Original Link: http://www.guardian.co.uk/commentisfree/cifamerica/2011/sep/13/american-middle-class-poverty
By Paul Harris
The heart of our political malaise is that the middle class, so long a powerhouse of US prosperity, is being crushed as never before
No one can accuse the candidates on stage at Monday's Republican debate of not discussing a broad range of topics. They talked about big issues like social security, the wars in Iraq and Afghanistan, energy independence, repealing healthcare reform and the need for job creation. And they talked about small issues for political point-scoring: like HPV vaccines for girls.
But missing from the debate – and, in fact, much current discussion of America's politics – is the single biggest issue facing the country: the destruction of the American middle class. For stories on how America is bifurcating into haves and have-nots, with precious little in between, you have to dive behind the headlines of the latest Washington political bun-fight and find the devil in the details.
Take a story that appeared in the Wall Street Journal Monday. The tale is nominally one about marketing strategy and it looks at how giant firm Procter & Gamble sells its household goods to its customers. But the picture that emerges is terrifying. P&G, it transpires, is cutting back on marketing to the disappearing middle classes, instead selling more and more to either high-income or low-income customers and abandoning the middle. Other big firms, like Heinz, are following suit. The piece reveals there is even a word for this strategy, helpfully coined by Citibank: the Consumer Hourglass Theory – because it denotes a society that bulges at the top and bottom and is squeezed in the middle.
The story contains some scary figures, such as the fact that the net worth of the middle fifth of American households has plunged by 26% in the last two years. Or that the income of the median American family, adjusted for inflation, is lower now than in 1998.
Or look at a story in the New York Times Tuesday. It starkly shows how the plight of the American working person has worsened. Solid jobs that once provided a secure grasp on middle class aims (a house, college for the kids, a retirement) have changed to become low-wage ones. It looks at the situation of some Detroit auto-workers, pointing out that new hires can find themselves working opposite long-term colleagues who do similar jobs yet earn twice as much. The system is called a "two tier" wage structure.
Perhaps that system can be justified as an emergency measure to keep Detroit's auto-industry alive and help it survive the current tough times. But, like the Consumer Hourglass Theory, it actually looks far more like the permanent shape of things to come. American society is bifurcating, squeezing the middle class out of existence. The ranks of the poor and low-income earners are growing and the rich are doing just fine – and no one is talking about it, much less doing anything about it.
The black-and-white facts of the case should stun Americans on both sides of the political divide. At the start of this week, Vermont Senator Bernie Sanders published a report on poverty called "Is Poverty a Death Sentence?" It showed that in 313 counties in America, life expectancy for women has actually declined over the last 20 years. It showed six million more people have fallen into poverty since 2004.
Indeed, this week the US Census Bureau has released a survey showing that one in six Americans now live in poverty: the highest number ever reported by the organisation. It also showed that real median household incomes dropped 2.3% in 2010 from the year before, reflecting the decline of the middle class. At the same time, the richest 20% of the US population now controls 84% of the wealth. In fact, so staggeringly unbalanced has America become that the richest 400 American families have the same net worth as the bottom 50% of the nation.
I do not care if you are a Tea Party activist or a Socialist party USA organiser, you should be able to agree on one thing, at least: this is unsustainable. Something has to give. But no one in the current political system looks they have an answer.
Sunday, September 18, 2011
At Strategy Seminar, Koch Refers To Obama As ‘Saddam Hussein’ To Be Defeated In ‘Mother Of All Wars’
Original Link: http://thinkprogress.org/politics/2011/09/06/312067/at-strategy-seminar-with-wealthy-guests-charles-koch-referred-to-obama-as-a-saddam-hussein-to-be-defeated/
By Zaid Jilani
Today, Bradblog’s Brad Friedman reports for Mother Jones about a secret meeting that the right-wing oil billionaire Koch brothers held at a Colorado resort in June with hundreds of wealthy donors who plotted to finance right-wing causes and elect conservative politicians.
Friedman reports that audio he obtained from the conference reveals that Charles Koch alarmingly referred to President Obama as “Saddam Hussein,” saying that the right had to fight the “mother of all wars.” He rallied his guests to donate millions of dollars to help defeat Obama and boost other right-wing causes. Listen to audio of these remarks obtained by Friedman:
Koch also read off a list of 32 donors who gave a million dollars or more to his efforts to build up far-right infrastructure. Mother Jones’s Gavin Aronsen notes that this list was largely corroborated by ThinkProgress research published in 2010. The list includes financiers such as Charles Schwab of the Charles Schwab Corporation and John Templeton, Jr. of the powerful John Templeton Foundation.
By Zaid Jilani
Today, Bradblog’s Brad Friedman reports for Mother Jones about a secret meeting that the right-wing oil billionaire Koch brothers held at a Colorado resort in June with hundreds of wealthy donors who plotted to finance right-wing causes and elect conservative politicians.
Friedman reports that audio he obtained from the conference reveals that Charles Koch alarmingly referred to President Obama as “Saddam Hussein,” saying that the right had to fight the “mother of all wars.” He rallied his guests to donate millions of dollars to help defeat Obama and boost other right-wing causes. Listen to audio of these remarks obtained by Friedman:
Koch also read off a list of 32 donors who gave a million dollars or more to his efforts to build up far-right infrastructure. Mother Jones’s Gavin Aronsen notes that this list was largely corroborated by ThinkProgress research published in 2010. The list includes financiers such as Charles Schwab of the Charles Schwab Corporation and John Templeton, Jr. of the powerful John Templeton Foundation.
Fallout From Chris Christie-Koch Brothers Exposé
Original Link: http://motherjones.com/mojo/2011/09/charles-koch-barack-obama-saddam-hussein-chris-christie
By Gavin Aronsen
Unless you've been living in a hole, you've probably heard at least something about a secret confab near Vail, Colorado, where the billionaire industrialist Charles Koch referred to the 2012 elections as "the mother of all wars." (He may or may not have been referring to President Obama when he evoked Saddam Hussein—more on that below—but he certainly used Saddam's battle slogan to characterize efforts by him and his brother to evict Obama from the White House.)
In the week since we ran Brad Friedman's two-part series, which publicized audio from inside the big event and broke the news that New Jersey Gov. Chris Christie had delivered the keynote speech (a fact Christie had kept hidden from New Jersey voters), dozens of news outlets have picked up the story, and even taken it further. Here are a few highlights.
