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Two important progressive organizations, the Institute for Policy Studies and the Campaign for America's Future, today jointly released Fix the Debt" CEOs Enjoy Taxpayer-Subsidized Pay.  You will at that link find a description of this new report, and link to download the PDF.

Fix The Debt was cofounded by Alan Simpson and Erskine Bowles, and is very proud of its CEO Fiscal Leadership Council.  Yet while these CEOs call for call for cuts to Social Security, Medicaid, and more, they continue to benefit from subsidized pay.

The report is the first to put a price tag on the tax breaks specific corporations have enjoyed from a loophole that allows unlimited deductions for executive stock options and other “performance-based” pay.

Among the key findings from the report ‘Fix the Debt’ CEOs Enjoy Taxpayer-Subsidized Pay:

•       The 90 publicly held corporate members of the ‘Fix the Debt’ lobby group raked in at least $953 million — and as much as $1.6 billion — from the “performance pay” loophole between 2009-2011.

•       UnitedHealth Group enjoyed the biggest taxpayer subsidy for its CEO pay largesse during this period. The nation’s largest HMO paid CEO Stephen Hemsley $199 million in total compensation, of which at least $194 million was fully deductible “performance pay.” That works out to a $68 million taxpayer subsidy – just for one individual CEO’s pay. A just-released proxy reveals that Hemsley pocketed another $28 million in “performance pay” in 2012, which computes into a tax break for UnitedHealth of nearly $10 million.

•       Discovery Communications stood next in line for a government handout. CEO David Zaslav pocketed $114 million in total compensation, $105 million of this in exercised stock options and other fully deductible “performance pay.” That translates into a $37 million taxpayer subsidy.

•       Caesars Entertainment has hemorrhaged money in recent years, driving CEO Gary Loveman’s stock options underwater. Despite his poor performance, Loveman has managed to take home $9.6 million in cash bonuses, generating taxpayer subsidies the firm can cash in to lower its taxes in years to come.

I have not had time to fully digest the report, having received an embargoed (until 12:01 this morning) copy late yesterday evening.  The authors bring a wealth of experience and knowledge to the task of this report, including among other the co-directors of CAF, Robert Borosage and Roger Hickey, and from IPS Sam Pizzigatti and Scott Klinger.  

Some history is in order.  In 1993, fueled by disgust over excessive compensation for CEOs, Congress limited the deductibility from corporate taxes of CEO compensation to $1 million dollars.  But the new legislation left a huge loophole - exempted from this limitation was compensation for performance.  In effect, large corporation, including those whose CEOs are advocating for the austerity programs that include cuts to social insurance programs, are exploiting the U.S. tax code to send taxpayers the bill for the huge rewards they’re doling out to their top executives.  Remember, the nominal corporate tax rate is 35%.  Thus executive compensation of $11 million, of which the first million would still have been deductible but the additional 10 millions is considered performance pay or stock options, the taxpayers would eat $3.5 million in taxes not paid on that additional compensation.  The loophole led to a huge explosion in "performance-based" compensation, including stock options, with the total compensation of CEOs hitting extraordinary levels.

I want to quote from the description at the page at which you can find the link to download the report:

Corporate boards of directors touted this new surge in stock options as a means to align the interests of executives and shareholders. In practice, options align only greed and the tax code. If a firm’s shares decline in value over time, shareholders lose wealth. But executives with stock options lose nothing. In fact, during stock slumps, executives often receive boatloads of new options with lower exercise prices. In 2007, for instance, Goldman Sachs gave executives options to purchase 3.5 million shares. In December 2008, after the crash had driven Goldman shares to record lows, the bank’s top executives received nearly 36 million stock options, ten times the previous year’s total. This new grant positioned Goldman executives for massive new windfalls even if the bank’s shares never regained their 2007 price level.

On the upside, stock options gains have no limit, a reality that encourages reckless, short-sighted executive behaviors designed to jack up share prices by whatever means necessary. What sort of reckless behaviors? Over the past two decades, the Institute for Policy Studies has documented the connections between massive CEO options payouts and corporate tax-dodging, excessively risky financial gambles, and accounting fraud.

Stock options also provide huge personal tax advantages for executives. If executives hold onto their shares for more than two years after the grant date and more than a year after the exercise date — the point at which  the stock is transferred to the executive —  they pay only the long-term capital gains tax rate on this income. This rate will rise from 15 to 20 percent as a result of the “fiscal cliff” deal, a rate still far lower than the new 2013 top marginal rate of 39.6 percent on ordinary income.

The performance pay loophole, in short, serves as a critical subsidy for excessive compensation. The larger the executive payout, the less the corporation pays in taxes. And average taxpayers wind up footing the bill.

I am not going to quote more from either the summary or the report itself.   You should read the report.

Instead I want to offer a few remarks about the implications of this practice.

-  executives are being rewarded even if their actions do not benefit the shareholders

-  this practice leads to increasing shifts of wealth to those already quite well-off, who are able to use that additional wealth to further tilt the political playing field to their advantage

- the costs of running the government, and the costs of the tax breaks that underwrite this excessive compensation, is shifted to the rest of us who are paying taxes

- for all their bloviating about how we can't "afford" the social safety-net programs such as Social Security and Medicare -  into which we have been paying based on a supposed commitment of benefits - none of these people have to worry about the impact of cutting benefits whether by using chained-CPI or by raising age for eligibility.

The problem is that most Americans do not understand what is going on.  The mainstream media does a poor job of explaining any of this.  And of course increasingly those in broadcast and cable media are less connected to the ordinary people and do not grasp the impact of what those in groups like Fix The Debt are doing to the rest of us.

We can hope that the thoroughness and clarity of this report will begin to change the discussion.  Providing clear examples of how those advocating for limitations on social programs on the grounds the nation cannot afford them while simultaneously benefiting from tax breaks not available to the vast majority show the hypocrisy of the entire approach.

We do not have to be totally dependent upon the main stream media to make the argument.

We can use the tools available to us to make sure more people know about this report.

For example, not only am I posting this blog entry, I am sending the link directly to federal office holders I know, to candidates for political office asking them what they plan to do about it should they gain the offices they seek.

If we do not restore real fairness to the American economic system, we will not long retain even the trappings of a democracy.

We can start with honesty about government finances, including how many of those advocating for fiscal austerity are simultaneously and hypocritically benefiting from their sucking at the public teat of tax breaks they have that the rest of us do not.

Originally posted to teacherken on Thu May 02, 2013 at 03:30 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  not only sending link to politicians (31+ / 0-)

    have also sent it to a number of media types I know in the hopes that one or more of them might pick up on it

    remember - the President is unfortunately willing to buy in to the idea of things like chained CPI that are effectively cuts to social insurance.  We need to focus first on the sources of revenue that should be flowing to the government that would lessen the financial pressures

    "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

    by teacherken on Thu May 02, 2013 at 03:47:23 AM PDT

    •  ken - as johnny w, a tax lawyer, notes below (6+ / 0-)

      this entire discussion starts with the notion that Sec 162m violated basic accounting and tax principles. Executive compensation is a real business expense and deducting those expenses from income, before calculating taxable income, is not a "loophole".

