Major American firms pay more in CEO compensation than they do in fed tax

26 major American companies paid more to their CEOs than they paid in taxes in 2011, including Citigroup, Abbott Labs, and AT&T. This from a study published by the Institute for Policy Studies entitled Executive Excess 2012: The CEO Hands in Uncle Sam's Pocket. They note that this figure has climbed since last year. Reuters's Nanette Byrnes reports:

Among companies topping the institute's list:

* Citigroup, the financial services giant, with a tax refund of $144 million based on prior losses, paid CEO Vikram Pandit $14.9 million in 2011, despite an advisory vote against it by 55 percent of shareholders.

* Telecoms group AT&T paid CEO Randall Stephenson $18.7 million, but was entitled to a $420 million tax refund thanks to billions in tax savings from recent rules accelerating depreciation of assets.

* Drugmaker Abbott Laboratories paid CEO Miles White $19 million, while garnering a $586 million refund. Abbott has 64 subsidiaries in 16 countries considered by authorities to be tax havens, the institute said.

Companies paid CEOs more than they paid in taxes


  1. Obviously that Dodd Frank financial regulation did a whole hell of a lot to help this. Haha, just kidding. We’re all suckers. 

  2. The math here is completely broken; I expect better of Cory.  Refunds represent payback of taxes paid earlier.   Comparing the amount paid to the CEO this year to the amount by which the companies overpaid their taxes in a previous year is silly.  All it’s doing is demonstrating that some companies are really bad at estimating how much tax they owe.

    1. Surely they have enough to hire a good accountant? Maybe they need to make a few calls to Hollywood, they have some very creative ones. 

    2. I’m curious about this sort of thing as well, particularly hearing in the past several months things like “Corporation X paid zero taxes last year” or “Corporation Y received a refund”.  I mean, I received a refund the last few years from my income taxes, but I still obviously ended up paying taxes.  Are statements like these saying something different?  Does this mean corporations like these are literally contributing zero dollars to the federal coffers?  And how does that relate to, like, payroll taxes?  I’m legitimately interested in a serious answer to this.

  3. This group’s analysis is extremely suspect.  I have accounting training, and a cursory review of the financial reports of the corporations listed shows that the “tax refunds” they are purportedly receiving are not, in fact, refunds at all.  No doubt there is a lot to be outraged about with regard to executive compensation, but a naive reading of income statement items that appear to show tax refunds without actually understanding tax accounting is extremely misleading.  The IPS is an extremely partisan group with an axe to grind, as is obvious if you read the angry rants they include on the page summarizing this study on their website.

  4. Man, I thought they paid too much in taxes, but it turns out that we need to lower the corporate tax rate AND CEO salaries if we want these hand-to-mouth corporations to survive. That sounds about right, eh Mr. Burns?

  5. The part that gets me is that Pandit got his bonus after a majority of the rightful owners of Citigroup voted that he shouldn’t.  If corporations aren’t accountable to their owners, who are they accountable to?  If a corporation was doing something really horrible and bad for society who could stop it?  That’s pretty scary.  More people should probably be looking into that.

  6. I would note that, as per the recent Planet Money consensus-building podcast, there is a pretty good case to be made for a low or zero corporate tax rate – and instead there should be a higher tax rate on the outsize corporate salaries, along with relatively high consumption taxes, especially on products with negative externalities (ie carbon tax, etc., also to be paid by corporations). Taxation shouldn’t penalize corporate success in and of itself, it should penalize the offloading of costs onto society and the environment. So this statistic isn’t a huge problem in and of itself. A nice illustration of … something… but of less concern than the gap between executive and worker salaries, and bonus or stock-option centred compensation policies that allow executives to loot corporations even as they are failing (and potentially, eventually, requiring ‘bailouts’ with taxpayer dollars). 

    1. I would be cautious with the opinions of Planet Money, Adam Davidson has been discovered to have a pretty big (pro-banker/corporate) conflict of  interest when it comes to ethics in his reporting, and Planet Money is sponsored by, yep you guessed it, a bank.

      I remember thinking the ‘pool of money’ piece was really great, in that it did a great job explaining the crisis and complex instruments in an easy to understand way, but I thought it was kind of curious the way he (and his colleagues) seemed to go out of their way to deflect blame from fraudsters and try to place as much (more?) blame on consumers, average citizens etc. His Elizabeth Warren interview, where he basically badgered her (and by extension consumer protections) ala Bill O’Reilly, was so awful and unprofessional that the NPR ombudsman had to step up and issue a public apology..

      Turns out my bullshit detector was working, but you can decide for yourself:

  7. Guys, come on, stop your class warfare.

    Everyone knows that the people who steal money from the government are Cadillac-driving welfare queens, not job-creating Real American Companies.

  8. UPDATE: I see I was beaten to the punch on this. But it was the first thing that came to my mind.

    NPR got 6 economists from accross the spectrum to agree to 6 proposals. One was that corporations pay no tax at all. Makes sense

    “Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that’s good. Don’t tax companies in an effort to tax rich people. ”

    1. Their idea of eliminating income tax (because we like income, it promotes social mobility and other things humans are fond of) is great, except they want to replace it with a consumption tax, which will of course favor the rich (just like nearly all their suggestions) disproportionately.  The consumption of the poor can be tracked, that of the rich can be easily hidden – for example, rich people can grow all their own food using their own resources, but poor people have to buy food or the means to produce it.

