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August 26, 2012 10:18 AM More grist for the outrage mill: how the tax code enables CEO greed

By Kathleen Geier

Perhaps the most illuminating blog post I’ve read this week was this one. It’s by In These Times’ David Moberg and it concerns the “disgrace to the human race” (as Jimmy Carter described it) that is the U.S. federal tax code. Moberg writes about a research report called Executive Excess*, released by the Institute for Policy Studies, which analyzes the ways in which U.S. tax laws actively encourage massive tax dodging by corporations and grotesquely overcompensated CEOs. To name just one of many outrages the report documents: as Moberg writes, “26 out of the 100 highest paid CEOs received more in overall pay than their companies paid in federal income taxes (and many of those corporations actually received tax refunds).”

According to the report, the four “most direct” subsidies for out-of-control CEO paychecks cost U.S. taxpayers a total of about $14.4 billion per year. Those subsidies are as follows:

— Declaring that its pay to the CEO is for that CEO’s “performance.” This enables the corporation to write off its taxes on any amount of the CEO’s compensation, not just the standard limit of $1 million.

— Unlimited deferred compensation, whereby pensions, stock options and the like do not get taxed like regular income, no matter how much filthy lucre the CEO receives in this form — Mitt Romney’s $21+ million IRA, anyone?

— Double standards on accounting for stock options. Stock options are tax deductible, yet are not required to be reported on SEC financial statements, a lack of transparency that presents a wildly misleading picture to investors and employees.

— “[P]referential treatment for ‘carried interest’ in hedge, private equity and other investment funds (where payments that should be taxed like regular income are instead taxed at a much lower rate).”

A number of reforms aimed at closing the loopholes and capping CEO pay have been proposed or are in the works. Moberg concludes:

But perhaps the most effective constraints on CEO excess is the simplest in terms of policy, if not politics: Go back to the Eisenhower-era top marginal tax rates of 91 percent.

I say, amen to that!

*Note: I tried to download a PDF of the report from IPS’ website because I wanted to summarize it myself, but the link was dead. Therefore, I am relying on Moberg’s summary.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • Varecia on August 26, 2012 11:40 AM:

    In the spirit of George Lakoff, I'm trying to refer to this sort of thing not as "massive tax dodging," but as massive *public investment* dodging, or *revenue* dodging. I think it casts it in a much more accurate light, that of ingrates in private enterprise who aren't willing to acknowledge that what they have would not be possible without Public investment.

  • Varecia on August 26, 2012 11:48 AM:

    Actually, I'm going to amend that to massive public re-investment dodging. They accept the many benefits of Public investment, taking gladly and willingly from the system, but refuse to re-invest back into the system in proportion to what they've received.

  • FriscoSF on August 26, 2012 12:01 PM:

    WOW !!
    Thanks for the great work you've done on this Mr President

    The Obama Admin had OVERWHELMING Democratic majorities in it's first two years
    What, exactly did they do about tax reform ??
    What did they do about finding ande punishing Wall Street criminals ?
    What did they do about REFORMING the financial system ??

    Obama had Overwhelming Congressional majorities.....
    ,,, and Obama did NOTHING

  • stormskies on August 26, 2012 12:09 PM:

    Right so we end up with corporations like General Electric paying no taxes at all. And the media that they own, NBC, who then hire creeps like David "I am not a used corporate condom" Gregory to create the corporate propaganda to peddle to the typically stupid American that has no ability to sort out the propaganda from the truth.

    Think about the travesty called buffoon Romney and all that has been exposed about this evil man, and the Anne Rand devote Paul Ryan. Think about all this leading to the Repiglican convention that includes seven speakers who support 'birtherism'. And yet there was the used condom last night on NBC'S nightly propaganda telling us what fine shape the Romney campaign is in, and how 'well positioned' they feel they are for the general election.

    The objective observe could literally see the corporate cum coming from the used condom's eyes, mouth, and nose.

    And, of course, the used condom's pays less taxes that you and me because he has been made a millionaire by General Electric whom he does their bidding for. He pays less taxes than his servants who wipe his corporate asshole.

    Then there is Brain Williams, who is paid 15 million a year by General Electric who refused on his nightly propaganda show to even report the fact that his employer did in fact pay no taxes. Refused.

    This is what our country has come too.

  • Morrigan on August 26, 2012 12:22 PM:


    Yes, the tax code needs an overhaul.

    Unfortunately, our President has made it clear he has no interest in governing, so we have no realistic hope of a the sort of reform we need to fuel economic growth until 2013 or 2017.

  • c u n d gulag on August 26, 2012 12:42 PM:

    Frisco SF
    "The Obama Admin had OVERWHELMING Democratic majorities in it's first two years..."

    Yes, numerically, the people with a "D" next to their name had 60 people in the Senate (until Ted Kennedy died), and a majority in the House.
    But many of them didn't have an atom of "D" in their hearts and souls.

    Let me remind you of some of their names:
    Bayh, Landrieu, Nelson, McCaskill, Shuler, among dozens and dozens of 'Red Dog's' in both houses - I don't call them "Blue Dog's," 'cause there ain't nothin' "blue" 'bout 'em!

