Well This Is A Good Start, But, Where’s That Trickle Down Effect I've Been Waiting 20 Years For?
This story, in The Huffington Post, caught my attention today not because it was such a shock, it wasn't, it was more that it wasn't a shock and all I could think was that I had been saying for years that the health of this country’s economy, and thus the worlds, was pegged to the overinflated salaries of CEOs and company executives. Company executives who have, in the past as well currently, all the pay in the world for themselves but nothing for the common worker that makes happen the plans they make.
The same companies that have benefited from this countries stellar performance over the years but are also the same people responsible, along with wall street, for the current fiasco we saw the market suffer in 2008 as the house of cards came crashing to earth.......problem though is it will not end until the market levels itself back to the real value of things before the manipulated markets effects were felt.
They, most of corporate America as a recent article reported on, of all places I believe it was a Fox News story, receive the most in return for the least paid in taxes. The same companies run scams on counties and states year after year by having those areas beg and make deals to have those companies come to their town and do nothing but further enrich the already wealthy and the company in question.
So I say good going to the reporter of this story but I ask how successful can we possibly hope to be if we can't get any closer than 20 years to a problem; our recognition of that problem and then to start doing something about it?
Highest-Paid CEOs Often Earn More Than Company Pays In Income Taxes, Study Finds:
WASHINGTON - 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 CEOs. Among the companies topping the IPS list:
* eBay whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S. taxes.
* Boeing, which paid CEO Jim McNerney $13.8 million, sent in $13 million in federal income taxes, and spent $20.8 million on lobbying and campaign spending
* General Electric where CEO Jeff Immelt earned $15.2 million in 2010, while the company got a $3.3 billion federal refund and invested $41.8 million in its own lobbying and political campaigns.
Though the companies come from different industries, their tax breaks fall into two primary areas.
Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.
Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings. But Chuck Collins, an IPS senior scholar and co-author of the report, said that is a mistake.
"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," he said.
In prior reports, Collins said, out-sized CEO pay was often a red flag of bigger problems to come. The IPS has been putting a pay report together for 18 years. Among those whose leaders have made the high pay list in years past, only to have their businesses falter: Tyco, Enron and WorldCom.
(Reporting by Nanette Byrnes; Editing by Howard Goller and Todd Eastham)
(The following story was corrected to show Boeing paid CEO Jim McNerney $13.8 million, not billion)
Copyright 2011 Thomson Reuters.