Thursday, June 05, 2014

You Pay Taxes? Guess Who Doesn't


Tuesday we were looking at the nexus of democracy-destroying avarice and the outsourcing of public services to private companies. I saw a report from our friends from Americans for Tax Fairness that reveals how WalMart was able to get around $104 million in taxes by handing out lavish "performance-based bonuses to top executives. How's that for a sound use of tax payer money? That's a government subsidy for the very richest-- combined with social interest loopholes that big corporations pay politicians to insert in appropriations bills. A full $40 million was clipped off their tax bill because of an outrageous bonus to recently retired CEO Michael Duke, who pocketed $116 million in stock options and other performance-based compensation. From Americans for Tax Fairness:
Walmart’s $104 million in tax savings was made possible by a loophole in U.S. tax law that allows companies to deduct unlimited amounts for performance-based compensation. The origin of this loophole was a 1993 reform intended to discourage excessive executive compensation by capping the amount corporations can deduct from their income taxes for executive pay at no more than $1 million per executive. But the law opened a massive loophole by exempting stock options and other so-called “performance pay” from the cap.

“When Walmart gets a $104 million tax break for giving its executives outrageous pay packages, the rest of us pick up the tab,” said Frank Clemente, executive director at Americans for Tax Fairness. “With this tax loophole, the bigger the executive bonuses the less Walmart pays in taxes. This is truly one of the most perverse loopholes of all time.”

“Subsidies for executive bonuses come at a huge social cost,” said Sarah Anderson, Global Economy Project Director at the Institute for Policy Studies. “The $104 million in tax subsidies for Walmart’s executive pay over the past six years would have been enough, for example, to cover the cost of providing free lunches for 33,000 children. What’s even more outrageous is that this is a company that pays its workers so little that many of them must rely on such public assistance programs.”

“When large corporations pay multimillion dollar bonuses to executives subsidized by taxpayers, then small businesses and families must pay more,” said Rep. Lloyd Doggett (D-TX), author of a bill in the U.S. House of Representatives that would close the CEO loophole, the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (H.R. 3970). “Publicly-held companies like Walmart can continue paying their executives multimillion dollar bonuses; just don’t expect the American taxpayer to pick up your tab. It makes no sense for working families to subsidize those making nearly 300 times the average worker.”

“While worker incomes stagnate and CEO pay is reaching new heights, the tax code should not be subsidizing runaway executive compensation,” said Sen. Richard Blumenthal (D-CT), who joined Sen. Jack Reed (D-RI) in introducing in the U.S. Senate the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S. 1476). “Companies do not deserve needless tax breaks and giveaways for lavish pay to their executives. Instead, the nation must invest in creating jobs and rebuilding a strong middle class. I will continue fighting to end this wasteful loophole.”
Doggett was unable to find even one Republican to co-sponsor his bill, although 20 Democrats signed on including stalwart progressives like Raul Grijalva, Barbara Lee, Jan Schakowsky, Jim McDermott, Carol Shea-Porter, Keith Ellison Jim McGovern. Although the Steny Hoyer/Steve Israel/Joe Crowley Republican wing of the Democratic Party is shunning the legislation with the Republicans, five top Pelosi lieutenants, George Miller, Louise Slaughter, Rosa DeLauro, Nydia Velazquez and Chris Van Hollen, also signed on as co-sponsors. Cantor buried the bill in Dave Camp's House Ways and Means Committee, where it will never be heard from again unless Pelosi fires Steve Israel as DCCC chairman and allows the Democrats to take back the House.

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