    And the Obama Admin did manage a lot in those 2 years. Thanks in large part to Nancy Pelosi, with lesser credit to Harry Reid - though for him to get the entitled elitist egomaniacs in the Senate (D, or, R) to agree on anything that actually helps regular people, makes him worthy of the The Medal of Freedom.

    And after Ted died, the Republicans knew that any ONE of them, could now stop whatever the feck they wanted in the Senate.

    And when the feckless idiots who showed up to vote in 2010, voted for belligerant morons, it's amazing that this country is still standing.

    Despite their best efforts, all the Republicans did was to stop progress, and lower the nations credit rating.

    They'll wait until they're back in power to finish the job of destroying this nation - which was started by Nixon, ably moved along by Reagan, and took full speed, like a runaway truck coming down the side of one of the Rocky Mountain, under the inable "leader"ship of W and his puppet-master, Dick.

    Besides, who was worried about tax rates, when it looked like the whole economy might go down the toilet faster than a lead-infused turd?

    Taxes on wheelbarrows of cash are degrees of the same nothing - whether you have 1 wheelbarrow, or 10, or 1,000.

    To quote that great philosopher, the 5th Beatle himself, Billy Preston, "Nothin' from nothin, leaves nothin'..."

  • PTate in MN on August 26, 2012 12:58 PM:

    Six comments so far, and two of them criticize Obama for not doing more. Jeez, people! Sure, Obama has been a huge disappointment for liberals like me. Sure, I regret that he did not use the wave of good will that accompanied his election in 2008 to reframe the national discussion. But, no, he let blue dog Democrats shilly-shally over the healthcare bill and adopted the Republican deficit frame. What a lost opportunity!

    But not for one moment do I criticize him for not doing more to reform taxes. The entire Republican party is in thrall to Grover Norquist and stooges of the Koch operation, and I suspect that every one of these CEO tax abuses can be traced directly to some Bush-era conservative deceit. Under these circumstances, any initiative to "reform" tax rates would be a disaster.

  • LJL on August 26, 2012 1:15 PM:

    Obama hasn't been a disappointment to me, a long time progressive and one time official member of a Socialist Party. Why? Because America is in such a mess (just one aspect of which this article highlights) that criticizing Obama for not reforming the country overnight is like criticizing a salmon for not swimming faster upstream against the torrent. BTW the 91% marginal rate was instrumental in causing post-war American prosperity, a level of wealth for the people we haven't recapture since the tax rates have been cut.

  • Mikhail on August 26, 2012 3:42 PM:

    I'm with LJL and PTate here. Would it have been wonderful if Obama had reformed taxes? Sure. There are a lot of things it would be wonderful if he did. But blaming Obama is to some extent missing the point. He had to work with Congress to do what he did, and even when he had majorities all over he suffered a *hugely* obstructionist minority and Blue Dog democrats that were only a little bit better. And even with what he had to work with he... did Dodd-Frank, the ACA, the stimulus, and that's just what comes to mind.

    I mean, sure, this would be a different story if it was like his halting deportations, but I'm pretty sure the President can't just change tax laws by fiat. So, be realistic.

  • square1 on August 26, 2012 6:44 PM:

    From a liberal's perspective, the problem with Obama isn't so much that he hasn't accomplished more -- although he could have. The problem is that he hasn't laid any sort of foundation for more liberal policies to be enacted in the future.

    I have argued that the reason is that Obama simply is not a liberal. At least not unless you define "liberal" so broadly as to include 90% of the Democratic Party.

    Frankly, this is beyond obvious and I now have a fairly healthy amount of pity -- if not outright contempt -- for those liberals who continue to naively believe that Obama is a closet liberal who will eventually deliver a liberal agenda if only given a little more time and less of that gosh-darned criticism.

    The bad news is that Obama is a fairly typical Centrist Democrat. He will NEVER voluntarily push for a significantly higher marginal tax rate, higher corporate taxes, abolishing most corporate tax loopholes, raising the cap gains rate, or any number of liberal tax fantasies.

    The good news is that Obama is a politician, and a fairly confrontation-averse one at that. Which means that Obama can be convinced to adopt more liberal policies that he would personally support in a vaccuum. Unfortunately, liberals need to be far more -- not less -- critical of Obama. They need to blast him until he gives liberals what they want just to shut them up.

    Interestingly enough, the dynamic of aggressively badgering politicians -- aka "lobbying" -- is widely employed by every other constituency on the planet besides liberal activists. These groups understand that you won't get anything from a politician unless you ask for it, usually loudly and repeatedly. Instead, liberal activists have been suckered into believing that if you are too critical of politicians that the politicians will have their feelings hurt and be unresponsive.

  • Anonymous on August 26, 2012 9:17 PM:

    Six comments so far, and two of them criticize Obama for not doing more. Jeez, people! -PTate in MN

    For those who aren't regulars here (or have forgotten), FriscoSF is a concern troll. Given the proximity of the "Morrigan" post, I'd say FriscoSF owns that handle too.

    Haven't heard from ol' Frisco in awhile, but now that the election season has rolled back around (and overflowing Citizens United money is making its way into paid troll's coffers), I expect we'll be hearing a lot more from these phoney liberal bleeding heart Obama trolls.