      "let's talk about that"

      by VClib on Thu May 02, 2013 at 05:44:51 AM PDT

      [ Parent ]

      •  Welfare for rich people! (7+ / 0-)

        johnny w argues for many right wing positions that coddle the rich. There is no good reason why we should be sending welfare to CEOs that make millions!

        +++ The law is a weapon used to bludgeon us peasants into submission. It is not to be applied to the monied elite.

        by cybersaur on Thu May 02, 2013 at 07:16:01 AM PDT

        [ Parent ]

        •  I'm not taking any right wing positions; (4+ / 0-)
          Recommended by:
          VClib, hnichols, Balto, nextstep

          I'm explaining how the tax code works.  Being reality based is the province of the left, not the right.

          •  then it's time to change how it "works." (4+ / 0-)

            Close the damn loopholes.  Stop the damn corporate subsidies.  It isn't rocket science.  It's corporate welfare.

            If the plutocrats begin the program, we will end it. -- Eugene Debs.

            by livjack on Thu May 02, 2013 at 10:03:49 AM PDT

            [ Parent ]

          •  However, the purpose of the original legislation.. (3+ / 0-)
            In 1993, fueled by disgust over excessive compensation for CEOs, Congress limited the deductibility from corporate taxes of CEO compensation to $1 million
            ... was to limit CEO compensation by taking away the tax deduction from the corporations.

            Clearly, you can see that by moving what would have been compensation to "Performance Based" incentives, they are purposefully trying to limit their tax liability in spite of the intent of the 1993 law in place.  I'm not saying what they are doing is illegal but by definition, I think you will agree, that is exploiting a loophole.

            "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

            by Buckeye Nut Schell on Thu May 02, 2013 at 11:40:35 AM PDT

            [ Parent ]

            •  absolutely (2+ / 0-)
              Recommended by:
              Buckeye Nut Schell, cybersaur

              corporations wrote in that loophole and they're abusing it to the fullest.

              this assumption that corporations just wouldn't pay executives above $1M, so we're somehow lucky that corporations are overpaying CEOs so that we collect the individual tax, but would otherwise not collect any indivdidual tax because corporations will not be paying executives if they can't write off the pay -- is so wrongheaded it's not even funny.

              yes it's a loophole.

              and yes by corporations avoiding taxation, we're subsidizing the behavior. simple as that :)

              Deficits don't matter, jobs do.

              by aguadito on Thu May 02, 2013 at 01:21:56 PM PDT

              [ Parent ]

        •  Agreed that there isn't (2+ / 0-)
          Recommended by:
          hnichols, VClib

          Welfare for CEOs is despicable. But I'm not sure that's what this particular study is about.  The nuances of tax policy -- and there are nuances to everything -- are just that, nuances.  What I hope everyone here can agree on is the income inequality is bad for society and that the astonishing growth of executive income paired with the flat-lining of middle-class income is something we should work to address.

          How? Well, the devil is, as always, in the details.

      •  Not going to dig into this pile, but... (7+ / 0-)

        ...compensation, be it for frontline workers or executives is surely a legitimate business expense, but executive income is, well, income. Is the break for hedge fund managers -- carried interest is it? -- anything more than reverse Robin Hood looting of the rest of us? Fancy terms for tax-dodging and moving money to those with pockets big enough to hold whole states from the rest of us is, simply put, sick. Fix has a couple of meanings. They fix fights, they fix roads, etc. Fix the debt fits the first. FIX THE TAX CODE!

        •  Corporate executives and investment partnership (3+ / 0-)
          Recommended by:
          hnichols, nextstep, johnny wurster

          managers are taxed in an entirely different manner. All of the income of corporate executives, including their equity compensation, is taxed at the top marginal rate. To qualify for "carried interest", and long term capital gains treatment of your incentive compensation, you have to manage an investment partnership. There are unique characteristics to partnerships that allow the allocation of profits and losses based on contract, the partnership agreement, rather than purchased ownership.

          "let's talk about that"

          by VClib on Thu May 02, 2013 at 08:14:32 AM PDT

          [ Parent ]

          •  You should edit your reply (0+ / 0-)

            The second sentence says "All of the income of corporate executives, including their equity compensation, is taxed at the top marginal rate." You know that it's not true based simply on tax brackets, so why put it that way? To make it true in this simple sense, you can change "top marginal rate" to "appropriate marginal tax rate." But, it's not even true in a second sense, and you know that too.  

            So, for the example given in the diary, the CEO with compensation of (can I round it to) $100M one year is paying $39.6M in federal income taxes?

            I'm pretty sure that's not what you mean, unless you qualify it with "all other things being equal" or something like that, right?

            •  voicemail - I should have qualified it as (1+ / 0-)
              Recommended by:
              voicemail

              senior Fortune 1000 executives. They are all in the top marginal bracket. Corporate executives of smaller companies often don't have income that places them in the top 1% as you note.

              My main point was that corporate executive compensation cannot be structured to qualify for long term capital gains treatment.

              "let's talk about that"

              by VClib on Thu May 02, 2013 at 10:17:59 PM PDT

              [ Parent ]

      •  Question (0+ / 0-)

        Is there a place to address excessive compensation in the tax code?  Seriously interested in your thoughts.

        •  myg - I don't think so (1+ / 0-)
          Recommended by:
          johnny wurster

          If high income earners should pay higher taxes they should apply to all high income professions including athletes, entertainers, lawyers, physicians, as well as corporate executives.

          I don't know how you single out one group. All senior executive compensation at the Fortune 1000 is taxed at the top marginal rate so to me that's where you should start.

          "let's talk about that"

          by VClib on Thu May 02, 2013 at 08:09:40 AM PDT

          [ Parent ]

          •  Hmmm (1+ / 0-)
            Recommended by:
            VClib

            I wrestle with this question myself. I do think there is a culture of entitlement related to executive compensation that is destructive for society, and not sure what the fixes are.  I'm for higher tax rates for all high income, and for fewer tax shelters, but my knowledge of 162m and 280g makes me wonder if you are write about the limits of addressing through taxes.

      •  the loophole (0+ / 0-)

        is the "performance based pay"

        but stock options are barely performance-based -- as executives aren't alwys responsible for run-ups in stock prices which determine the value of the options which are pay.

        so the Corporations write off that "performance based pay" instead of it being ineligible for deduction above 1M.

        thus corporations dont pay the tax, and the rest of us tax payers have to cover it.

        it's a loophole, and we are subsidizing it.

        you can't explain it any other way than that, it's pretty clear.

        Deficits don't matter, jobs do.

        by aguadito on Thu May 02, 2013 at 11:37:46 AM PDT

        [ Parent ]

    •  As much as I hate the obscene compensation (3+ / 0-)
      Recommended by:
      VClib, New Rule, johnny wurster

      levels , I hate it worse when progressives send out information that is slanted and obscures relevant facts.