Christie "mentally deranged," says New Jersey Democratic Assembly leader: In the audio from his June 26 keynote speech, Christie boasts about backroom dealings with two state Democratic leaders—Senate President Steve Sweeney and Assembly Speaker Sheila Oliver—to pass a bill forcing public employees to pay more for their pensions. (Christie has called the pension overhaul his "biggest governmental victory.") "I want to post the bill, but I think when I go on the floor, my own party's going to take a run at me to remove me as speaker. So I can't post the bill," Christie says Oliver told him. "I think the only way I survive is if the 33 Republicans in the chamber will agree to vote for me for speaker. Can you work it out?"
After the audio broke, Oliver told the Newark Star-Ledger that Christie was "more mentally deranged than some of us thought. Never happened." True or false, Christie's story led to speculation that Oliver could be ousted from her leadership role. But two state Democrats speaking on the condition of anonymity told the Cherry Hill Courier Post that reports of party infighting are overblown, and Oliver's position is safe. Her standing with Christie, whom she also called a "rattlesnake," could prove more icy.
In early July, Sweeney went ballistic on Christie, claiming the governor had double-crossed him on the pension deal by unilaterally using his line-item veto to slash services to the poor. Back then, the former union leader called the governor a "rotten bastard" and "rotten prick" and said he "wanted to punch him in his head." He responded more coolly to the Koch seminar revelations, but speaking to the Asbury Park Press through a spokesman, he did manage another jab:
The Senate President has no comment on remarks Governor Christie made while he was wining and dining with ridiculously wealthy people just days before he cut funding for visually impaired people, our most vulnerable seniors, and programs for sexually abused children, while coming to the aid, yet again, of his rich friends.
Chris Christie's climate "smoking gun": In his introduction of the governor, David Koch revealed how he and Christie had gotten acquainted: "Five months ago we met in my New York City office and spoke, just the two of us, for about two hours on his objectives and successes in correcting many of the most serious problems of the New Jersey state government," Koch said.
New Jersey's Sierra Club director Jeff Tittel told the AP that this was "the smoking gun that shows [Christie has] been working with the Koch brothers from the beginning." The AP story suggests that the meeting may have influenced Christie's decision to withdraw from the Regional Greenhouse Gas Initiative (RGGI), a 10-state cap-and-trade program. In late May, after Christie announced his plan to exit RGGI by year's end, Tittel told Mother Jones that the governor was "trying to have it both ways" by supporting some environmental programs in New Jersey while appealing nationally to groups like the Kochs' Americans for Prosperity, a political advocacy group that stridently opposes efforts to regulate greenhouse gas emissions. A Christie spokesman told the AP that the winter meeting with David Koch was "wholly unconnected" to Christie's decision on RGGI.
Saddam Hussein and Barack Obama: Part 1 of Friedman's exclusive opens like this:
"We have Saddam Hussein," declared billionaire industrialist Charles Koch, apparently referring to President Barack Obama as he welcomed hundreds of wealthy guests to the latest of the secret fundraising and strategy seminars he and his brother host twice a year. The 2012 elections, he warned, will be "the mother of all wars."
Reporters nationwide quickly picked up this quote, and broadcast hosts replayed the audio clip (which was included in the piece) on their shows. Friedman appeared on a number of radio, podcast, and TV programs, including CNN's Situation Room and MSNBC's The Ed Show, to discuss it:
But some listeners, including our own Kevin Drum, suggested that Koch may have simply been quoting Hussein's well-worn slogan from the outset of the first Gulf War. Politico's Ben Smith wrote: "As I hear the (ambiguous) line, Koch is quoting Saddam here, not comparing Obama to him. In that version, the quote reads: 'We have, as Saddam Hussein [said] this is the Mother of All Wars.'" A Koch Industry spokesman echoed that sentiment. But there's little doubt that the war in question is the war to retake the White House. The quote was all that Obama campaign manager Jim Messina needed to blast out a fundraising email, suggesting that it "absolutely should" offend Democrats. "But it should also motivate you, because you are the only thing that can stop…[t]he Koch brothers and the front groups they fund."
(The complete audio and transcript are available at The BRAD BLOG.)
Koch ally Art Pope denies attending the seminar: No one on our list of likely million-dollar Koch donors has contacted us to protest their inclusion. But Raleigh, North Carolina, retail magnate Art Pope—whom IndyWeek.com previously called a regular seminar attendee—told the News & Observer that he neither attended the seminar nor donated any of his own money. He did admit that his family's foundation donated "several hundred thousand dollars," presumably in the past year, to Americans for Prosperity, where he serves as a national director. A Facing South investigation discovered that the foundation has given a total of more than $1.9 million to Americans for Prosperity.
Here's a sampling of additional coverage:
Newark Star-Ledger, "NJ Gov. Chris Christie hurt himself by discrediting Assembly Speaker Sheila Oliver"
Philadelphia Inquirer, "Editorial: Christie Should Disclose Secret Political Trips"
Milwaukee Journal-Sentinal, "Menard, Hendricks on Koch donor list"
Colorado Independent, "Why are the Kochs so afraid of Obama?"
Wonkette, "War on Everyone Else Round One Million: Charles Koch Defeats Jimmy Hoffa"
Slate, "The Koch Brother-Anna Nicole Smith Connection"
Greenpeace.org, "Mother Jones Secret Koch Brothers Tapes"
By Gavin Aronsen
Unless you've been living in a hole, you've probably heard at least something about a secret confab near Vail, Colorado, where the billionaire industrialist Charles Koch referred to the 2012 elections as "the mother of all wars." (He may or may not have been referring to President Obama when he evoked Saddam Hussein—more on that below—but he certainly used Saddam's battle slogan to characterize efforts by him and his brother to evict Obama from the White House.)
In the week since we ran Brad Friedman's two-part series, which publicized audio from inside the big event and broke the news that New Jersey Gov. Chris Christie had delivered the keynote speech (a fact Christie had kept hidden from New Jersey voters), dozens of news outlets have picked up the story, and even taken it further. Here are a few highlights.
Christie "mentally deranged," says New Jersey Democratic Assembly leader: In the audio from his June 26 keynote speech, Christie boasts about backroom dealings with two state Democratic leaders—Senate President Steve Sweeney and Assembly Speaker Sheila Oliver—to pass a bill forcing public employees to pay more for their pensions. (Christie has called the pension overhaul his "biggest governmental victory.") "I want to post the bill, but I think when I go on the floor, my own party's going to take a run at me to remove me as speaker. So I can't post the bill," Christie says Oliver told him. "I think the only way I survive is if the 33 Republicans in the chamber will agree to vote for me for speaker. Can you work it out?"
