Katrina vanden Heuvel
Is corporate CEO pay really out of control? Well, consider Fleecing Uncle Sam, a new report from the Institute for Policy Studies and the Center for Effective Government. Of the 100 highest-paid CEOs in the US, the study finds, twenty-nine of them received more compensation than their companies paid in federal income tax.
Take American Airlines, for example. CEO W. Douglas Parker took home $17.7 million in total compensation in 2013, while his company received a $22 million tax refund. It makes you wonder. After all, American didn’t have a lot of income on which to pay taxes–the company’s pre-tax income in 2013 was negative $2 billion–so is AA sending us a message that tax avoidance, and not air transport, is their real business? Parker certainly piloted his company to be more success at the former than he did the latter.
Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government, co-authored of the report. “Our corporate tax system is so broken,” he says, “that large, profitable firms can get away without paying their fair share and instead funnel massive funds into the pockets of top executives.”
But the heavyweight champion of corporate tax refunds is JPMorgan Chase, which earned more than $17 billion in 2013 in pre-tax income. Their tax “payment” took the form of a $1.3 billion refund. How did this happen?