      For example, the so called tax subsidy the occurs presumably when the executive exercises his or her options. While the company may take this as a write off ,  the year that anyone exercises options they are liable for tax under normal income rates. Therefore the tax subsidy is offset by the taxes the executive pays at full income rates.

      Here is an example from 2000: Cisco engineer gets 100,000 options for 100,000 shares. He exercises the options at the start of 2000 when Cisco was riding high at $80 a share. The engineer incurred a 2.5 Million dollar tax on the transaction payable via quarterly payments or by the following year's tax filing deadline.  He waited until the deadline. Had he sold and paid a quarterly tax he would have still been in the black as CSCO really didn't start major sinkage (compared to others) until 2001.

      Normally people who believe the stock is going higher will sell enough at the high price to cover their taxes which is taxed at the normal rate of income - less the cost of the options. In other words instead of the 38% rate that was in effect at the time on 8 million it would have been maybe 37% on the profit made.

      The engineer held on to all of the stock sensing a wonderful opportunity to see it double again. I mean this was the mighty Cisco that had a 500B market cap at the time with 18 Billion in sales (way overpriced), meaning the market cap of the company would have to go to a trillion or more before his stock would have effectively doubled. Apparently the extreme amount of Math that an electrical engineer needs to know doesn't apply to matters of stock.

      By the end of the year, the tax due was 2.5 Million and the stock prices was down to $18.00. There seemed to be a $700,000 difference if he sold the stock. Not surprisingly Cisco flat lined for most of the last 13 years ( currently trades at $20.00).

      Wait I have to get in the mindset of the times: Maybe the engineer thought the stock was going up 50% before year end and he would either sell enough to pay the taxes or borrow against enough of the stock after it had been locked up.
      Obviously people became smarter after a series of disasters like that and most sell the majority of their stock at the time it's exercised. There is literally no tax subsidization once one balances off the corporate tax rate and the new tax rate for high earners which can go as high as 43%.

      This of course is open to debate. I'm fairly sure VCLib will back me on this. But get it right before you send of sternly worded letters to the those in power who will wipe them clean off the table if they see that no homework has been done regarding vis a vis the  actual tax code.

      The amount of money  in question is staggeringly obscene, but this method of attack is questionable at best.

      “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

      by Dburn on Thu May 02, 2013 at 10:47:56 AM PDT

      [ Parent ]

      •  Dburn - well stated (1+ / 0-)
        Recommended by:
        Dburn

        The article has several holes in its logic and understanding of the current tax code.

        "let's talk about that"

        by VClib on Thu May 02, 2013 at 11:03:07 AM PDT

        [ Parent ]

      •  this is just wrong. (0+ / 0-)

        we already know the executive is paying full income tax on it, regardless of whether a corporation writes off the pay or not.

        but the corporation is writing it off and NOT paying tax on it, as a loophole around the 1MM cap. so we lose out on the tax revenue from the corporation ,even if we are getting it from the exec. the point is we wanted to avoid corporations writing off exhorbitant pay so we could get two shots at taxing it. but the performance-pay loophole by using stock options gets around that...

        this isn't complicated stuff, so while you, VClib and the other pluto's wanna try and flex your nitty-picking muscles, it's really not relevant in this case.

        Deficits don't matter, jobs do.

        by aguadito on Thu May 02, 2013 at 11:41:11 AM PDT

        [ Parent ]

        •  I tried to write a cogent response to this (1+ / 0-)
          Recommended by:
          johnny wurster

          and then realized it was either a joke or someone throwing a hissy fit who had no idea what they were talking about.

          the point is we wanted to avoid corporations writing off exhorbitant pay so we could get two shots at taxing it.
          What is this "we" shit?

           Sigh, send the letter out with your OUTRAGE and give the assholes something else to laugh about.

          exhorbitant is spelled exorbitant

          You couldn't even get that right.

          “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

          by Dburn on Thu May 02, 2013 at 02:27:55 PM PDT

          [ Parent ]

          •  the intent of the law (0+ / 0-)

            that is being discussed in the diary was to not let corporations write off exorbitant pay -- so "we" is "we the people" having passed the original law that set the excessive compensation cap.

            Also I don't think you could compose a cogent response if your life depended on it, so don't worry about it.

            Obviously you don't understand the issue at hand regarding the 1MM deduction cap on executive compensation, so you attack a typo I made.

            Re-read the comment if you can understand the issue, i'll even hold your hand if you need it, baby boy dbag...

            but the corporation is writing it off and NOT paying tax on it, as a loophole around the 1MM cap. so we lose out on the tax revenue from the corporation ,even if we are getting it from the exec.
            But yea, personal attacks are a lot easier than trying to understand an issue your pea-brain can't handle.

            Deficits don't matter, jobs do.

            by aguadito on Thu May 02, 2013 at 08:55:26 PM PDT

            [ Parent ]

            •  Such Nastiness (0+ / 0-)

              You didn't make a typo. A Typo is a word. I know. I make them frequently. Not an entire commentary. You wanted double taxation. Even in this "response" you had to leave  out the part where the tax deduction is offset by the executive paying the full taxes in order to make your point whatever that was.

              If we were to take you at  face value, we would have to assume , that all corporations and small business could no longer make deductions for compensation and the employee would have to pay full taxes.

              Lets think for a moment, if you're capable of reasonable thought, and consider how much more wage pressure that would put on the rank and file workers who make the country work.

              The chances of any of this BS going into effect is nil today.
              It was the Dems who capped the salary at 1,000,000 for corporations to make a tax deduction on it.  . They didn't bother to close the loophole for stock based compensation .

              Finally many of the the options that are given both to employees and execs are usually priced far lower than what they're priced at the point they are exercised. Sometimes in the pennies. That would be the only time that a corporation would have to pay taxes if it were to happen.

              What's worse is, you then you forgot that many of the options end up under water./ That means they have no value to the executive even if it was beyond their control.

              “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

              by Dburn on Fri May 03, 2013 at 05:38:38 AM PDT

              [ Parent ]

              •  you're wrong (again), no surprise there (0+ / 0-)
                Even in this "response" you had to leave  out the part where the tax deduction is offset by the executive paying the full taxes in order to make your point whatever that was.

                If we were to take you at  face value, we would have to assume , that all corporations and small business could no longer make deductions for compensation and the employee would have to pay full taxes.

                this was your response above.

                and my comment 2-3 levels up which your comment is a response to, contained this:

                we already know the executive is paying full income tax on it, regardless of whether a corporation writes off the pay or not.

                but the corporation is writing it off and NOT paying tax on it, as a loophole around the 1MM cap. so we lose out on the tax revenue from the corporation ,even if we are getting it from the exec.

                Again, reading comprehension problem is obviously at work here. I clearly pointed out we get the revenue from the exec no matter what, and the issue is losing some tax revenue by letting the corp deduct excessive pay through the loophole. But because I was correcting you, your ability to reason flew out the window and you got defensive instead of acknowledging that I explained the issue just fine.

