Decline of Corporate Taxes & Subsequent Rise of CEO Pay

Corporate Traitors:
The Decline of Corporate Taxes & the Subsequent
Rise of CEO Pay

By Scott Klinger, CFA, United for a Fair Economy

Download Report

Executive Summary

“That’s un-American!” is the cry heard whenever the unwritten code of American values is breached. Fairness, compassion and equal opportunity are hallmarks, and although you might not be able to recite chapter and verse of the whole code, you know when it is broken.

On this the 204th death anniversary of one of America’s most famous traitors, Benedict Arnold, it’s time to consider whether some of America’s largest corporations that pay little or no taxes, have indeed become traitors. Some of the un-American behaviors exhibited by American corporations in recent years include:

• Full retreat from their obligation to pay their fair share of the cost of
government. At the close of the Second World War, U.S. corporations paid half
the cost of the federal government; by 2003 the corporate share of government revenues shriveled to just 7%.1

• Lobbying Congress for tax policy that grossly abuses the intended collection of taxes for the good of the entire nation

Some companies, however, stand out. In 2003, ten large U.S. corporations listed at the end of this report each earned more than $1 billion in pre-tax profits, yet paid no federal income taxes:

• Collectively these ten Benedict Arnold companies earned $30 billion in profits and paid their CEOs $126 million. The $12.6 million average pay of the CEOs
of these firms was 51% higher than the $9.6 million received by the average
large-company CEO as reported by Business Week.2

• If these ten firms paid taxes at the 35% statutory tax rate, they would have contributed more than $11.7 billion to the federal treasury instead of extracting $3.3 billion in refunds, a $14 billion budget swing from just ten companies!