CEOs rake it in while their corporations dodge taxes.

Written By: - Date published: 11:51 am, September 3rd, 2011 - 14 comments
Categories: employment, tax - Tags:

Guns don’t kill people, the old saw goes. People do. By the same token, corporations don’t dodge taxes. People do. The people who run corporations. And these people — America’s CEOs — are reaping awesomely lavish rewards for the tax dodging they have their corporations do. A report from the U. S. Institute of Policy Studies shows that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes.

Some of the corporations have raised questions about the methodology used by the Institute. The Institute’s response is here. Interestingly, one of the issues raised by the corporations is that the tax results are the results of “accounting adjustments and settlements.” In rebutting this, the Institute argues that clearer corporate tax reporting is in the interest of all.

The need for  clearer corporate reporting in New Zealand has also been raised today by Brian Gaynor in a Herald article titled “Changing the scores unfair to investors” .

Gaynor says:

Company directors are beginning to look like golfers who go around in 85 but put a 76 on their card because that is what they normally shoot.

and:

There can also be serious conflicts of interests if senior executives are paid on the basis of normalised, rather than audited profits. There is clearly a strong incentive for executives to focus on the higher normalised profits if their bonuses are based on these figures.

Nine of the 19 companies had normalised earnings higher than their audited figures.

Telecom reported normalised profits of $388 million, 133.7 per cent higher than the audited figures of $166 million.

That might explain Reynolds’ pay.

Also in an article in today’s Guardian discloses that the previous year’s report indicated that some of the best paid CEOs are the ones that lay off the most workers. The authors calculated that the CEOs of the 50 companies that laid off the most workers since the onset of the economic crisis took home 42% more pay in 2009 than their peers on the Standard & Poor’s 500 index.

14 comments on “CEOs rake it in while their corporations dodge taxes. ”

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  1. Herodotus 1
    3 September 2011 at 12:29 pm

    Every feel as if the elite are giving us the bird !!!!
    Things like QE 1,2 & 3 were to save what ? The economy or divert from public funds to a elite few.
    http://www.theage.com.au/national/1000-jobs-gone-1bn-lost-executives-get-3m-20110823-1j8ga.html

  2. Herodotus 2
    3 September 2011 at 12:51 pm

    Also this – Pity we have issues with teaching morality now.
    And for the puritians I know above should be corrected to “an elite” edit function failed me !! 🙂
    http://articles.moneycentral.msn.com/Investing/CompanyFocus/ceos-cut-more-jobs-make-more-money.aspx

  3. Lanthanide 3
    3 September 2011 at 1:17 pm

    What’s the difference between normalised and audited profits?

    • mikesh 3.1
      3 September 2011 at 3:03 pm

      “Normalized profits” presumably exclude profits (or losses) resulting from what are deemed to be one-off events.

      • tc 3.1.1
        3 September 2011 at 8:25 pm

        Explain please….one off events are abnormal below line events that are reported and validated by auditors like lions gain on the failed property deal on their Newmarket site as the deposit becomes profit as they still have the asset.
        Sounds like operational profit before the real world kicks in and halves it with the financing and write downs but I’ve never heard that term before….normalized, maybe more canny bargaining on Reynolds part…..ha ha ha all the way back home suckers.

        • tc 3.1.1.1
          3 September 2011 at 8:43 pm

          Done some surfing FFS normalized is effectively adjusting it to account for economic cycles…..cycles as volatile as a teenagers mood, which assume what goes down comes back up…..hands up who think were all going back to the days of old.
          Adjusting a measurable profit ( you know based on actual revenue and costs….remember those) for this isn’t accounting it’s yet another device to make black white and magic up profit where it didn’t exist….enron/ world com etc.
          See how far you get taking your normalized personal situation to the bank for a mortgage extension.

  4. Nick C 4
    3 September 2011 at 1:35 pm

    Yep: Including the newly self annointed hero of the ‘rich should pay more tax’ brigade: http://www.newsmax.com/InsideCover/buffett-irs-back-taxes/2011/09/01/id/409520

    • aerobubble 4.1
      3 September 2011 at 2:35 pm

      funny but there’s more money to be made if the rich pay more tax. Its
      reminds me of the highwayman who is hired by the state to keep the
      roads free to travel unmolested. Taxing the wealthy more will make
      the capitalist roads free to travel down unmolested.

    • crashcart 4.2
      4 September 2011 at 11:41 am

      What makes me laugh about that article is how quickly the wealthy in America swung into action to discredit this guy. They completely ignore the fact that the reason it is so easy to find this sort of dirt on a company or individual avoiding taxes is because there are a large number of them who think it is their responsability to avoid paying tax. When it comes to running a buisness if the CEO isn’t doing that then he won’t be the CEO for very long.

      These people are so deluded about it they think it makes them look good to say “hay look he’s trying to not pay tax so why should I?”

      These are not the people who are the future of society.

  5. Bill 5
    3 September 2011 at 2:08 pm

    And in related news, Goldman Sachs provided its clients (or some of them) with info and strategies to cash in on currency crises. Bear in mind that Goldman Sachs works with some of the governments whose economies its strategies would impact on.

    http://www.independent.co.uk/news/business/news/goldmans-memo-on-how-to-cash-in-on-euro-crisis-2347796.html

    So firstly, our governments help these bastards in spite of what we were saying.

    Secondly, our governments rifle our futures to pay for that help.

    Thirdly, those bastards now invent further dodgy dealings to put more pressure on economies and by extention our future prospects

  6. Afewknowthetruth 6
    3 September 2011 at 8:33 pm

    Humans began to abandon the hunter-gatherer lifestyle around 10,000 years ago.

    One of the immediate effects ‘civilisation’ was the establishment of hierachical societies in which the fruits of the labour of many were transferred to the few at the top, who were generally sociopaths who had the weapons and decided what the laws would be.

    Little has changed over the past 10,000 years except that civilisation has caused massive population overshoot and has degraded the Earth to the point that civilisation will not be maintained for much longer.

    Over the next few years the monetary system will melt down, industrialisation will grind to a halt, and those at the top who are currently managing to steal more than their fair share will either commit suicide or be lynched, or will establish overtly fascist feudal states.

    We will have a better idea where things are headed and how quickly at the end of the year, when the markets will have collapsed a little more and ordinary people all around the world will be suffering a bit more.

    • Draco T Bastard 6.1
      4 September 2011 at 12:48 am

      Little has changed over the past 10,000 years except that civilisation has caused massive population overshoot…

      Of course it’s caused population overshoot. The more people there are to exploit the more the psychopaths can appropriate from them.

      …and those at the top who are currently managing to steal more than their fair share will either commit suicide or be lynched, or will establish overtly fascist feudal states.

      Well, I’m sure the first option is out, the second option will probably prevail at some point in the future but the third is already in progress. Selling of state assets and bailouts of financial institutions is proof of that.

    • johnm 6.2
      4 September 2011 at 1:14 am

      Hi AFKTT
      In support of what you say is this http://www.countercurrents.org article explaining the gravity of the oil supply terminal decline set to happen from 2012 onwards.
      Apologies to moderator such an important comment have copied it in total:

      [deleted]

      [lprent: Has bugger all to do with the post and was an excessive cut’n’paste. I’d have left the link – but you didn’t provide one. ]

  7. Ianupnorth 7
    4 September 2011 at 1:41 pm

    Where do I claim my syndication fee? I am sure I posted this in open mike on Thursday?