                So to sum up: my point was that no matter whether the corp can write off excessive pay -- the pay ends up in the hands of a wealthy individual who will pay that tax on it -- that's given.

                but by leaving this "performance-based pay" loophole wide open, corporations write off excessive pay and we then lose out on the corporate taxation that would occur if they made such payouts without deducting.

                Also:

                What's worse is, you then you forgot that many of the options end up under water./ That means they have no value to the executive even if it was beyond their control.
                I've personally worked on formulation of compensation packages, and every time an options package was OTM, we would have strike-adjustment provisions or issue whole new sets of options that would ensure that they still get paid no matter what. it's not like they're playing the lottery or spinning the roulette wheel and hoping the options go ITM,

                Deficits don't matter, jobs do.

                by aguadito on Fri May 03, 2013 at 06:50:48 AM PDT

                [ Parent ]

        •  Honestly , they don't teach tax policy? (0+ / 0-)

          BSc and Master's in Econ. Former economic consultant.

          “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

          by Dburn on Thu May 02, 2013 at 06:36:01 PM PDT

          [ Parent ]

          •  listen (0+ / 0-)

            i know you're upset you got called out for not understanding how a corporate deduction works. and that allowing corporations to deduct the expense of excessive compensation is indeed a loophole that lets the corporation avoid paying tax on it.

            but you should thank me for correcting you, now you actually might understand the issue better (although your stubborn pride seems to be in the way). you took the time to go through an irrelevant example which didn't even demonstrate the key difference here between a corporaiton writing off the compensation as an expense and not being able to write off the expense (which forces the corporation to eat the tax ON TOP OF the burden faced by the recipient EITHER WAY).

            so the deductibility of the excessive compensation through the loophole for "performance-based pay" allows the corporation to not pay tax on this. but it's still a subsidy, it's not "offset" by the recipient having to pay income taxes, it just means we the people get screwed out of the corporations having to pay tax on the payout as well by NOT being able to write it off!

            seriously, on DKos you can't delete comments for this exact reason. you were disingenuously agreeing with knee-jerk comment-repliers instead of actually reading the Report and understanding the issue at hand. part of the point is you have to own up to when you make a really dumb mistake in understanding a simple issue (as in your childish comment and hilariously dumb example of the engineer, which avoided the whole point of the loophole discussed in the report).

            but now you know. you're welcome, by the way.  i'll get you a tissue for all that butthurt you're expressing.

            Deficits don't matter, jobs do.

            by aguadito on Thu May 02, 2013 at 09:03:08 PM PDT

            [ Parent ]

          •  oh (0+ / 0-)

            and since we're prying into each other's profiles and such, let me point out a laughably wrong diary entry you wrote here:

            First it was the Insider trading law that was passed and then quietly repealed.
            STOCK Act wasn't repealed to allow insider trading, the public online disclosure of financial holdings is a provision of the act that was removed last month, but insider trading by congress is still prohibited even under the revision.

            but hey, this just shows that you have a history of reading comprehension problems and knee-jerk reactions, so I won't blame you for making such a mistake in this diary.

            I won't even address you insulting my credentials, considering you haven't provided any substantive response to my correction of your comment. Your ad homs just show how weak your understanding is in this discussion.

            tootles!

            Deficits don't matter, jobs do.

            by aguadito on Thu May 02, 2013 at 09:07:54 PM PDT

            [ Parent ]

            •  You really are something. I ran into you before. (0+ / 0-)
              While Congress might be stuck in a deadlock on just about every issue imaginable, there’s one piece of legislation that both Democrats and Republicans hate unanimously: the Stop Trading on Congressional Knowledge (STOCK) Act, a law passed last year designed to prevent insider trading among lawmakers and government officials by requiring them to post disclosures of their financial transactions online.
              Both parties and both houses of Congress hated the disclosure portion of the law so much that it was repealed on Friday without debate—the measure was sent to the president by unanimous consent. The ordeal took about 10 seconds in the Senate and 14 seconds in the House, according to official records.
              The STOCK Act would have required members of Congress, their aides, and other federal employees making more than $119,554 a year to disclose their financial dealings in an online database. It was supposed to prevent government officials from using insider knowledge about policy-making to profit from stock trades and other investments.

              Read more: Congress Quietly Repeals Congressional Insider Trading Ban · NYU Local http://nyulocal.com/...
              Under Creative Commons License: Attribution

              “ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

              by Dburn on Fri May 03, 2013 at 05:44:05 AM PDT

              [ Parent ]

              •  and? (0+ / 0-)

                That's precisely it, it wasn't repealed, it's still very illegal for Congress to use inside information to trade.

                The provision of the STOCK Act that WAS repealed was the online disclosure; the illegality of insider trading was NOT REPEALED.

                SO it wasn't quietly repealed, it had a transparency online-disclosure provision that was killed, but it's wrong to say the whole law was repealed, as it was NOT.

                How do I know? Well,I wrote a huge diary on this exact topic.

                Posting an excerpt from some local paper on the STOCK Act doesn't change that you were wrong in your wording in your diary.

                Deficits don't matter, jobs do.

                by aguadito on Fri May 03, 2013 at 06:54:52 AM PDT

                [ Parent ]

              •  you know what (0+ / 0-)

                we better just drop it.

                I'm not sure who is to blame for setting the tone the way it has been reached.

                Perhaps it was me by calling you and others "nitty-picky" or maybe it was you responding to being called nit-picky by calling me a joke and saying i was throwing a hissy fit and was not worth responding to and saying "what is this we shit" and correcting me on a spelling instead of discussing the issues.

                but either way we better cut it off here, it's not going to get any more civilized.

                Deficits don't matter, jobs do.

                by aguadito on Fri May 03, 2013 at 07:02:40 AM PDT

                [ Parent ]

  •  If a company pays it's CEO an extra (7+ / 0-)

    $100 million per this "loophole", the company gets to claim the amount as an expense, lowering their tax bill. The CEO is 1099'ed for the same amount, and must pay ordinary income taxes on that amount. So there is no taxpayer subsidy. In fact, with marginal tax rates higher for individuals than for corporations, the taxman actually benefits from higher CEO pay. It may be distasteful that some CEOs make this much, but as long as it is in the form of cash (thus ordinary income), it just is not true that we the taxpayer foot part of the bill.

    •  not quite correct (17+ / 0-)

      since it is in the form of stock options, the CEO is able to receive the compensation at the cost of exercising the option, not the actual value of the compensation.  It is still being subsidized by the taxpayer.

      Further, were it not exempted from the $1 million limit, the corporation would also be paying taxes on the stock options

      and if you read the report, you will see the games being played so that the compensation is quite often in no way related to the actual performance of either the company or the stock.

