In a startling revelation, top executives at some of America’s largest corporations have received more in pay than their companies paid in federal taxes. A recent report by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) sheds light on this concerning trend. Between 2018 and 2022, senior executives at 35 different firms, including household names like Tesla, Ford, Netflix, and T-Mobile US, received compensation worth more than the net tax payments of their respective employers.
The Numbers
The collective net federal income tax bill of these 35 companies was negative $1.72 billion over the five years. Yes, you read that right—they collectively received more money back from the government in refunds than they paid. Meanwhile, executive compensation for these senior executives stood at a staggering $9.49 billion during the same period.
Tesla’s High-Stakes Game
Among the companies highlighted in the report, Tesla stands out. The electric carmaker, led by billionaire tycoon Elon Musk, generated significant profits between 2018 and 2022. However, its net federal income tax balance over this period was a mere $1 million. How is this possible? Tesla carried forward excess losses from previous years, which offset its tax liability. Meanwhile, the company’s executive pay bill reached $2.5 billion, largely due to a 2018 compensation arrangement for Musk that was later struck down by a Delaware judge.
The Broader Picture
Tesla isn’t alone in this game. Other profitable corporations, including T-Mobile, American International Group (AIG), Ford, Netflix, and more, paid their top executives more than they paid in taxes. AIG, infamous for its role in the 2008 financial crisis, collected $17.7 billion in profits between 2018 and 2022. Yet, its top five executives received more than the company’s federal income tax payments. CEO Peter Zaffino alone made over $75 million in 2022.
The Connection Between Executive Pay and Tax Cuts
Lavish executive compensation packages and skimpy corporate tax payments are intertwined. Executives have a personal incentive to lobby for corporate tax cuts, as these windfalls often end up in their own pockets. The 2017 Republican tax law slashed the corporate tax rate from 35% to 21%, leaving loopholes untouched. As a result, CEOs continue to rake in hefty paychecks while corporations pay less in taxes.
Conclusion
President Joe Biden has called for big businesses to “finally pay their fair share.” It’s time to reevaluate the system that rewards the super-rich and leaves taxpayers footing the bill. As the debate over corporate taxes continues, the stark reality remains: CEOs are earning more than their companies contribute to the nation’s coffers.
