Tax Dollars Subsidize CEO Pay
|August 29, 2012||Posted by Jeffery J. Smith under News|
Government Spends More on Whom? CEOs, Really?
by Sarah Anderson, Chuck Collins, Scott Klinger & Sam Pizzigati, by Thinking by Numbers, and by The King Act
How Our Tax Dollars Subsidize Exorbitant Executive Pay
Tax dollars flow from average Americans to the kingpins of America’s private sector. They’re subsidizing, directly and indirectly, the mega-million paychecks that go to the top executives at our nation’s biggest banks and corporations. Wages for average Americans continue to stagnate. Pay for top executives continues to soar.
One key reason: our nation’s tax code. The fewer dollars these corporations pay in taxes, the more robust their eventual earnings and the higher the “performance-based” pay for the CEOs who produce them.
Among our findings:
* Of last year’s 100 highest-paid U.S. corporate chief executives, 26 took home more in CEO pay than their companies paid in federal income taxes.
* The CEOs of these 26 firms received $20.4 million in average total compensation last year. That’s a 23 percent increase over the average for last year’s list.
What can be done to end today’s incredibly gross pay divide between top executives and average workers?
JJS: Because wealth creates envy, some reformers want to take it away via taxes and spend it on things they think are good for the poor. One thing wanna-be reformers can do is to keep peeling the onion. It’s not just loopholes that enrich a handful of CEOs. It’s also outright gifts from public treasuries — and much more.
Government Spends More on Corporations Or the Poor?
In 2006, about $59 billion was spent on traditional social welfare programs. $92 billion on corporate subsidies. For 2002, the Cato Institute estimated that $93 billion were devoted to corporate welfare. This is about 5 percent of the federal budget.
To clarify what is and isn’t corporate welfare, a “no-bid” Iraq contract for Halliburton would not be considered corporate welfare because the government technically receives some good or service in exchange for its expenditure, despite findings of $1.4 billion of overcharging and fraud from the Pentagon’s Defense Contract Audit Agency (DCAA).On the other hand, the $15 billion in subsidies contained in the Energy Policy Act of 2005, to the oil, gas, and coal industries, would be considered corporate welfare because no goods or services are directly returned to the government in exchange for these expenditures.
Tax breaks targeted to benefit specific corporations could also be considered a form of welfare. Tax loopholes force other businesses and individual taxpayers without the same political clout to pick up the slack and sacrifice a greater share of their hard-earned money. However, to simplify matters, we’ve only included financial handouts to companies in our working definition of corporate welfare.
Whenever corporate welfare is presented to voters, politicians say that they’re stimulating the economy or helping struggling industries or creating jobs or funding important research. But deducting from the paychecks of working people reduces their ability to buy the things they want or need. This decrease in demand damages other industries and puts people out of work.
The largest fraction of corporate welfare spending, about 40%, went through the Department of Agriculture, most of it in the form of farm subsidies. The opposite of the rule used in the social welfare system’s welfare system, in the corporate welfare system, the more money and assets you have, the more government assistance you get. The absolute largest 7% of corporate farming operations receive 45% of all subsidies.
The government gives tons of favors to the largest corporations, increasing the significant advantage they already have over smaller competing businesses. Wal-Mart receives hundreds of millions of dollars of subsidization by local governments throughout the country. A Wal-Mart distribution center in Macclenny, Florida received $9 million in government subsidies in the form of free land, government-funded recruitment, and training of employees, targeted tax breaks, and housing subsidies for employees allowing them to be paid significantly lower wages.
The final totals of $59 billion for regular welfare and $92 billion for corporations means the government spends roughly 50% more on corporate welfare than it does on these particular public assistance programs.
JJS: As long as politicians are going to spend money on some people, they may as well spend money on all people, and do so equitably..
The King Act
We the People of the United States of America Mandate President Obama and Congress to immediately implement The Reverend Martin Luther King, Jr. Memorial Act for Monetary Reform and the Citizen’s Dividend.
The Citizen’s Dividend is the policy declaring every citizen a shareholder in the nation and requiring the U.S. Department of Treasury to disburse equal tax free dividends to every citizen annually.
Monetary Reform requires the U.S. Congress to repeal the Federal Reserve Act, abolish all fractional reserve banking or other private money creation schemes, authorize the U.S. Treasury to repossess U.S. assets held by the Federal Reserve Banks and retire the debt. The restored money creation utility will be used to inject new currency into the economy only through the Citizen’s Dividend.
America’s rapidly advancing mechanization will render many more citizens unproductive.
Thomas Paine also reasoned that all people have an inalienable right to a share in the common wealth of their country. This Mandate is inspired by Dr. King’s last message to us, which is truer today then 1967 when it was published in Where Do We Go From Here: Chaos or Community?
JJS: While it’s nice to have people use “citizens’ dividend” (a phrase I coined), it’s even nicer if they use the phrase correctly. Both King and Paine had the right idea. That is, you don’t just make up money that never existed before and give it to people (enabling inflation), you pay a true dividend, from a true social surplus. What pile of money is our common wealth? Actually, it’s not a pile so much as it is a flow. It’s all the money that society spends for the nature it uses, for land such as parcels beneath buildings and for resources such as oil in the ground, not to mention the value of the airwaves and other natural gifts. Government could redirect that spending into everyone’s pockets via a geonomic system of land dues in and “rent” dividends out.
Also, monetary reformers need not make us choose between letting central bankers control the money supply on one hand or on the other letting central politicians issue new funds and destroy old notes. No need to go from frying pan to fire. Instead, local banks, credit unions, co-ops, even local governments, could create any needed new money by endowing new members to their organization with a small sum of “freshly minted coin”. These local organizations could federate in order to faciliatate trade and travel over broader regions. The role of government would be to establish standards that any currency — even their own — would have to meet in order to be declared stable and acceptable as legal tender.
Once people do get their fair share of Earth’s worth, then they’ll be sufficiently endowed to afford social services of their own choosing. Politicians will lose their excuse to control the public purse. And once government shifts its revenue raising from taxing anything that moves to just using fees and dues to guide only socially-generated values into the public treasury — Paine urged shifting taxes from individual efforts to a region’s land and King cited Henry George, famous for his Single Tax on land — then politicians will lose their excuse for carving out loopholes. To win these geonomic reforms, the effort of petitioning does make a certain sort of sense.
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