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Thu May 02, 2013 at 04:03:15 AM PDT

      [ Parent ]

      •  Stock options are a specific (4+ / 0-)
        Recommended by:
        gravlax, Sparhawk, Dburn, VClib

        way of paying people. But even with stock options, the amounts deductible by the company and the amounts subject to tax liability by the employee are equal. If the employee exercises the option and holds the stock long enough to take advantage of long term capital rates, then there is a gap for the IRS. But that has nothing to do with CEO pay and everything to do with the existence of capital gains rates. In all of these situations, there is no "loophole" in the way people usually understand loopholes - that someone is taking advantage of something in order to pay less than everybody else.

        The $1M non-deductibility law was stupid from its inception; Congress knew when it passed it that few individuals make more than a million in salary. Once it passed, within a nanosecond, virtually nobody in the country had a salary over a million. The whole thing was, and was designed to be, a publicity stunt.

      •  stock option exercises are W2 income (7+ / 0-)
        Recommended by:
        gravlax, Sparhawk, doc2, VClib, marleycat, Balto, Dburn

        just like salary.  as doc2 notes, taxpayers are net winners.  the tax benefit to the company will be 35%, while the tax hit to the CEO will be 39.6 + Medicare (3.8%).  that's a pretty big difference.

        •  So this part of the report is flat out false: (6+ / 0-)
          Recommended by:
          gravlax, doc2, VClib, Kimbeaux, nextstep, Dburn
          If executives hold onto their shares for more than two years after the grant date and more than a year after the exercise date — the point at which  the stock is transferred to the executive —  they pay only the long-term capital gains tax rate on this income.
          I know tax is complicated, but it's not that complicated.  So.......no.  The piece is describing "incentive stock options."   ("ISOs") Incentive stock options are pretty rare birds in exec comp for two reasons:

          - there's no deduction for the company.
          - Grants of ISOs are limited to $100,000 vesting per year.  

          So if we're talking about companies taking big deductions (over and above our 162(m) limit of $1MM) for big executive pay, we're pretty clearly not talking about ISOs, but rather talking about "nonqualified stock options" which, as noted above, are W-2 wages taxed at top marginal rates and subject to our 2.35% medicare tax on taxpayer and 1.45% on the employer.

        •  Show me the returns... (3+ / 0-)
          Recommended by:
          caul, Kimbeaux, elwior

          ...just show me that the CEO of US Healthcare pays a 39.6% federal income tax rate on that $100 million dollars. I'll believe it when I see it.  

          •  I've done returns like that. (3+ / 0-)
            Recommended by:
            Balto, nextstep, VClib

            They do indeed pay a mammoth amount of tax.  

            The thing is that we know what kind of comp they're getting so we know how it's taxed.  You can be reality based or not, but unless the CEO of US Healthcare is just illegally evading taxes, then s/he's paying top rates on the vast majority of the taxable income (which is closer to 45% when you add FICA & the effect of phased out deductions, so put it at around w/ 47-49% w/ state tax).  

            •  lol (4+ / 0-)

              you need to buck up on your deductions if you're doing returns for wealthy people paying 40+% net taxes.

              the only times i've seen numbers that high are for certain mid-low level (not über wealthy) guys in Cali and NYC, around the 500K mark, they can get nailed.

              but these CEO type guys making 100 million, 200 million is are  not paying anywhere near 40% and i'm willing to bet you've never handled a super wealthy client if yo'ure claiming they pay that kind of effective tax.

              Deficits don't matter, jobs do.

              by aguadito on Thu May 02, 2013 at 09:15:18 AM PDT

              [ Parent ]

            •  I agree with mammoth (0+ / 0-)

              But this volleying is about 39.6% federal income tax. We all know everyone pays other state, local, school, sales, FICA, Medicare, etc. taxes and they add to the total.

              Since you've done returns like that, just tell us that the average Federal income tax rate for 10 of the high income clients is X%.  

              Mr. Romney reported something like 14% for the single year he released.  If the others were higher we probably would have seen those too, right?

              I think we are all pretty much on the same page here anyway.  

        •  yea right (1+ / 0-)
          Recommended by:
          3goldens

          as if because so many companies are facing a 35% effective tax. and so many rich people facing a 39% tax (sarcasm).

          the point is the deductibility goes into perpetuity down to the individual who is rich who deducts so much that their effective rate is so far below the statutory.

          Deficits don't matter, jobs do.

          by aguadito on Thu May 02, 2013 at 09:10:40 AM PDT

          [ Parent ]

  •  since teachers are now being paid for performance (7+ / 0-)

    via student test scores, can they deduct their salaries? Yeah, I didn't think so.....

  •  they're viewed a little differently in practice (3+ / 0-)
    Recommended by:
    gravlax, VClib, nextstep
    but executives with stock options lose nothing. In fact, during stock slumps, executives often receive boatloads of new options with lower exercise prices. In 2007, for instance, Goldman Sachs gave executives options to purchase 3.5 million shares.
    when an exec gets an equity comp bonus of, say, $1MM, they can get it in the form of company stock totaling $1MM, or they can get options that have accounting value of $1MM and real world value of zero and that wont be worth anything unless company stock price goes up.

    so the executive that gets worthless options loses a lot! they lose that years bonus; they could've gotten cash or stock, but instead they got zilch.  

    options do really well when stock price is bound to go up, which is why GS did options when they did.  the price was down and the execs knew it would go up.

    •  The article referenced is completely (6+ / 0-)

      misleading, which is disappointing. It's not even really about stock options, it is about this "loophole" that eliminates what amounts to double taxation. This excerpt is a great example:  

      Caesars Entertainment has hemorrhaged money in recent years, driving CEO Gary Loveman’s stock options underwater. Despite his poor performance, Loveman has managed to take home $9.6 million in cash bonuses, generating taxpayer subsidies the firm can cash in to lower its taxes in years to come.
      So cash pay to a CEO results, according to the authors, in "taxpayer subsidies". That's just flat-out wrong, and intentionally misleading if you ask me. The only thing that is happening here is that these situations are not resulting in the employee AND the corporation paying taxes on these amounts - in other words, double taxation. Somehow, the authors present this as a loophole/taxpayer subsidy.
  •  In addition to Wurster and doc2's comments (4+ / 0-)
    Recommended by:
    gravlax, johnny wurster, VClib, nextstep

    There is the question of the definition of a 'subsidy'.

    Even if Congress repealed the 1MM deductibility thing in its entirety, CEOs still wouldn't be 'subsidized' by taxpayer money. All CEO income comes out of the private gross revenue of the company in question. The government doesn't contribute anything, and the CEO pays normal taxes on the income anyway.

    So what exactly is being subsidized?

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Thu May 02, 2013 at 04:46:32 AM PDT

    •  To be honest, the only subsidy is (6+ / 0-)

      going from the corporation and CEO to Uncle Sam. Because every incremental dollar of CEO pay is resulting in additional tax revenue to the government (due to higher individual tax rates relative to corporate rates). The article actually has got the whole thing backwards, if anything.

