Dozens of major US companies shelled out more money to top executives than they paid in federal taxes: report
Dozens of big U.S. companies paid their top executives more money than they paid in federal taxes between 2018 and 2022, a new analysis found.
(The Hill) — Dozens of big U.S. companies paid their top executives more money than they paid in federal taxes between 2018 and 2022, a new analysis from the progressive Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF) found.
The report comes as President Biden has proposed raising the corporate tax rate to 28 percent, up from the 21 percent rate set in 2017 by his predecessor and presumptive 2024 nominee former President Trump, under the Tax Cuts and Jobs Act.
The analysis by IPS and ATF, which looks at tax and compensation for the first five years after Trump’s tax cuts took effect in 2018, aims to connect lucrative compensation packages big businesses offer their top executives to the lower tax rate.
Sixty-four companies paid their top five executives more than the business paid in federal taxes during at least two of those five years, according to the analysis. Of those companies, 35 — including household names such as Ford and Tesla — paid their top executives more than their next tax payments over all five years.
Compensation for the top executives at those 35 companies totaled $9.5 billion over the five-year period, while their combined federal income taxes totaled negative $1.8 billion, the analysis found.
“Both kinds of corporate misbehavior — underpaying taxes and overpaying executives — ultimately make working families the victim through smaller paychecks and diminished public services,” said David Kass, executive director of Americans for Tax Fairness.
Many corporations pay lower tax rates than those set under the Trump tax bill by taking advantage of a myriad of tax breaks and loopholes. The average effective tax rate for big, profitable companies fell to 9 percent in 2018 from 16 percent in 2014, according to a 2022 analysis by the Government Accountability Office.
It is highly unlikely that Biden’s proposal, which also called for higher taxes on individuals whose net worth exceeds $100 million, would pass the Republican-controlled House.
The president’s plan also drew sharp criticism from the U.S. Chamber of Commerce, the massive pro-business lobbying group that spent nearly $70 million on federal lobbying in 2023, more than any other interest in Washington.
Neil Bradley, the organization's chief policy officer, told The Hill that while they had not seen the study, “it sounds like something done by people with a political agenda who don't understand how our tax system works.”
"Companies pay taxes on their profits after their expenses. If a company doesn't make a profit, or if it reinvests its earnings into building a new plant or paying employees higher wages, then there are no profits after expenses on which to be taxed," Bradley said.
“Of course, paying your employees good wages and building new factories are positive things we want employers to do,” he added.
The Hill has reached out to Ford and Tesla for comment.
The question of how to tax wealthy corporations and individuals is set to play a central role in the upcoming presidential election, as many provisions in the 2017 tax law are set to expire in 2025.
During his State of the Union address last Thursday, Biden said he wants to raise the corporate tax rate “so every big corporation finally begins to pay their fair share.”
“The way to make the tax code fair is to make big corporations and the very wealthy finally pay their share,” Biden said.