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Wednesday, November 19, 2014

Seven of the country’s 30 largest corporations paid more to their CEOs than they did in taxes last year

"Of course, if these companies were doing anything clearly illegal, this would be a matter for the IRS to investigate rather than a policy question for us to consider" 

        The tax breaks for Boeing, headed by James McNerney, far right, are no laughing matter.

"The rift between tax burden and executive pay for big companies is “getting worse”, says Scott Klinger, director of revenue and spending policies at the Center for Effective Government. Since the Center for Effective Government and the Institute for Policy Studies published their first report in 2010, the average compensation of the CEOs they single out has climbed from $16.7m to almost $32m. Meanwhile, corporate profits zoom higher, while the effective tax rate, in absolute terms and as a percentage of GDP, languishes near historic lows.

That’s not all. There’s a widening rift between corporate profits and the jobs they create. After tax, corporate profits last year accounted for 10% of GDP, higher than ever recorded. The contribution of employee incomes to GDP has been sliding steadily lower since the 1970s, however, and Klinger doesn’t see this as a coincidence.  Indeed, he notes that most of the corporations whose names appear on his list – nearly all of which are profitable – have been nearly as active reducing their workforce over the past year as they have been trying to cut their tax burden. Washington state gave Boeing $8.7bn in tax breaks to ensure that the 777x was built in the state, but the aerospace company has been shifting engineering jobs to lower-wage areas, saving the company $100m a year and resulting in layoffs. Citigroup and JP Morgan Chase – both on “the list” – have slashed jobs in the past few years. Ford has been closing down plants and axing jobs, too."