      •  bahaha (1+ / 0-)
        Recommended by:
        aliasalias

        this is absolutely hilarious.

        corporate effective taxes are so low (% of gdp, compared w past), and numerous corporations actually pay zero or negative taxes.

        and you're managing, with a seemingly straight non-ironic demeanor, to paint exorbitant CEO pay as being a subsidy from corporations to Uncle Sam?!?!?!

        i'm trying to contain my laughter.

        of course corporations are subsidized by we the people. they pay abnormally low taxes historically, while working class individuals have seen higher payroll taxes recently and regressive spending cuts.

        so yes, we are subsidizing all corporate rent-seeking behavior, which includes insane CEO pay, because they get away with paying lower taxes than they should be, and have systematically rigged the tax code for decades now to benefit the plutocrats.

        and why is a healthcare CEO getting such a bonus? that's right, Obamacare's big wet kiss to the medical industrial complex...

        but go on, tell us how the corporations are subsidizing us and we're just so lucky to let them do this to us.

        Deficits don't matter, jobs do.

        by aguadito on Thu May 02, 2013 at 11:05:29 AM PDT

        [ Parent ]

    •  The 162(m) limit is more like a reverse loophole. (5+ / 0-)
      Recommended by:
      VClib, gravlax, Sparhawk, doc2, nextstep

      I'd call a loophole or tax subsidy anything that diverges materially from the general principles underlying the tax code, a primary one being that we tax net business income.  That's the basis of our tax code: income less business expense yields taxable income.  Exec comp, no matter how high, is still a business expense.  The 162(m) limit (the $1MM cap on deductible salary) is a divergence from that general principle that's driven by non-tax policy considerations*, so I'd think of it as a reverse loophole of sorts.

      * ie, it's tough to justify from a coherentist standpoint.  The section doesn't really hang together with the rest of the code.  

      •  But since 162 is incredibly easy to (5+ / 0-)

        skirt, it's not even a reverse loophole. It's more of a publicity stunt if you ask me, a good example of politicians trying to fool the electorate that they've done something, with all of the targeted people understanding that the whole thing is meaningless. Even after all of the explaining we've done here, commenters are still chiming in with the "the system is rigged" comments. Tax legislation is a terrific way of fooling people, because the vast majority of Americans simply don't understand basic tax math.

        •  Good intentions/bad consequences (2+ / 0-)
          Recommended by:
          nextstep, VClib

          I think the attempt at containing CEO pay is legit, but have come to believe that it is like trying to legislate morality, and trying to legislate morality with a well-lawyered group in opposition.

          For comp-nerds and wannabees, there's another tax code example: 280G put fairly onerous tax consequences for an individual and company on "golden parachutes" that crossed a certain threshold.  The idea was that it would be so horrible that no one would do it.  What ended up happening (for not entirely vile reasons) was that companies offered "gross-ups" to pay the extra tax consequence for the executives.  In no universe was this good news for shareholders.  Eventually, it took many years, shareholder activists shined enough light on the practice and campaigned against it that most companies have eliminated the practice.  Still and all, a lot of lawyers made a lot of money and still do wading in the weeds of this one.

          Thinking of it now it reminds me of the sequester: we should never assume that we've set up consequences bad enough that that won't be tolerated/can't be evaded.

        •  because the system is rigged (1+ / 0-)
          Recommended by:
          aliasalias

          it's not about not understanding the basic tax math.

          it's about a loss of any values from lawyers, accountants, and others who work for the elites, including yourself as a casual apologist.

          the very problem is that you don't seem to see things like carried interest, or the deductions that only benefit the wealthy, or offshore loopholes, or the endless scheme of stupid corporate-written tax legislation as corrupt or rigged.

          you object so much to the term "rigged", then the system is just faulty, broken, wrong. But the fact is we know corporations and lobbyists wrote these things in, so RIGGED is a fair way to describe our tax code and regulatory framework, which since the 70's has slowly dismantled the middle class and promoted inequality in a globalized environment that was going to press on workers anyway.

          Deficits don't matter, jobs do.

          by aguadito on Thu May 02, 2013 at 11:10:59 AM PDT

          [ Parent ]

      •  wrong (0+ / 0-)

        the limit has a loophole that exempts performance-based pay.

        it's a loophole that corporations are using to issue excessive pay that they can deduct (to get around the 1MM limit) -- mostly through stock options.

        the "performance-based pay" thing should not be a loophole to this limit at all.

        but the fact that corporations are issuing excessive executive compensation and writing it off as "performance-based pay" and thus exempt from the deduction limit of 1MM, makes it a loophole.

        you try and masquerade your arguments as if they're technical nuances from a tax lawyer's perspective, but in reality you really are just trying to obfuscate the issue to try and confuse people and make them see a blatant loophole as something that is just not quite exactly a loophole, to serve no real purpose but distract from the point made in the report.

        the base fact is: tax expenditures are spending cuts, and foregoing tax revenue is the same as giving a subsidy. technicallly, theoretically, and empirically this is axiomatic. deal with it and call a subsidy a subsidy and a loophole a loophole.

        if we let corporations write off excessive pay through a "performance-based" loophole, we FOREGO that tax revenue, and collect ONLY the personal income tax from the recipient of the excessive pay --- SUBSIDY. PERIOD.

        Deficits don't matter, jobs do.

        by aguadito on Thu May 02, 2013 at 12:00:45 PM PDT

        [ Parent ]

    •  the subsidy aspect is (0+ / 0-)

      giving corporations the ability to write off the excess pay instead of having to pay the corp income tax on it, in addition to the person receiving the excessive pay paying income tax on it.

      we're subsidizing it by not collecting the tax we should be, and having the make up the difference by working americans paying the gap.

      this isn't a controversial way of viewing/defining "subsidy".

      it's like the discussion of "tax expenditures" vs. "spending cuts" -- when you forego tax revenue, it's essentially SPENDING, so by forgoing the corporate tax revenue on the >1MM pay loophole, we are essentially PAYING the corporations and subsidizing the excessive pay.

      and all economists view tax expenditures as spending cuts. and tax loopholes on the same token serve as subsidies.

      Deficits don't matter, jobs do.

      by aguadito on Thu May 02, 2013 at 11:49:21 AM PDT

      [ Parent ]

  •  Another example of how the system is rigged. (7+ / 0-)

    Plato's " The Cave" taught me to question reality.

    by CTDemoFarmer on Thu May 02, 2013 at 04:53:32 AM PDT

  •  well it's really a charitable organization ...n/t (3+ / 0-)
    Recommended by:
    Words In Action, voicemail, elwior

    ''A conservative is a man with two perfectly good legs who, however, has never learned to walk forward.'' FDR

    by lostinamerica on Thu May 02, 2013 at 05:00:36 AM PDT

  •  That's the American way lying hypocrisy; (5+ / 0-)

    Tipped & rec'ed

  •  Great study, but somewhat misleading (4+ / 0-)
    Recommended by:
    gravlax, Kimbeaux, ScienceMom, aguadito

    This would be more useful if it were framed as a discussion on the lower rates of corporate tax paid these days and lost revenue that results, in my opinion.  

