advertisement
As our national debt reaches new heights, some elite wealthy taxpayers get a pass when it comes to footing their share of the bill:
Those lavishly paid CEOs in their corner offices.
Thanks to five tax breaks cooked up by their friends in Washington, D.C., top executives and their companies enjoy at least $20 billion a year in income-tax breaks that are unavailable to the rank and file, according to a new study from the Institute for Policy Studies and United for a Fair Economy.
It's hard to figure out exactly who gets how much because tax laws and the manner in which CEO income is reported are so complex. But one of these breaks will probably save Oracle (ORCL, news, msgs) more than $190 million this year on stock options paid to CEO Larry Ellison. Entertainment group IAC (IACI, news, msgs) likely saved $64 million last year because of options cashed in by Chairman and CEO Barry Diller, and Countrywide Financial probably saved more than $42 million last year on options granted to then-chief Angelo Mozilo.
The cost to you, me and ordinary workers around the country is easier to figure out. Every household filing a return pays about $192 extra in taxes to cover these breaks, by my calculation.
For a lot of Americans, that's real money. But not for this elite group.
Pay continues to soar
Average annual CEO pay at S&P 500 ($INX) companies hit $10.54 million last year, or 344 times the pay of the average American worker. Thirty years ago, CEO pay was only 30 to 40 times the pay of the average worker.Those numbers, and the $20 billion in estimated annual tax breaks for bigwigs, come from the study, released just this week and called "Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay."
More from MSN Money
"At a time where so many working people are trying to hold on to their houses, keep gas in the tank and pay for college tuition, it's outrageous that billionaires are gaming the tax system so they not only pay a lower tax rate than the firemen and janitors who are taking care of them, but they actually get subsidies to do it," says Stephen Lerner, the director of the Private Equity Project of the Service Employees International Union.
"These tax breaks help create and enrich an elite class in this country. That's not what America is about," laments Rich Ferlauto, the director of pension and benefit policy for the American Federation of State, County and Municipal Employees, or AFSCME. "It doesn't make sense, but that's the way the tax system works."
Video on MSN Money
Should Lehman's CEO be fired?Roben Farzad of BusinessWeek and Dan Colarusso of Portfolio.com discuss whether Lehman Bros. CEO Dick Fuld should be ousted.
"Tax loopholes are in the eye of the beholder," says Chris Edwards, the director of tax policy at the Cato Institute, a libertarian think tank in Washington, D.C. "What are identified as tax loopholes are often in there for legitimate policy reasons. It's not like businesses and executives have the run of Capitol Hill and they are sticking in all sorts of unjustified stuff."
Where the breaks go
Who gets the benefit of this tax bonanza? Assuming that CEOs who make the most get the biggest subsidies, these would get the lion's share:- Oracle chief Ellison. He tops the list of the highest-paid CEOs, with a 2008 salary of $84.6 million, according to a tally by The Associated Press.
- Merrill Lynch (MER, news, msgs) chief John Thain. He was the highest-paid CEO in 2007, at $83 million.
- CBS (CBS, news, msgs) chief Les Moonves. He was a runner-up to Thain last year, when he made $67.6 million.
Ellison's company has been on a roll, with its stock up 80% in the past three years. Merrill's stock has plunged since the start of 2007 amid the mortgage mess, while CBS is down almost 50% from highs of mid-2007.
Continued: CEOs who make the most on stock options
Rate this Article
High