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Top CEOs Earn More Than Their Firms Pay in Taxes

Twenty five CEOs of America's top companies earned more money than their companies paid in taxes last year, according to the Institute for Policy Studies' Executive Excess report. The think tank "researched the 100 U.S. corporations that shelled out the most last year in CEO compensation. At 25 of these corporate giants," the Institute "found the bill for chief executive compensation actually ran higher than the company's entire federal corporate income tax bill."

Companies on the list include Verizon (VZ), International Paper (IP), Prudential Financial (PRU), GE (GE), BNY Mellon (BK), Boeing (BA), Marsh & McLennan (MMC), Stanley Black & Decker (SWK), Chesapeake Energy (CHK), and Ebay (EBAY). (See the gallery below for the report's full list of compensation and refund details.)

The report also challenged the gap between CEO pay and those of the average workers at the companies they run. "The gap between CEO and average U.S. worker pay rose from 263-to-1 in 2009 to 325-to-1 last year."

The report was particularly hard on companies that use tax-avoidance techniques such as money held "off shore" to "accelerate depreciation." GE has already been criticized in the press, particularly by The New York Times, for the level of taxes it has paid in recent years.

The Institute for Policy Studies report says that Congress must take action to close the tax loopholes that allow companies to pay low taxes in comparison to their earnings and even listed potential government remedies to corporate tax dodging. They include: closing "numerous loopholes that facilitate tax dodging through abuse of tax havens" and mandating "that corporations take the same deduction for stock-based executive compensation on their tax returns as they do in shareholder financial reports." Legislation has already been introduced in Congress on both matters.

The Institute also said that laws which give shareholders little voice in corporate governance shield CEOs from questions about pay packages. But because the companies are public, one of the most important opinions should be those of the shareholders. GE shares, for example have underperformed the S&P 500 during the last year. But, shares in eBay and Verizon have done better by the same measure. The stockholders of the firms that did outperform the market may not care about what the companies in which they own shares paid to Uncle Sam.


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