    162(m) is often viewed by the inside-baseball types (including those on the side of economic justice) as an example of how difficult it is to legislate good changes on exec comp.  Even the best laws have unintended consequences.  One of the negative outcomes of this was that all of a sudden, when the rule came out, many, many companies raised CEO salary to $1 million, and that became the baseline for large companies.  Companies are required in their proxy statements to discuss this, in obscure language of course, and usually say they attempt to pay in a way that won't result in the tax consequences.  I'm seeing more proxy statements that pay more than a million these days.

    Anyway, it is good stuff.  Here's another article of interest:

    http://www.bloomberg.com/...

    And my favorite comp tidbit of the season, which I may do a diary on at some point, is the McDonald's removed Costco from its comp peer group because of difference in philosophy.

  •  When Greed became a social Good (1+ / 0-)
    Recommended by:
    3goldens

    who could have foreseen?

    Certainly not the moderates.

    But now that it's happened: s'all good, people. don't gotta fight it. Just let it slip into veins.

    The singularity we are witnessing is the passing of the last wave of people who had the luxury to behave as if the past 30 years did not happen.

    by Words In Action on Thu May 02, 2013 at 06:33:08 AM PDT

  •  The rest of us don't get paid for performance? n/t (2+ / 0-)
    Recommended by:
    gravlax, Kimbeaux
  •  This makes me sick (6+ / 0-)

    Healthcare company CEO raking in $200 million in pay?

    I guess that's what happens when Washington gives away hundreds of billions in subsidies to the industry while neglecting to offer a public option that would compete against the private sector and provide a balance.

    Excellent diary and this information is dangerously underreported in most media.

    Corporate governance reform is and has been on the backburner for a long time now. Ralph Nader has some good ideas on this, particularly a federal corporate charter, co-determination, and democratization of corporations (stripping power from index funds and other proxy conduits of shareholders).

    Management infests the Boards and they give themselves huge payouts that shareholders don't even want to really give, but they're told "they need to pay for talent" and other total nonsense.

    Thanks for bringing this information out there, this report seems like a goldmine on this topic.

    Deficits don't matter, jobs do.

    by aguadito on Thu May 02, 2013 at 08:33:00 AM PDT

  •  I gave Zaslav and his daughter an admissions tour (0+ / 0-)

    She was checking out BU, my alma mater, and I was asked to give them a personal tour along with an admissions employee. He was a pretty regular guy, at least in that moment, dressed in jeans and sneakers and was kind, but his daughter wasn't the least bit interested in our tour! Haha. I guess rich kid syndrome?

  •  Heh, all the apologists, (2+ / 0-)
    Recommended by:
    aguadito, aliasalias

    the defenders of obscene income inequality, billionaires all no doubt, are coming out of the woodwork.

    Hey guys, it's on the FP now too, better get over there quick!

    The free market is not the solution, the free market is the problem.

    by Azazello on Thu May 02, 2013 at 10:30:20 AM PDT

    •  I see this as trying to reduce the aggregate (2+ / 0-)
      Recommended by:
      VClib, mygreekamphora

      stupidity of the world with respect to tax.  If I can reduce that even a little, it's worth the dumb comments from the peanut gallery.

    •  Az - no one is defending the magnitude of (2+ / 0-)
      Recommended by:
      mygreekamphora, johnny wurster

      executive compensation in the Fortune 1000, only how it is taxed at a personal level and how those expenses impact corporate P & Ls and how compensation impacts corporate tax rates.

      We all think the compensation is outrageous. The only good news is that it is taxed at the top marginal rate.

      "let's talk about that"

      by VClib on Thu May 02, 2013 at 10:58:35 AM PDT

      [ Parent ]

      •  again, we don't even know that (3+ / 0-)

        his tax returns are not public.

        who knows how little of that income is actually getting taxed at the marginal rate.

        Deficits don't matter, jobs do.

        by aguadito on Thu May 02, 2013 at 11:12:55 AM PDT

        [ Parent ]

      •  no your defending a tax break the corp shouldn't (2+ / 0-)
        Recommended by:
        aguadito, aliasalias

        get.

        The Corp shouldn't get this tax break, and if they didn't this is more income they would pay tax on.

        Then, when they pay their CEO, good news, we still get that top tax rate!

        So without that loophole we are getting more revenue.

        Growth for the sake of growth is the ideology of the cancer cell. --Edward Abbey

        by greenbastard on Thu May 02, 2013 at 11:30:05 AM PDT

        [ Parent ]

        •  it's amazing (1+ / 0-)
          Recommended by:
          greenbastard

          how many times you have to tell these corporatist defender guys that their line of thinking might be fine at work, but in society and humanity it's just warped.

          "HEY WE STILL GET TO TAX IT ON THE PERSONAL INCOME LEVEL"

          uh, yea, but the corporations are avoiding paying the tax above 1MM by writing off the stock option payout.

          "BUT BUT BUT ITS NOT A SUBSIDY BECAUSE WE STILL GET THE TAX ON THE PERSONAL LEVEL"

          eventuallly we become a broken record by pointing out the obvious -- we're LOSING TAX REVENUE because the corporation shouldn't be able to write off these payouts as "performacne based" and deduct -- we should be taxing it as their normal corporate income once, and AGAIN on the personal level!

          the point of a tax is not only to raise revenue but primarily to dissuade bad behavior, reduce incentives, regulate demand.

          +1 :)

          Deficits don't matter, jobs do.

          by aguadito on Thu May 02, 2013 at 11:44:08 AM PDT

          [ Parent ]

          •  There is no double taxation of (1+ / 0-)
            Recommended by:
            johnny wurster

            compensation in the tax code. There is double taxation of non-incentive comp. That's it. So nobody has to pay the double tax because it is easy to call compensation incentive comp. And Congress knew this when it wrote the provision. If you want double taxation of CEO comp, or triple, or whatever, fine. But it is simply untrue that given today's tax code that just because CEO pay is not doubly taxed that they are being "subsidized". When a company pays an executive an extra million, we taxpayers actually collect more money (since individual rates + Medicare is higher than corporate rates). The article, while sympathetic to liberal ideas, is simply wrong on the facts.

            •  more silliness (1+ / 0-)
              Recommended by:
              aguadito

              income of a corporation is taxed, and then the income of their employees are taxed.

              Just like you are taxed, and if you had an employee, their income would be taxed as well.

              Double taxation is would be if the corporation was taxed twice. Or the CEO was taxed twice.

              Growth for the sake of growth is the ideology of the cancer cell. --Edward Abbey

              by greenbastard on Thu May 02, 2013 at 12:21:58 PM PDT

              [ Parent ]

              •  You need to be a bit more humble (2+ / 0-)
                Recommended by:
                VClib, johnny wurster

                and when a number of tax professionals are saying the same thing, pause for a moment to read and reflect on what they are saying. If a corporation has $1 of expense, that expense is deducted from their income, and the counterparty the $1 was paid to (or employee) has an additional dollar of income. Thus, no net tax obligation is created. If the corporation was not able to deduct the expense, they would have to pay tax on that dollar, the same dollar that the employee would also have to pay tax on. So the dollar would be taxed twice, once at 35% (corporate) and once at 42.8% (personal + medicare), for a total of 77.8%. Thus it is not only double taxation, it is worse (usually with double taxation, the second tax is applied to the after-tax amount; in this case both taxes are applied to the entire amount).

