September 2, 2011--Class Warfare: CEO Pay
On occasion I plan to write about the widely underreported class warfare that is underway in America.
We need to know about this struggle since average people are losing. Beyond that, so is the United States.
The emergence of an oligarchy in this country will undermine our place in the world and ultimately our historic form of capitalism, which, in the past, was the route to the middle class for hundreds of millions of hardworking Americans.
The latest evidence of this struggle is the report from the Institute for Policy Studies which found that of America's 100 highest-payed CEOs, 25 took home more in pay than their companies paid in federal taxes. (The full study is linked below.)
And we are talking about highly profitable companies such as General Electric, Boeing, and eBay. By utilizing a plethora of tax loopholes, tax shelters, and other tax-avoidance strategies, these companies on average garnered more than $400 million a year in tax benefits. In some cases, this meant that they paid no federal taxes whatsoever.
In the meantime, their CEOs, again on average, were paid more than $16 million in annual compensation, which was substantially higher than the $10,8 million which was the average amount of taxes paid by all companies included in the Standard & Poor's 500 stock index.
A couple of examples--
Verizon earned $11.9 billion in pre-tax profits in 2010 but managed to receive a tax refund of $705 million. Their CEO, Ivan Seidenberg, received $18.1 million in compensation. Not bad.
eBay reported a pre-tax profit of $848 million, received a refund of $183 million, and its CEO, John Donahoe, collected $12.4 million.
It is clear why these corporate patriots did so well--by specializing in manipulating the system that they helped shape through the machinations of their lobbyists so that they can avoid taxation; and by laying off people, they were able to pad their companies' bottom lines without doing anything expansive or innovative.
In addition, though these CEOs were not asked to put anything personally at risk (the way capitalists are supposed to do) they reaped the benefits that have been traditionally reserved for captains of industry who invented things, who developed new services, and stuck their necks out, often by investing in themselves. If things worked out, they profited; if not, they took the hit.
That's the way capitalism is claimed to work. That's the capitalism we learned about in public school that was responsible for making American the world's greatest economic power. But in truth, these days, at the highest levels, it's more about minimizing risks; rigging the system; and, regardless of how things turn out, for the CEOs to be protected by golden parachutes.
I wonder what Thomas Edison and Henry Ford would think.
We need to know about this struggle since average people are losing. Beyond that, so is the United States.
The emergence of an oligarchy in this country will undermine our place in the world and ultimately our historic form of capitalism, which, in the past, was the route to the middle class for hundreds of millions of hardworking Americans.
The latest evidence of this struggle is the report from the Institute for Policy Studies which found that of America's 100 highest-payed CEOs, 25 took home more in pay than their companies paid in federal taxes. (The full study is linked below.)
And we are talking about highly profitable companies such as General Electric, Boeing, and eBay. By utilizing a plethora of tax loopholes, tax shelters, and other tax-avoidance strategies, these companies on average garnered more than $400 million a year in tax benefits. In some cases, this meant that they paid no federal taxes whatsoever.
In the meantime, their CEOs, again on average, were paid more than $16 million in annual compensation, which was substantially higher than the $10,8 million which was the average amount of taxes paid by all companies included in the Standard & Poor's 500 stock index.
A couple of examples--
Verizon earned $11.9 billion in pre-tax profits in 2010 but managed to receive a tax refund of $705 million. Their CEO, Ivan Seidenberg, received $18.1 million in compensation. Not bad.
eBay reported a pre-tax profit of $848 million, received a refund of $183 million, and its CEO, John Donahoe, collected $12.4 million.
It is clear why these corporate patriots did so well--by specializing in manipulating the system that they helped shape through the machinations of their lobbyists so that they can avoid taxation; and by laying off people, they were able to pad their companies' bottom lines without doing anything expansive or innovative.
In addition, though these CEOs were not asked to put anything personally at risk (the way capitalists are supposed to do) they reaped the benefits that have been traditionally reserved for captains of industry who invented things, who developed new services, and stuck their necks out, often by investing in themselves. If things worked out, they profited; if not, they took the hit.
That's the way capitalism is claimed to work. That's the capitalism we learned about in public school that was responsible for making American the world's greatest economic power. But in truth, these days, at the highest levels, it's more about minimizing risks; rigging the system; and, regardless of how things turn out, for the CEOs to be protected by golden parachutes.
I wonder what Thomas Edison and Henry Ford would think.
posted by Steven Zwerling at
5:20 AM
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