After the audio broke, Oliver told the Newark Star-Ledger that Christie was "more mentally deranged than some of us thought. Never happened." True or false, Christie's story led to speculation that Oliver could be ousted from her leadership role. But two state Democrats speaking on the condition of anonymity told the Cherry Hill Courier Post that reports of party infighting are overblown, and Oliver's position is safe. Her standing with Christie, whom she also called a "rattlesnake," could prove more icy.
In early July, Sweeney went ballistic on Christie, claiming the governor had double-crossed him on the pension deal by unilaterally using his line-item veto to slash services to the poor. Back then, the former union leader called the governor a "rotten bastard" and "rotten prick" and said he "wanted to punch him in his head." He responded more coolly to the Koch seminar revelations, but speaking to the Asbury Park Press through a spokesman, he did manage another jab:
The Senate President has no comment on remarks Governor Christie made while he was wining and dining with ridiculously wealthy people just days before he cut funding for visually impaired people, our most vulnerable seniors, and programs for sexually abused children, while coming to the aid, yet again, of his rich friends.
Chris Christie's climate "smoking gun": In his introduction of the governor, David Koch revealed how he and Christie had gotten acquainted: "Five months ago we met in my New York City office and spoke, just the two of us, for about two hours on his objectives and successes in correcting many of the most serious problems of the New Jersey state government," Koch said.
New Jersey's Sierra Club director Jeff Tittel told the AP that this was "the smoking gun that shows [Christie has] been working with the Koch brothers from the beginning." The AP story suggests that the meeting may have influenced Christie's decision to withdraw from the Regional Greenhouse Gas Initiative (RGGI), a 10-state cap-and-trade program. In late May, after Christie announced his plan to exit RGGI by year's end, Tittel told Mother Jones that the governor was "trying to have it both ways" by supporting some environmental programs in New Jersey while appealing nationally to groups like the Kochs' Americans for Prosperity, a political advocacy group that stridently opposes efforts to regulate greenhouse gas emissions. A Christie spokesman told the AP that the winter meeting with David Koch was "wholly unconnected" to Christie's decision on RGGI.
Saddam Hussein and Barack Obama: Part 1 of Friedman's exclusive opens like this:
"We have Saddam Hussein," declared billionaire industrialist Charles Koch, apparently referring to President Barack Obama as he welcomed hundreds of wealthy guests to the latest of the secret fundraising and strategy seminars he and his brother host twice a year. The 2012 elections, he warned, will be "the mother of all wars."
Reporters nationwide quickly picked up this quote, and broadcast hosts replayed the audio clip (which was included in the piece) on their shows. Friedman appeared on a number of radio, podcast, and TV programs, including CNN's Situation Room and MSNBC's The Ed Show, to discuss it:
But some listeners, including our own Kevin Drum, suggested that Koch may have simply been quoting Hussein's well-worn slogan from the outset of the first Gulf War. Politico's Ben Smith wrote: "As I hear the (ambiguous) line, Koch is quoting Saddam here, not comparing Obama to him. In that version, the quote reads: 'We have, as Saddam Hussein [said] this is the Mother of All Wars.'" A Koch Industry spokesman echoed that sentiment. But there's little doubt that the war in question is the war to retake the White House. The quote was all that Obama campaign manager Jim Messina needed to blast out a fundraising email, suggesting that it "absolutely should" offend Democrats. "But it should also motivate you, because you are the only thing that can stop…[t]he Koch brothers and the front groups they fund."
(The complete audio and transcript are available at The BRAD BLOG.)
Koch ally Art Pope denies attending the seminar: No one on our list of likely million-dollar Koch donors has contacted us to protest their inclusion. But Raleigh, North Carolina, retail magnate Art Pope—whom IndyWeek.com previously called a regular seminar attendee—told the News & Observer that he neither attended the seminar nor donated any of his own money. He did admit that his family's foundation donated "several hundred thousand dollars," presumably in the past year, to Americans for Prosperity, where he serves as a national director. A Facing South investigation discovered that the foundation has given a total of more than $1.9 million to Americans for Prosperity.
Here's a sampling of additional coverage:
Newark Star-Ledger, "NJ Gov. Chris Christie hurt himself by discrediting Assembly Speaker Sheila Oliver"
Philadelphia Inquirer, "Editorial: Christie Should Disclose Secret Political Trips"
Milwaukee Journal-Sentinal, "Menard, Hendricks on Koch donor list"
Colorado Independent, "Why are the Kochs so afraid of Obama?"
Wonkette, "War on Everyone Else Round One Million: Charles Koch Defeats Jimmy Hoffa"
Slate, "The Koch Brother-Anna Nicole Smith Connection"
Greenpeace.org, "Mother Jones Secret Koch Brothers Tapes"
Sunday, September 11, 2011
Remembering the Moment Our CEOs Dug In
Original Link: http://www.ips-dc.org/blog/remembering_the_moment_our_ceos_dug_in
By Sam Pizzigati
Forty years ago, U.S. corporate honchos saw their power ebbing away - to a ragtag mob of long-hairs and loony social reformers. So they did what corporate honchos always do. They asked for a memo.
A landmark historical anniversary passed by almost totally unnoticed last week. No front-page retrospective in a major daily newspaper. No ceremony in the White House Rose Garden. Not even a new postage stamp.
A postage stamp, to be sure, might have been a bit of a stretch. You can’t, after all, put a memo on a postage stamp. Not even a memo that helped change, 40 years ago this month, the course of modern U.S. history.
The writer of this memorable memo, Richmond attorney Lewis Powell, would later go on to national prominence as a U.S. Supreme Court justice. But Lewis Powell, back in August 1971, had no national general public presence.
Powell did have widespread respect within elite corporate circles. A former American Bar Association president, he served on top corporate boards — and had friends in pivotal places, like Eugene Sydnor, a mover and shaker at the U.S. Chamber of Commerce.
Powell and Sydnor, notes corporate watchdog Charlie Cray, shared a sense of impending doom. The American “free enterprise system,” they feared, faced an existential crisis. The enemies of that system would surely triumph — unless business mobilized, as never before, to meet the threat.
The Chamber’s Sydnor asked Powell for a memo that outlined what the Chamber could do to jumpstart a crusade to save free enterprise. Powell's confidential August 23, 1971 response did just that.
Powell’s memo, reread today, can come across as wildly overheated and even, at times, laugh-out-loud paranoid.
Business confronts, Powell contends in the memo, critics “seeking insidiously” to “sabotage” free enterprise. “Extremists on the left,” he declares, have become “far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history.”
