New Report Finds $20 Billion in Tax Subsidies for Excessive Executive Compensation - 8/25/08 - yubanet.com

New Report Finds $20 Billion in Tax Subsidies for Excessive Executive Compensation
15th Annual Labor Day 'Executive Excess' Report


Published on Aug 25, 2008 - 8:05:40 AM

http://yubanet.com/usa/New-Report-Finds-20-Billion-in-Tax-Subsidies-for-Excessive-Executive-Compensation.php

By: United for a Fair Economy

BOSTON
and WASHINGTON, Aug. 25 2008 - A new report finds that U.S. taxpayers
subsidize excessive executive compensation by more than $20 billion per
year.



The 15th annual 'Executive Excess' report from the Institute for Policy
Studies and United for a Fair Economy calculates the annual cost to
taxpayers of the following tax and accounting loopholes that encourage
excessive executive pay:



1. Preferential capital gains treatment of carried interest ($2.6 billion)

2. Unlimited deferred pay ($80.6 million)

3. Offshore deferred compensation ($2.1 billion)

4. Unlimited deductibility of executive compensation ($5.2 billion)

5. Stock option accounting double standard ($10.0 billion)



"These loopholes allow top executives to avoid paying their fair share
of taxes. As a result, ordinary taxpayers wind up picking up the bill,"
explains report co-author and IPS Associate Fellow Sam Pizzigati.



Members of Congress have attempted to plug each of these five
loopholes, but their efforts have stalled in the face of strong
opposition from corporate lobby groups.



The Presidential race is shining a brighter spotlight on the issue, as
both candidates have attacked excessive executive compensation on the
campaign trail. And yet the report points out that neither Obama nor
McCain has yet endorsed all the major reforms needed to eliminate
subsidies for executive pay.



"It's outrageous that our tax dollars are inflating executive
paychecks," says Institute for Policy Studies fellow Sarah Anderson, a
lead author of the annual Executive Excess reports for the past 15
years. "Surely in these troubled economic times we can find better ways
to spend our nation's wealth."



ADDITIONAL KEY FINDINGS:



CEO-WORKER PAY GAP: CEOs of large U.S. companies last year averaged
$10.5 million each in total compensation, 344 times the pay of the
average U.S. worker. The top 50 private equity and hedge fund managers
pocketed an average of $588 million each, or 19,000 times as much as
average workers.



IF CURRENT TRENDS CONTINUE: The gap between CEO and average worker pay
will grow wider since industries that are adding the most jobs have far
wider pay gaps than those that are losing the most jobs. Labor law
reforms are needed to help more workers exercise their right to bargain
collectively for fair compensation.



INDIRECT TAXPAYER SUPPORT FOR RUNAWAY PAY: Additional billions of
taxpayer dollars indirectly encourage excessive executive pay through
government contracts and bailouts that allow unlimited CEO
compensation. The report documents that 85 percent of top federal
contractors paid their CEOs over 100 times the pay of average U.S.
workers in 2007.



Authored by Sarah Anderson, John Cavanagh, Chuck Collins, Sam
Pizzigati, and Mike Lapham, Executive Excess 2008 is the 15th annual
CEO pay study by the Institute for Policy Studies and United for a Fair
Economy.



The report is available via the web here.



The Institute for Policy Studies is an independent center for
progressive research and education in Washington, DC (www.ips-dc.org).
Boston-based United for a Fair Economy is a non-partisan organization
that spotlights growing economic inequality (www.faireconomy.org).