Last year, 25 major U.S. corporations paid their CEOs more than they paid in federal income taxes, a new study has found, showing once again that the system works—for the 1 percent.
In its annual report, “Executive Excess,” the Institute for Policy Studies researched the 100 U.S. corporations that paid the most in chief executive compensation. The study found that at 25 of these corporate giants the bill for CEO compensation actually ran higher than the company’s entire federal corporate income tax bill.
The report also confirmed the suspicions of the American people that executive pay has not suffered during the recession. Even though unemployment continues to erode the living standards of the working class, top executive pay levels are almost back to their pre-recession levels.
Among the nation’s biggest firms, those included in the S&P 500 stock index, CEO pay last year averaged $10,762,304, up 27.8 percent over 2009. In contrast, average worker pay in 2010 averaged $33,121, up just 3.3 percent over the previous year.
Two main reasons why the government does not have the money to fund infrastructure and social programs are the bloated military budget, which throws away billions on wars and preparations for wars, and corporate tax avoidance, which has sent federal revenues plummeting.
In 1945, U.S. corporate income taxes contributed 35 percent of all federal government revenue. This year, corporate income taxes will make up just 9 percent of federal revenue.
Large corporations are now taxed at a lower rate than they were 50 years ago. In addition, transnational corporations avoid taxes through the use of offshore tax havens. According to IPS, “these havens are speeding the transfer of wealth out of local communities and the global south into the bank accounts of the planet’s wealthiest and most powerful.” In fact, the two biggest banks that got bailed out—Citigroup and Bank of America—make liberal use of tax havens. Citigroup operates 427 subsidiaries in tax havens, and Bank of America 115.