      The logical thing, the humanist thing to do is replace income tax with asset taxes.  Everybody who has taken a week to think about it knows this, which is why the rich asset holders have completely seized control of the mechanisms of government – so they can prevent fair taxation based on asset values.

      1. I can agree with you about probelms of consumption tax. The 6 economists all were on board with it in some fashion though.

        I don’t think “well the rich will grow their own food” for tax avosion is much of a risk, and seems like an ad hoc, made-up non-issue. 

        Lots of super-rich in NYC with no room for farming, for example. 

        1. The super-rich in NYC don’t live there year-round.  They have nice, large country homes with plenty of space for gardens.

          Tax wealth, not income OR consumption.

          1. So, the rich would run ranches with massive vegetable gardens to avoid taxes? Couldn’t they do the same now and avoid sales taxes (in states that tax food)? You’d have to have a pretty high consumption tax to make it worthwhile to run your own ranch/farm.

          2. I get the idea of where you all are going with “growing their own food”.  But ironically I doubt any uber-rich person would actually do it themselves, which means they are employing people to do it for them. 

          3. I’m not actually saying it would happen, just pointing out that glaborous’ argument for why it wouldn’t happen isn’t any good.

            But ironically I doubt any uber-rich person would actually do it themselves, which means they are employing people to do it for them.

            We call that “feudalism”, boys and girls.

          4. But “feudalism” is actually a pretty good economic system all things considered.  “Serfdom” is a problem (it’s just another word for “slavery” really), but Feudalism as such is mostly about rights and responsibilities that – crucially – go both ways.  At the moment we seem to have completely lost any sense of responsibility at both ends of the spectrum.

      2. Norway f/e has an annual 1.1% wealth tax on net assets over $117,000 but that is in addition to income taxes.

        It’s funny to hear the talk about corporate rates, when loop holes and breaks are factored in they are rarely paying anything close to the actual rate.

      3. Your sense of scale is off.  The rich won’t need to “grow their own food,” because they spend less than 1% of income on food.  They can dine on caviar every damn day and it still won’t add up to a fraction of income.

        And that is why a consumption tax is the most profoundly regressive tax possible, short of actually tithing our virgin daughters to the Baron.

        The 1% only “consume” a small fraction of their income – especially if you disregard real estate, education, and a few other things.  And you can bet an argument would be made for disregarding them.

        The other issue this raises is economic.  If the poor get a $100 tax break, they are going to spend it immediately.  If the rich get a $100,000 tax break, it goes right in the bank.  And dollars in the bank do not create jobs.

    2. Corporations are people and all the people I know have to pay taxes. If corporations get a zero tax break because they would re-invest money saved to grow their interests, I submit that if I was not taxed I would re-invest the saved money in myself as well.

      This is a great idea. Sure, pretty much all of our government services would have to go away. But think of all the jobs corporations would create with the tax break money. Jobs are more important than social services right?

      1.  Actually, I think you’re onto something.  Let’s end corporate taxes by ending corporate personhood and limited liability.  Everyone gets what they (claim to) want.  Compromise!

      1.  Yeah thanks, that was the one.  It disappeared for a bit. I had forgot that Disqus sometimes yanks posts with too many links in them, presuming they’re spam.

  9. I have to agree with the previous commentary … I get tax returns all the time, but that doesn’t mean I don’t pay taxes.  

    1. Noting that I don’t think major corporations deserve much pity, I do have a problem with yelling fire in the movie theatre.

      I’m not really sure what the value of this article is for the anti-big-corporate-corruption argument.
      Knowing that a business pays more to their CEO than they do in taxes doesn’t really prove anything.  The article suggests some form of discordance between income, outflow and taxes, when in fact, the more you pay your CEO (outflow),  the more you offset your income, and the less you pay in taxes.  It’s actually quite normal to see an inverse relationship between the two values.

  10. I had to laugh at Pandit’s $14.9 million. Which admittedly is down on the $23 million he pocketed last year. For the CEO who’s overseen a collapse in his company’s share price from nearly $500 when he took over to its current $29, the amount is tantamount to giving the finger to the people who actually own Citi and bank with it (though I can’t imagine why anyone would still bank with them – they are rancid). 

    Keep in mind that Citi has also been the worst performing big bank in the US by a long shot for the last ten years, five of which have been under Pandit. Its stock price is a reflection in this instance of its sub-par performance.

    Here in Hong Kong, there have been daily protests outside this bank for at least three years as ripped-off customers vent their anger. In true Citi fashion, it completely ignores the protest while passing itself of as a responsible corporate citizen. I had the misfortune of meeting one of the banks VPs several years ago in Hong Kong. A more arrogant, born to rule master of the universe I couldn’t imagine (and I’ve met my fair share of PE, hedge fund and big bank senior managers). Walking away from dealing with these type of people was the best thing I ever did in my life.

    But I still can’t help feeling angry about how Pandit has syphoned tens of millions from that bank. His tenure as CEO must surely rate as one of the most daring daylight robberies of modern times.

  11. Wait, so are the CEOs not paying personal income tax themselves? What difference does it make whether the tax is perceived on the corporation making a profit or the executives receiving salary? In Canada I know the tax system is designed with this parity built in. 

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