With “extremists” and “social reformers” working ever more closely in concert, Powell's memo laments, “individual freedom” itself may stand at risk.
In truth, “free enterprise” in America had faced significantly more threatening — and better organized — challenges before World War I and then again during the Great Depression. In 1971, those Powell labeled “extremists” had no significant political parties, as they had in earlier eras. And the social reformers of 1971, unlike their predecessors, rarely questioned any “free enterprise” basics.
But corporate leaders, Powell correctly understood, did face a hostile political environment in 1971. Progressives were making headway against tax breaks that benefit “only the rich, the owners of big companies,” as one Washington Post columnist put it. “Populist” tracts in mainstream magazines like New York were arguing that “the root need in our country is ‘to redistribute wealth.’”
“This setting of the ‘rich’ against the ‘poor,’ of business against the people,” Powell’s memo seethes, “is the cheapest and most dangerous kind of politics.”
Corporate America, Powell goes on to exhort, must respond with more than “appeasement, ineptitude, and ignoring the problem.” Business leaders must show more “stomach for hard-nose contest with their critics.” CEOs need to consider counterattacking “a primary responsibility of corporate management.”
Yet individual corporate leaders, Powell would acknowledge, can only do so much. An individual corporation, he understood, might be reluctant “to get too far out in front and to make itself too visible a target.” The answer?
“Strength lies in organization,” Powell's would explain, “in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”
The rest of Powell’s memo would detail the sorts of steps Corporate America could take — on campuses, with the media, in politics — to sweep away what Powell considered “inequitable” taxes on men of means and tame regulatory agencies “with large authority over the business system they do not believe in.”
The memo would remain confidential until syndicated national columnist Jack Anderson did an exposé in 1973. That publicity only served to whet corporate interest in Powell’s exhortations. By year’s end, a Chamber of Commerce task force — with executives from corporate giants ranging from G.E. to General Motors — had translated the Powell memo into action plan specifics.
Powell’s 1971 musings,historian Kim Phillips-Fein reflects, “crystallized a set of concerns shared by business conservatives in the early 1970s” — and gave “inspiration” to corporate leaders who would later become familiar names and powerful forces, men like arch Colorado right-winger Joseph Coors.
Together, these newly energized corporate leaders would unleash upon America what political scientists Jacob Hacker and Paul Pierson have called “a domestic version of Shock and Awe.”
The number of corporate public affairs offices in Washington, D.C. would quintuple between 1968 and 1978, from 100 to over 500. In 1971, Hacker and Pierson relate, only 175 U.S. corporations had registered lobbyists in Washington. The 1982 total: almost 2,500.
Corporate leaders also joined together in new national organizations, most notably with the 1972 founding of the Business Roundtable, and bankrolled a series of new militantly “free market” think tanks and action centers: the Heritage Foundation and American Legislative Exchange Council in 1973, the Cato Institute in 1977, the Manhattan Institute in 1978, among many others.
Between the late 1970s and late 1980s, add analysts Hacker and Pierson, corporate PACs increased their outlays for congressional races “nearly fivefold.” The U.S. Chamber of Commerce, for its part, would double its membership between 1974 and 1980 and triple its budget.
The end result of this all this political activity? Four decades of corporate pressure have transformed America. Tax rates on corporations and the wealthy have nosedived. Lawmakers have “deregulated” corporations in one sector after another. Unions, across wide swatches of the private sector, have disappeared.
The United States has become, with all these changes, a far more unequal place. In 1971, the year Powell penned his influential memo, America’s most affluent 0.1 percent reported average incomes — in 2008 dollars — of $1,263,485, and America’s bottom 90 percent averaged, again in 2008 dollars, $31,324.
By 2008, America's top tenth of 1 percent was averaging over four times as much, $5,648,768, and the average income of America’s bottom 90 percent had actually dropped, to $31,244.
The irony here? These numbers would likely trouble Lewis Powell, who died in 1998. Powell saw business as a champion for prosperity for all. He considered unions and collective bargaining “essential” to the freedom Americans enjoy.
Today’s U.S. Chamber of Commerce, by contrast, acts as the lobbying ringleader against any and all legislation that seeks to help workers organize and bargain.
Who knows? Lewis Powell might have come to feel, if he had lived a little longer, that his memo really needed a rewrite.
By Sam Pizzigati
Forty years ago, U.S. corporate honchos saw their power ebbing away - to a ragtag mob of long-hairs and loony social reformers. So they did what corporate honchos always do. They asked for a memo.
A landmark historical anniversary passed by almost totally unnoticed last week. No front-page retrospective in a major daily newspaper. No ceremony in the White House Rose Garden. Not even a new postage stamp.
A postage stamp, to be sure, might have been a bit of a stretch. You can’t, after all, put a memo on a postage stamp. Not even a memo that helped change, 40 years ago this month, the course of modern U.S. history.
The writer of this memorable memo, Richmond attorney Lewis Powell, would later go on to national prominence as a U.S. Supreme Court justice. But Lewis Powell, back in August 1971, had no national general public presence.
Powell did have widespread respect within elite corporate circles. A former American Bar Association president, he served on top corporate boards — and had friends in pivotal places, like Eugene Sydnor, a mover and shaker at the U.S. Chamber of Commerce.
Powell and Sydnor, notes corporate watchdog Charlie Cray, shared a sense of impending doom. The American “free enterprise system,” they feared, faced an existential crisis. The enemies of that system would surely triumph — unless business mobilized, as never before, to meet the threat.
The Chamber’s Sydnor asked Powell for a memo that outlined what the Chamber could do to jumpstart a crusade to save free enterprise. Powell's confidential August 23, 1971 response did just that.
Powell’s memo, reread today, can come across as wildly overheated and even, at times, laugh-out-loud paranoid.
Business confronts, Powell contends in the memo, critics “seeking insidiously” to “sabotage” free enterprise. “Extremists on the left,” he declares, have become “far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history.”
With “extremists” and “social reformers” working ever more closely in concert, Powell's memo laments, “individual freedom” itself may stand at risk.
In truth, “free enterprise” in America had faced significantly more threatening — and better organized — challenges before World War I and then again during the Great Depression. In 1971, those Powell labeled “extremists” had no significant political parties, as they had in earlier eras. And the social reformers of 1971, unlike their predecessors, rarely questioned any “free enterprise” basics.
