While nearly one-in-ten Americans are out of a job and the country attempts to rebound from recession, some of the richest companies in the US are compensating their CEOs famously in lieu of stimulating the economy.
A report released today from the Institute for Policy Studies (IPS) reveals that a quarter of the highest-paid CEOs in America actually made more in 2010 than their companies paid in federal income tax. In some cases, reveals Washington DC-based IPS, those same companies even spent more on lobbying than they did on taxes, putting more money into furthering their personal causes than giving back to the crumbling infrastructure that kept them afloat during the troubling times as of late.
The CEO of eBay, for example, raked in $12.4 million last year alone, yet the Internet auction house actually received a refund of over $130 million from the US government. Jim McNerney of Boeing was paid nearly $14 million, whilst the aerospace company only paid $13 million in taxes. On K Street, lobbyists at Boeing contributed over $20 million to causes that concern them.
Since the report made it onto the desk of Representative Elijah Cummings (D-Md.), a ranking member of the Committee on Oversight and Government Reform, he has asked for hearing to investigating the compensation of chief executive officers. Cummings has written to the other side of the aisle, asking Committee Chairman Republican Darrell Issa, “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today,” reports Reuters.
In his letter to the committee, Cummings asked for lawmakers to look into why CEO compensation and corporate profits continue to skyrocket all while the pay of other workers remains stagnant and unemployment stays above 9 percent. He has also asked committee members to look into “the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today.”
In the report from IPS released Wednesday, August 31, that of the 100 highest-paid CEOs in America, 25 of them make more than their companies contributed in tax payments last year. IPS has unearthed that around two-thirds of the firms mentioned in the report used offshore subsidiaries in international tax havens to get the biggest breaks. Elsewhere, the other one-third of the top 100 benefited from accelerated depreciation.
“These 25 companies are extreme examples of how large corporations can get away with picking Uncle Sam’s pocket,” said Scott Klinger, one of co-authors of the report, said in a statement. “And while the CEOs clearly benefit, working and middle class families and small businesses are left to pick up the tab.”
While the report signals that perhaps eBay, Boeing and others may be far from faltering during dire economic times, Chuck Collins of the IPS tells Reuters that in the past two decades, Tyco, Enron and WorldCom all had CEOs towards the top of the high pay list, only for the companies to crumble after.
“I think it’s an exposure of weakness in a company if their profitability is dependent on their accounting department and not on making better widgets,” Collins said.
General Electric and Verizon were also among the companies that spent more on lobbying than taxes in 2010. Ivan Seidenberg, CEO of telecom giant Verizon, actually received a refund check from the US government for over $700 million, all while citing profits close to $12 billion. Mr. Seidenberg himself made $18 million last year.
Reps from both Boeing and Verizon responded to The New York Times that they expect to pay deferred taxes at some point in the future. For the time being, the report from IPS suggests that the top CEOs in America make around 325 more than the average worker.