Report Finds Corporations Prioritize Executive Luxury Over National Needs

By William Rice

The needs of the many are supposed to take precedence over the needs of the few. Or at the very least, over the desires of the few. But that’s evidently not how things are viewed from the executive suites of Corporate America.

ATF in partnership with the Institute for Policy Studies (IPS) has just released a report revealing that over a recent five-year span dozens of big profitable corporations paid more to their top executives than they paid in federal income taxes. 

To be fair, it would be hard for most of these firms—some with familiar names like Tesla, T-Mobile and Duke Energy—to pay their CEO, CFO and the next three best-compensated execs less than they paid in taxes. That’s because, despite being net profitable over the period 2018-22, they didn’t pay anything in taxes—and in fact got refunds instead. 

But the pay versus taxes contest wasn’t even close. The 35 firms in question collectively paid their big bosses $9.5 billion over those five years, while receiving collective federal tax refunds of $1.8 billion. 

You might well wonder how companies in such apparent financial distress that they owe little or nothing taxes, and in many cases get something back from the U.S. Treasury, would be in a position to pay their top executives so much money.  The answer is that the companies were not actually in financial crisis—the lopsided ratio of executive pay to federal tax payments reflects the priorities of the people who run some of our biggest corporations. 

Federal taxes pay to fix roads, teach kids, staff hospitals, and provide innumerable other vital services to a nation of 330 million people. Lavish executive pay packages further enrich a handful of already very wealthy people. For most of us, the choice is clear. Problem is, the choice is clear to a lot of corporations, too. It’s just the wrong choice. 

The ATF-IPS study drew its tax data from the recent report by the Institute on Taxation and Economic Policy (ITEP) on corporate tax avoidance in the first five years of the Trump-GOP tax law, which was enacted in 2017 and went into effect the following January.  Executive pay information came from the companies’ regular financial reports. IPS has been tracking excessive executive pay for years. 

Insufficient corporate taxation and over-the-top executive compensation are two sides of the same coin. Company bosses work hard to pay as little to the government, and as much to themselves, as possible.  They are assisted by compliant corporate boards, often packed with CEOs from other firms who are doing the same thing in their own companies. 

This self-serving cycle can only be broken with reforms to our tax system. We have to ensure big profitable corporations can no longer use a low corporate tax rate enhanced with loopholes and special breaks to pay little or nothing in taxes. And we have to stop subsidizing excessive corporate salaries. That means further restricting companies’ ability to deduct oversized salaries as well as better taxing the stock-based compensation that makes up so much of big bosses’ pay. President Biden has recently proposed just such reforms in his State of the Union address and accompanying budget. 

Now it’s time for Congress to act. Big profitable corporations should pay more to support the country that helps make them successful than they do to support the luxurious lifestyles of wealthy executives. It’s time our public policies upheld that simple truth.