But corporate leaders, Powell correctly understood, did face a hostile political environment in 1971. Progressives were making headway against tax breaks that benefit “only the rich, the owners of big companies,” as one Washington Post columnist put it. “Populist” tracts in mainstream magazines like New York were arguing that “the root need in our country is ‘to redistribute wealth.’”
“This setting of the ‘rich’ against the ‘poor,’ of business against the people,” Powell’s memo seethes, “is the cheapest and most dangerous kind of politics.”
Corporate America, Powell goes on to exhort, must respond with more than “appeasement, ineptitude, and ignoring the problem.” Business leaders must show more “stomach for hard-nose contest with their critics.” CEOs need to consider counterattacking “a primary responsibility of corporate management.”
Yet individual corporate leaders, Powell would acknowledge, can only do so much. An individual corporation, he understood, might be reluctant “to get too far out in front and to make itself too visible a target.” The answer?
“Strength lies in organization,” Powell's would explain, “in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”
The rest of Powell’s memo would detail the sorts of steps Corporate America could take — on campuses, with the media, in politics — to sweep away what Powell considered “inequitable” taxes on men of means and tame regulatory agencies “with large authority over the business system they do not believe in.”
The memo would remain confidential until syndicated national columnist Jack Anderson did an exposé in 1973. That publicity only served to whet corporate interest in Powell’s exhortations. By year’s end, a Chamber of Commerce task force — with executives from corporate giants ranging from G.E. to General Motors — had translated the Powell memo into action plan specifics.
Powell’s 1971 musings,historian Kim Phillips-Fein reflects, “crystallized a set of concerns shared by business conservatives in the early 1970s” — and gave “inspiration” to corporate leaders who would later become familiar names and powerful forces, men like arch Colorado right-winger Joseph Coors.
Together, these newly energized corporate leaders would unleash upon America what political scientists Jacob Hacker and Paul Pierson have called “a domestic version of Shock and Awe.”
The number of corporate public affairs offices in Washington, D.C. would quintuple between 1968 and 1978, from 100 to over 500. In 1971, Hacker and Pierson relate, only 175 U.S. corporations had registered lobbyists in Washington. The 1982 total: almost 2,500.
Corporate leaders also joined together in new national organizations, most notably with the 1972 founding of the Business Roundtable, and bankrolled a series of new militantly “free market” think tanks and action centers: the Heritage Foundation and American Legislative Exchange Council in 1973, the Cato Institute in 1977, the Manhattan Institute in 1978, among many others.
Between the late 1970s and late 1980s, add analysts Hacker and Pierson, corporate PACs increased their outlays for congressional races “nearly fivefold.” The U.S. Chamber of Commerce, for its part, would double its membership between 1974 and 1980 and triple its budget.
The end result of this all this political activity? Four decades of corporate pressure have transformed America. Tax rates on corporations and the wealthy have nosedived. Lawmakers have “deregulated” corporations in one sector after another. Unions, across wide swatches of the private sector, have disappeared.
The United States has become, with all these changes, a far more unequal place. In 1971, the year Powell penned his influential memo, America’s most affluent 0.1 percent reported average incomes — in 2008 dollars — of $1,263,485, and America’s bottom 90 percent averaged, again in 2008 dollars, $31,324.
By 2008, America's top tenth of 1 percent was averaging over four times as much, $5,648,768, and the average income of America’s bottom 90 percent had actually dropped, to $31,244.
The irony here? These numbers would likely trouble Lewis Powell, who died in 1998. Powell saw business as a champion for prosperity for all. He considered unions and collective bargaining “essential” to the freedom Americans enjoy.
Today’s U.S. Chamber of Commerce, by contrast, acts as the lobbying ringleader against any and all legislation that seeks to help workers organize and bargain.
Who knows? Lewis Powell might have come to feel, if he had lived a little longer, that his memo really needed a rewrite.
CEOs Rewarded for Tax Dodging Gymnastics
Original Link: http://www.huffingtonpost.com/chuck-collins/ceos-rewarded-for-tax-dod_b_942428.html
By Chuck Collins
As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: Twenty-five hugely profitable U.S. companies paid their CEOs last year more than they paid Uncle Sam in taxes.
In other words, the more CEOs dodge their civic responsibilities, the more lavishly they're paid. That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.
These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.
Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.
Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions -- and then feign losses from their U.S. operations at tax time.
Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.
Here are a few examples of these champion tax-dodgers:
• Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract -- while lobbying to preserve antiquated tax breaks for oil and gas industry.
• Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay' 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.
• Insurance giant Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda -- a favorite locale for insurance companies seeking to avoid both taxes and regulation.
These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.
They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.
These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.
Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.
By Chuck Collins
As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: Twenty-five hugely profitable U.S. companies paid their CEOs last year more than they paid Uncle Sam in taxes.
In other words, the more CEOs dodge their civic responsibilities, the more lavishly they're paid. That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.
These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.
Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.
Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions -- and then feign losses from their U.S. operations at tax time.
Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.
Here are a few examples of these champion tax-dodgers:
• Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract -- while lobbying to preserve antiquated tax breaks for oil and gas industry.
• Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay' 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.
• Insurance giant Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda -- a favorite locale for insurance companies seeking to avoid both taxes and regulation.
These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.
They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.
These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.
Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.
Top 25 Corporate Tax Dodgers
Original Link: http://moneywatch.bnet.com/saving-money/blog/devil-details/top-25-corporate-tax-dodgers/5095/
By Kathy Kristof
Twenty-five of the nation’s highest-paid chief executive officers took home more pay than their companies shelled out in corporate income taxes last year even though their companies earned an average of $1.9 billion, according to a new study by the Institute for Policy Studies.
Methods of stiffing Uncle Sam vary, but IPS notes that 18 of these “hyperactive tax-dodging” corporations operate subsidiaries in offshore tax havens, such as Bermuda, Singapore and Luxembourg. They’ve also hired aggressive lobbyists to argue for special tax breaks that can cause these companies to essentially reap tax subsidy payments from Uncle Sam.
“Instead of sharing responsibility for addressing our nation’s fiscal challenges, these companies are rewarding CEOs for aggressive tax avoidance,” said Chuck Collins, co-author of the Institute’s “Executive Excess 2011″ report.
Far from struggling, most of the companies on the list justified paying their CEOs some 60% more than average big-company CEO by citing “exceptional corporate performance,” the study’s authors said. Where the average U.S. CEO earned a tidy $10.8 million (that’s roughly $5,400 an hour), the CEOs of the biggest tax-dodging companies took home an average of $16.7 million. That translates to roughly $8,350 per hour, or about $66,800 per day.
