This just isn’t right….
Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said on Wednesday. It also found many of the companies spent more on lobbying than they did on taxes.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies (IPS), a left-leaning Washington think tank, quickly hit a nerve.
After reading it, Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation.
In a letter to that committee’s chairman, Republican Darrell Issa, Cummings asked “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today”.
He also asked “why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high”, and “the extent to which our tax code may be encouraging these growing disparities”.
In putting together its study, IPS chose to compare CEO pay to current U.S. taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
The group’s rationale was that deferred taxes may or may not be paid, and that current U.S. taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year.
$16.7 Million Average
Compensation for the 25 CEOs with pay surpassing corporate taxes averaged $16.7 million, according to the study, compared to a $10.8 million average for S&P 500 [.SPX 1219.64 6.72 (+0.55%) ] CEOs. Among the companies topping the IPS list: eBay [EBAY 30.885 -0.065 (-0.21%) ] whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S.taxes.