abbott's CEO, meanwhile, earned $20.5 million in 2013, while the firm paid $16 million in federal income taxes that year.

As far as policy recommendations, Sarah Anderson, report co-author and global economy director at the Institute for Policy Studies, stressed that, "Congress should focus on cracking down on tax havens, eliminating wasteful corporate subsidies, and closing loopholes that encourage excessive CEO pay."

Read Progress Illinois' past coverage of taxpayer subsidies for executive pay herehere and here.


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