What companies ranked as the nation’s top tax dodgers? According to IPS, the tax-dodging gold medal goes to General Electric, which had a effective federal tax rate of negative 64.1%. The company’s pre-tax earnings from U.S. operations were $5.1 billion but it got a stunning $3.2 billion tax refund, according to the report.
Remarkably, that’s NOT the lowest tax rate in the survey. International Paper, which earned $198 million in pre-tax profits from U.S. operations and got a $249 million refund, wins that distinction with a negative 125.8% effective federal rate.
But GE beat out the competition by also spending a tidy $41.8 million on lobbying and campaign contributions, while awarding CEO Jeff Immelt a 172% raise. Immelt’s total compensation package was worth $15.2 million in 2010, according to the survey. A New York Times expose that ran earlier this year attributed GE’s extraordinary ability to cut its corporate taxes to “an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”
General Electric operates 14 subsidiaries in offshore tax-haven countries, where it has built up some $94 billion in unrepatriated profits that will not be subject to U.S. taxation unless those profits are returned to the U.S. (Not surprisingly, many companies are now lobbying to exempt “repatriated” profits from U.S. taxation.)
It’s worth noting that some of the companies on the IPS list dispute the study’s figures arguing that they do not account for tax reserves that have been “accrued” to pay deferred taxes. However, report author Scott Klinger notes that deferred taxes are not taxes paid — and they may never be paid, given the Byzantine way U.S. corporate income taxes are assessed. These figures reflect the taxes paid in 2010, according to corporate financial reports.
In addition, some companies maintain that they paid no taxes because they reported no taxable income in the U.S. Klinger acknowledges that this is sometimes true. But he says the lack of U.S. profitability is often due to accounting gimmickry that could make movie studios (notorious for making profits disappear) envious. For example, what many of these companies do is have their subsidiaries in foreign countries either own their patents or facilities, allowing that foreign subsidiary to drain the U.S. company of profits by charging exorbitant “royalty” or “lease” fees.
Corporate tax avoidance schemes are estimated to cost the federal government some $100 billion annually, Klinger adds. They also create huge disparities in effective tax rates between big businesses and small. Small businesses pay an average of 27% in federal taxes, he notes, while big businesses pay just 11% on average.
“In effect, small businesses are subsidizing big businesses,” Klinger says.
Here’s the IPS ranking of Top 25 Corporate Tax Dodgers. The companies are ranked by their CEOs pay, highest-paid first.
1. John Lundgren, Stanley Black & Decker; CEO Pay: $32.6 million; Federal income tax: negative $75 million; Subsidiaries in tax havens: 50.
2. Alan Mulally, Ford; CEO Pay: $26.5 million; Federal income tax: negative $69 million; Subsidiaries in tax havens: 3.
3. Aubrey McClendon, Chesapeake Energy; CEO Pay: $21 million; Federal income tax: $0; Subsidiaries in tax havens: 0
4. Gregory Chase, Aon: CEO Pay; $20.8 million; Federal income tax: $16 million; Subsidiaries in corporate tax havens: 128.
5. Robert Kelly, Bank of New York Mellon; CEO Pay: $19.4 million; Federal income tax: negative $670 million; Subsidiaries in tax havens: 10
6. John F. Brock, Coca-Cola Enterprises; CEO Pay: $19.1 million; Federal income tax: $8 million; Subsidiaries in tax havens: 4
7. Ivan Seidenberg, Verizon; CEO Pay: $18.1 million; Federal income tax: negative $705 million; Subsidiaries in tax havens: 0
8. Andrew Liveris, Dow Chemical; CEO Pay: $17.7 million; Federal income tax: negative $576 million; Subsidiaries in tax havens: 64
9. John Strangfeld, Prudential Financial; CEO Pay: 16.2 million; Federal income tax: negative $722 million; Subsidiaries in tax havens: 36
10. James Cracchiolo, Ameriprise; CEO Pay: $16.2 million; Federal income tax: negative $224 million; Subsidiaries in tax havens: 7
11. David Cote, Honeywell; CEO Pay: $15.2 million; Federal income tax: negative $471 million; Subsidiaries in tax havens: 5
12. Jeff Immelt, General Electric; CEO Pay: $15.2 million; Federal income tax: negative $3.25 billion; Subsidiaries in tax havens: 14
13. Patrick Hassey, Allegheny Technologies; CEO Pay: $15 million; Federal income tax: negative $47 million; Subsidiaries in tax havens: 0
14. Robert Coury, Mylan Laboratories; CEO Pay: $15 million; Federal income tax: negative 73 million; Subsidiaries in tax havens: 32
15. Richard Fairbank, Capital One Financial; CEO Pay: $14.8 million; Federal income tax: negative $152 million; Subsidiaries in tax havens: 0
16. Steve Wynn, Wynn Resorts Ltd.; CEO Pay: $14.6 million; Federal income tax: 0; Subsidiaries in tax havens: 16
17. Brian Duperreault, Marsh & McLennan; CEO Pay: $14 million; Federal income tax: negative $90 million; Subsidiaries in tax havens: 105
18. Jim McNerney, Boeing; CEO Pay: $13.8 million; Federal income tax: 13 million; Subsidiaries in tax havens: 42
19. Gregory Q. Brown, Motorola Solutions; CEO Pay: $13.7 million; Federal income tax: $7 million; Subsidiaries in tax havens: 6
20. Eugene Isenberg, Nabors Industries; CEO Pay: $13.5 million; Federal income tax: negative $138 million; Subsidiaries in tax havens: 1
21. Edward Mueller, Qwest Communications; CEO Pay: $13.4 million; Federal income tax: negative $14 million; Subsidiaries in tax havens: 0
22. James Dolan, Cablevision Systems; CEO Pay: $13.3 million; Federal income tax: negative $3 million; Subsidiaries in tax havens: 0
23. Sanjay Jha, Motorola Mobility; CEO Pay: $13 million; Federal income tax: $12 million; Subsidiaries in tax havens: 0
24. John J. Donahoe, eBay; CEO Pay: $12.4 million; Federal income tax: negative $131 million; Subsidiaries in tax havens: 31
25. John Faraci, International Paper; CEO Pay: $12.3 million; Federal income tax: negative $249 million; Subsidiaries in tax havens: 2
By Kathy Kristof
Twenty-five of the nation’s highest-paid chief executive officers took home more pay than their companies shelled out in corporate income taxes last year even though their companies earned an average of $1.9 billion, according to a new study by the Institute for Policy Studies.
