Corporate Accountability and WorkPlace

These Companies Paid Their CEOs More Than They Pay in Taxes

Adding insult to injury, there's hardly any transparency from public corporations on how much taxes they actually pay.

Of the 30 largest U.S. corporations, seven paid their CEO more last year than they paid Uncle Sam.

All seven—Boeing, Ford Motors, Chevron, Citigroup, Verizon, J.P. Morgan, and General Motors—had strong U.S. profits in 2013. And yet thanks to various tax credits, loopholes, and deductions, each reported getting more money back from the U.S. government than they paid in federal income taxes.

CEO pay at the seven firms ranged from $9.1 million for Daniel Ackerson at GM to $23.3 million for Jim McNerney at Boeing.

These figures are from a new report I co-authored by the Institute for Policy Studies and the Center for Effective Government, the third in a series on corporations that paid their CEO more than they reported paying in federal income taxes.

As in years past, the corporate flacks have come out swinging, but in sort of a kindergarten wiffle ball style.

First, all of the companies proudly deny having broken any laws. We never accused them of criminality. The problem is that tax-dodging that should be criminal currently isn’t.

The second rebuttal tactic is to claim that the firm pays just oodles and oodles of taxes worldwide. But when asked to separate out how much they pay the U.S. Treasury versus state or foreign governments, they refuse. Verizon, for example, told Reuters that it paid $422 million in income taxes in 2013, but “we do not provide a breakdown.” Our report focuses on federal taxes because they happen to be the focus of congressional debate.

Boeing spokesman Chaz Bickers told CBS News that their total tax expense in 2013 was $1.6 billion, “but much of that is deferred.” We don’t include deferred taxes in our calculations because many firms, particularly large ones that have amassed significant profits in overseas tax havens, can defer these taxes indefinitely. The foreign earnings of U.S. corporations are only taxed in the United States if they are repatriated.

Some have also questioned the source of our tax data. Like Citizens for Tax Justice and many other reputable research groups, we rely on the number public corporations report to the SEC in their 10-K forms for current taxes paid. The figure is what company accountants expect the firm pay when they file their tax return, which they prepare several months later. This is the only available information on corporate income taxes broken down by federal, state, and foreign governments, and we stand by it.

At the same time, we’d be very pleased if corporations would voluntarily reveal the precise tax payment figure from their IRS returns (Line 31 of Form 1120). So far, none have done so.

We’d be even more pleased if public corporations were required to report how much they’re paying in taxes —in the United States and other countries—as well as an explanation of why their U.S. tax payment may be less than the statutory 35 percent. We know large corporations pay much less on average, but figuring out exactly why is next to impossible.

Some companies would scream privacy invasion, but publicly traded corporations already must report detailed financial information to the SEC. And at a time when taxpayers are footing the bill for massive corporate tax breaks, privacy doesn’t seem the overriding issue.

In the lame-duck session, Congress is considering the renewal of a package of tax breaks known as the “extenders.” The House already passed one bill to permanently extend a business tax credit—at a cost of more than $500 billion over the next decade.

Today’s debate over corporate tax disclosure reminds me of the historical debate over CEO pay disclosure. In 1936, corporate critics of the initial SEC executive pay disclosure rules claimed that any public interest in executive salaries amounted to “criminal curiosity.”

About a decade ago, when the SEC required more detailed, standardized reporting, business groups again objected. Today, while debates over CEO pay practices continue to rage, squabbles over accurate numbers have all but disappeared.

Polls suggest a strong public appetite for more information on corporate taxes. When Gallup asked Americans if corporations are “paying their fair share in federal taxes, paying too much or paying too little,” two-thirds said “too little.”

A Hart Research Associates poll found that 67 percent of voters believe “we should end tax breaks for companies that ship jobs and profits offshore and level the playing field for small businesses that create jobs in America.”

Indeed, smaller corporations stand to gain the most from greater clarity over which companies pay how much and where. As the Main Street Alliance has pointed out, it’s America’s largest corporations that are able to take greatest advantage of tax havens and many other loopholes designed to benefit mega-firms.

As with CEO pay, increased disclosure wouldn’t end the battles over corporate tax policy. But at least we could move past the bickering over the numbers and have a better-informed debate over a central issue in our economic future.

 

Sarah Anderson directs the Global Economy project at the Institute for Policy Studies and is the author of the new report Off the Deep End: The Wall Street Bonus Pool and Low-Wage Workers.

Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
[x]
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Activism
Drugs
Economy
Education
Environment
Food
Media
World