Methods of stiffing Uncle Sam vary, but IPS notes that 18 of these “hyperactive tax-dodging” corporations operate subsidiaries in offshore tax havens, such as Bermuda, Singapore and Luxembourg. They’ve also hired aggressive lobbyists to argue for special tax breaks that can cause these companies to essentially reap tax subsidy payments from Uncle Sam.
“Instead of sharing responsibility for addressing our nation’s fiscal challenges, these companies are rewarding CEOs for aggressive tax avoidance,” said Chuck Collins, co-author of the Institute’s “Executive Excess 2011″ report.
Far from struggling, most of the companies on the list justified paying their CEOs some 60% more than average big-company CEO by citing “exceptional corporate performance,” the study’s authors said. Where the average U.S. CEO earned a tidy $10.8 million (that’s roughly $5,400 an hour), the CEOs of the biggest tax-dodging companies took home an average of $16.7 million. That translates to roughly $8,350 per hour, or about $66,800 per day.
What companies ranked as the nation’s top tax dodgers? According to IPS, the tax-dodging gold medal goes to General Electric, which had a effective federal tax rate of negative 64.1%. The company’s pre-tax earnings from U.S. operations were $5.1 billion but it got a stunning $3.2 billion tax refund, according to the report.
Remarkably, that’s NOT the lowest tax rate in the survey. International Paper, which earned $198 million in pre-tax profits from U.S. operations and got a $249 million refund, wins that distinction with a negative 125.8% effective federal rate.
But GE beat out the competition by also spending a tidy $41.8 million on lobbying and campaign contributions, while awarding CEO Jeff Immelt a 172% raise. Immelt’s total compensation package was worth $15.2 million in 2010, according to the survey. A New York Times expose that ran earlier this year attributed GE’s extraordinary ability to cut its corporate taxes to “an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”
General Electric operates 14 subsidiaries in offshore tax-haven countries, where it has built up some $94 billion in unrepatriated profits that will not be subject to U.S. taxation unless those profits are returned to the U.S. (Not surprisingly, many companies are now lobbying to exempt “repatriated” profits from U.S. taxation.)
It’s worth noting that some of the companies on the IPS list dispute the study’s figures arguing that they do not account for tax reserves that have been “accrued” to pay deferred taxes. However, report author Scott Klinger notes that deferred taxes are not taxes paid — and they may never be paid, given the Byzantine way U.S. corporate income taxes are assessed. These figures reflect the taxes paid in 2010, according to corporate financial reports.
In addition, some companies maintain that they paid no taxes because they reported no taxable income in the U.S. Klinger acknowledges that this is sometimes true. But he says the lack of U.S. profitability is often due to accounting gimmickry that could make movie studios (notorious for making profits disappear) envious. For example, what many of these companies do is have their subsidiaries in foreign countries either own their patents or facilities, allowing that foreign subsidiary to drain the U.S. company of profits by charging exorbitant “royalty” or “lease” fees.
Corporate tax avoidance schemes are estimated to cost the federal government some $100 billion annually, Klinger adds. They also create huge disparities in effective tax rates between big businesses and small. Small businesses pay an average of 27% in federal taxes, he notes, while big businesses pay just 11% on average.
“In effect, small businesses are subsidizing big businesses,” Klinger says.
Here’s the IPS ranking of Top 25 Corporate Tax Dodgers. The companies are ranked by their CEOs pay, highest-paid first.
1. John Lundgren, Stanley Black & Decker; CEO Pay: $32.6 million; Federal income tax: negative $75 million; Subsidiaries in tax havens: 50.
2. Alan Mulally, Ford; CEO Pay: $26.5 million; Federal income tax: negative $69 million; Subsidiaries in tax havens: 3.
3. Aubrey McClendon, Chesapeake Energy; CEO Pay: $21 million; Federal income tax: $0; Subsidiaries in tax havens: 0
4. Gregory Chase, Aon: CEO Pay; $20.8 million; Federal income tax: $16 million; Subsidiaries in corporate tax havens: 128.
5. Robert Kelly, Bank of New York Mellon; CEO Pay: $19.4 million; Federal income tax: negative $670 million; Subsidiaries in tax havens: 10
6. John F. Brock, Coca-Cola Enterprises; CEO Pay: $19.1 million; Federal income tax: $8 million; Subsidiaries in tax havens: 4
7. Ivan Seidenberg, Verizon; CEO Pay: $18.1 million; Federal income tax: negative $705 million; Subsidiaries in tax havens: 0
8. Andrew Liveris, Dow Chemical; CEO Pay: $17.7 million; Federal income tax: negative $576 million; Subsidiaries in tax havens: 64
9. John Strangfeld, Prudential Financial; CEO Pay: 16.2 million; Federal income tax: negative $722 million; Subsidiaries in tax havens: 36
10. James Cracchiolo, Ameriprise; CEO Pay: $16.2 million; Federal income tax: negative $224 million; Subsidiaries in tax havens: 7
11. David Cote, Honeywell; CEO Pay: $15.2 million; Federal income tax: negative $471 million; Subsidiaries in tax havens: 5
12. Jeff Immelt, General Electric; CEO Pay: $15.2 million; Federal income tax: negative $3.25 billion; Subsidiaries in tax havens: 14
13. Patrick Hassey, Allegheny Technologies; CEO Pay: $15 million; Federal income tax: negative $47 million; Subsidiaries in tax havens: 0
14. Robert Coury, Mylan Laboratories; CEO Pay: $15 million; Federal income tax: negative 73 million; Subsidiaries in tax havens: 32
15. Richard Fairbank, Capital One Financial; CEO Pay: $14.8 million; Federal income tax: negative $152 million; Subsidiaries in tax havens: 0
16. Steve Wynn, Wynn Resorts Ltd.; CEO Pay: $14.6 million; Federal income tax: 0; Subsidiaries in tax havens: 16
17. Brian Duperreault, Marsh & McLennan; CEO Pay: $14 million; Federal income tax: negative $90 million; Subsidiaries in tax havens: 105
18. Jim McNerney, Boeing; CEO Pay: $13.8 million; Federal income tax: 13 million; Subsidiaries in tax havens: 42
19. Gregory Q. Brown, Motorola Solutions; CEO Pay: $13.7 million; Federal income tax: $7 million; Subsidiaries in tax havens: 6
20. Eugene Isenberg, Nabors Industries; CEO Pay: $13.5 million; Federal income tax: negative $138 million; Subsidiaries in tax havens: 1
21. Edward Mueller, Qwest Communications; CEO Pay: $13.4 million; Federal income tax: negative $14 million; Subsidiaries in tax havens: 0
22. James Dolan, Cablevision Systems; CEO Pay: $13.3 million; Federal income tax: negative $3 million; Subsidiaries in tax havens: 0
23. Sanjay Jha, Motorola Mobility; CEO Pay: $13 million; Federal income tax: $12 million; Subsidiaries in tax havens: 0
24. John J. Donahoe, eBay; CEO Pay: $12.4 million; Federal income tax: negative $131 million; Subsidiaries in tax havens: 31
25. John Faraci, International Paper; CEO Pay: $12.3 million; Federal income tax: negative $249 million; Subsidiaries in tax havens: 2
Saturday, September 10, 2011
Some U.S. firms paid more to CEOs than taxes: study
Original Link: http://www.reuters.com/article/2011/08/31/us-usa-tax-ceopay-idUSTRE77U0KW20110831
Reporting by Nanette Byrnes; Editing by Howard Goller, Todd Eastham and Jackie Frank
Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study by a Washington think tank said on Wednesday.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the Institute for Policy Studies, a left-leaning group, said it also found many of the companies spent more on lobbying than they did on taxes.
The senior Democrat on the House of Representatives oversight committee, Elijah Cummings, called for hearings on executive compensation "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today."
Several companies mentioned in the report took issue with its methodology and said they paid all taxes owed.
General Electric spokesman Andrew Williams called the study "inaccurate" and noted it did not include significant income taxes paid in 2010 for previous years, or state taxes paid. "GE pays what it owes," he wrote in an e-mail response to questions.
Boeing spokesman Chaz Bickers said the study is "simply wrong".
Instead of Boeing's reported "U.S. federal current tax expense" of $13 million which the IPS used, he said a better approximation of the company's taxes paid would be the $360 million it reported as its net income tax payments, most of which, he says, was federal.
"On federal cash tax payments last year we paid in the hundreds of millions," Bickers told Reuters. The company also received a $371 million credit from the government last year for overpayment of taxes in the past, and has added 5,000 U.S. jobs this year Bickers says, in part because of Federal tax breaks.
The institute compared CEO pay to current U.S. taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
The group's rationale was that U.S. taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year. It said deferred taxes may or may not be paid.
The accounting used in SEC filings differs from the accounting used to tally what's owed on a corporate tax return. Neither the IPS number nor the figure cited by Boeing exactly equals the check written to the IRS, says Scott Dyreng, an assistant professor at Duke's Fuqua School of Business who studies corporate taxes, and though companies could disclose that figure, don't have to and don't do so.
$16.7 MILLION AVERAGE
Compensation for the 25 CEOs with pay surpassing corporate taxes averaged $16.7 million, according to the study, compared to a $10.8 million average for S&P 500 CEOs. Among the companies topping the IPS list:
* eBay whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S. taxes.
* Boeing, which paid CEO Jim McNerney $13.8 million, sent in $13 million in federal income taxes, and spent $20.8 million on lobbying and campaign spending
* General Electric where CEO Jeff Immelt earned $15.2 million in 2010, while the company got a $3.3 billion federal refund and invested $41.8 million in its own lobbying and political campaigns.
Though the companies come from different industries, their tax breaks fall into two primary areas.
Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.
Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings. But Chuck Collins, an IPS senior scholar and co-author of the report, said that is a mistake.
"I think it's an exposure of weakness in a company if their profitability is dependent on their accounting department and not on making better widgets," he said.
In prior reports, Collins said, out-sized CEO pay was often a red flag of bigger problems to come. The IPS has been putting a pay report together for 18 years. Among those whose leaders have made the high pay list in years past, only to have their businesses falter: Tyco, Enron and WorldCom.
Reporting by Nanette Byrnes; Editing by Howard Goller, Todd Eastham and Jackie Frank
Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study by a Washington think tank said on Wednesday.
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the Institute for Policy Studies, a left-leaning group, said it also found many of the companies spent more on lobbying than they did on taxes.
The senior Democrat on the House of Representatives oversight committee, Elijah Cummings, called for hearings on executive compensation "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today."
Several companies mentioned in the report took issue with its methodology and said they paid all taxes owed.
General Electric spokesman Andrew Williams called the study "inaccurate" and noted it did not include significant income taxes paid in 2010 for previous years, or state taxes paid. "GE pays what it owes," he wrote in an e-mail response to questions.
Boeing spokesman Chaz Bickers said the study is "simply wrong".
Instead of Boeing's reported "U.S. federal current tax expense" of $13 million which the IPS used, he said a better approximation of the company's taxes paid would be the $360 million it reported as its net income tax payments, most of which, he says, was federal.
"On federal cash tax payments last year we paid in the hundreds of millions," Bickers told Reuters. The company also received a $371 million credit from the government last year for overpayment of taxes in the past, and has added 5,000 U.S. jobs this year Bickers says, in part because of Federal tax breaks.
The institute compared CEO pay to current U.S. taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.
The group's rationale was that U.S. taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year. It said deferred taxes may or may not be paid.
The accounting used in SEC filings differs from the accounting used to tally what's owed on a corporate tax return. Neither the IPS number nor the figure cited by Boeing exactly equals the check written to the IRS, says Scott Dyreng, an assistant professor at Duke's Fuqua School of Business who studies corporate taxes, and though companies could disclose that figure, don't have to and don't do so.
$16.7 MILLION AVERAGE
Compensation for the 25 CEOs with pay surpassing corporate taxes averaged $16.7 million, according to the study, compared to a $10.8 million average for S&P 500 CEOs. Among the companies topping the IPS list:
* eBay whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S. taxes.
* Boeing, which paid CEO Jim McNerney $13.8 million, sent in $13 million in federal income taxes, and spent $20.8 million on lobbying and campaign spending
* General Electric where CEO Jeff Immelt earned $15.2 million in 2010, while the company got a $3.3 billion federal refund and invested $41.8 million in its own lobbying and political campaigns.
Though the companies come from different industries, their tax breaks fall into two primary areas.
Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.
Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings. But Chuck Collins, an IPS senior scholar and co-author of the report, said that is a mistake.
"I think it's an exposure of weakness in a company if their profitability is dependent on their accounting department and not on making better widgets," he said.
In prior reports, Collins said, out-sized CEO pay was often a red flag of bigger problems to come. The IPS has been putting a pay report together for 18 years. Among those whose leaders have made the high pay list in years past, only to have their businesses falter: Tyco, Enron and WorldCom.
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