                •  bahaha (0+ / 0-)

                  nice appeal to authority. meanwhile, ivy league lawyers and professionals are the ones who actually put together the report that this diary is about (not like you've even read it of course).

                  you've already shown your hand by calling this "double taxation."

                  If a corporation has $100 of expense, and it's deducted from their income, they avoid paying income tax on that $100 expense.

                  If we as a society have said "hey, we don't want this excessive compensation to be written off, corporations should have to pay tax on it as income, in addition to the tax personal individuals are paying", that $100 of expense that we will call excessive compensation would NOT be written off, and would be reported as income to be paid by the corporation!

                  in addition that $100 excessive compensation would go to the individual and create a tax obligation there.

                  By letting the corporations write it off, they avoid paying taxes on that income and pass on the tax obligation completely over to the individual. The "performance based" loophole lets them write it off instead of having to pay tax on the income!

                  Two separate tax obligations, it's only double taxation if you have a corporatist agenda to push.

                  Deficits don't matter, jobs do.

                  by aguadito on Thu May 02, 2013 at 12:39:20 PM PDT

                  [ Parent ]

                •  doc2 - very well stated (3+ / 0-)
                  Recommended by:
                  doc2, nextstep, johnny wurster

                  What we need to understand is that many here would be delighted that the income was taxed twice for a total of nearly 80% regardless of the fact that it violates nearly every principal of GAAP accounting and the basic structure of our tax code.

                  "let's talk about that"

                  by VClib on Thu May 02, 2013 at 01:56:09 PM PDT

                  [ Parent ]

                  •  That's fine if they want that to (0+ / 0-)

                    be put in the tax code. What I find disgusting is that some on the left (including the authors of this report) are arguing that by not paying the 80% corporations are somehow being subsidized and are taking advantage of a loophole. I think most people agree that someone taking advantage of a loophole is somehow paying less tax than the rest of us (not paying more tax than the rest of us but just not double). And the ranting of some here really is beneath the level of what liberals should strive for.

                    •  bahaha (0+ / 0-)

                      you're a joke, true progressives understand the compound effects of wealth-inequality and market power.

                      taxing corporations in addition to individuals is not immoral and it's not "80% taxation of corporations" -- but you're forced to use that kind of emotional language to buttress your neo-liberal approach. maybe you were trained that way so you don't understand how to think like a human, i dont know, but either way it's sad to see.

                      CONGRESS PASSED THE LAW AND PUT IT IN THE TAX CODE! that was the point of this analysis and the report which complains about the performance-based pay loophole that gets around the compensation deduction cap.

                      and nobody sensible is going to be jumping to the defense of multi-billiondollar corporations who abuse the tax code like no other (find me a single fucking corporation paying the 35% you complain about, and a single high-flying exec paying 40+% net on their personal income) -- the point of such laws is to even out the burden that corporations have spent decades reducing with useless tax legislation.

                      then again, you're not a sensible individual with liberal values. you seem more like a PR/DC lobbyist trying to influence policy to benefit corporations.

                      Deficits don't matter, jobs do.

                      by aguadito on Thu May 02, 2013 at 09:17:27 PM PDT

                      [ Parent ]

                  •  lol (0+ / 0-)

                    you don't understand the issue then.

                    because it's not about that, considering corporations aren't paying 35%, so by not being able to write off the excessive executive it's not the same as "double taxing that income for a total of nearly 80%"

                    the point of congress passing the law was to change the tax code, it doesn't "violate" any principles in reality.

                    GAAP is a total disgrace and dumb-fuck beancounters are a big reason why the financial crises are so common and ignored until it's too late.

                    and it's not "a total of 80%" -- the end-receiver of the funds is still paying a normal amount.

                    and by NOT allowing them to deduct excessive pay, it's the same as just having a sort of deduction cap as Obama proposed -- but you don't cry about that "violating principles"

                    if your problem is with Congress' original law, that's another issue, but trying to obfuscate the facts to make it look like this report is discredited is absurd, and all these "tax experts" in the diary have been thoroughly debunked in their attempts to talk their way out of it.

                    Deficits don't matter, jobs do.

                    by aguadito on Thu May 02, 2013 at 09:13:52 PM PDT

                    [ Parent ]

                    •  ag - I have always thought that 162m was (1+ / 0-)
                      Recommended by:
                      aguadito

                      bad tax policy, but it did specifically exempt performance compensation so there is no "loophole".

                      "let's talk about that"

                      by VClib on Thu May 02, 2013 at 10:14:05 PM PDT

                      [ Parent ]

                      •  the exemption (0+ / 0-)

                        was written into congress as a loophole.

                        in my opinion, it's not dishonest or misleading to call it a loophole.

                        loopholes written by congress or paid-for by corporations to put in place are still loopholes.

                        yes, it's statutorily legal, but the intent of the law was to not incentivize excessive exec compensation by capping at 1MM.

                        the difference we have here seems to merely be one of terminoloy, i think we agree on principle .

                        Deficits don't matter, jobs do.

                        by aguadito on Thu May 02, 2013 at 10:19:17 PM PDT

                        [ Parent ]

            •  stop your lying (1+ / 0-)
              Recommended by:
              Azazello
              When a company pays an executive an extra million, we taxpayers actually collect more money (since individual rates + Medicare is higher than corporate rates)
              we don't collect MORE by allowing corporations to write off excessive executive pay.

              stop trying to discredit a good report and a solid diary.

              yes, we get to tax any and all individual pay from corporations at the individual level.

              but by letting corporations write off that pay as an expense, instead of being forced as the law intended to limit the deduction to 1MM and make them eat the excessive comp, we are LOSING REVENUES.

              it's NOT higher, not NET, not gross, not in any damn way.

              it's not like corporations paying the tax on the pay would be INSTEAD OF the individual paying taxes (it's not the same as if the corporation decides just not to pay an executive and reinvest the money instead).

              if the corporation makes the excessive compensation payment to an individual, DOESNT deduct it, then BOTH the corporation AND the individual would have to pay it.

              we're not "collecting more" by letting corporations use a loophole to avoid deducting it so that we ONLY collect the individual tax.

              we should be collecting the tax on the corporate and individual level.

              Deficits don't matter, jobs do.

              by aguadito on Thu May 02, 2013 at 12:48:02 PM PDT

              [ Parent ]

  •  Lest we forget: (1+ / 0-)
    Recommended by:
    aguadito

    Alan Simpson and Erskine Bowles were handpicked by Obama to head his Catfood Commission.

    I wish I had a nickel for every liberal who claimed it was "eleventy-dimensional chess", etc. (Not to mention, shut up about it, you purity troll/firebagger/emo-proggie, and such as.)

    P.S. Our President is still appointing plutocrats and their servants to his Administration.

    Chicago billionaire Penny Pritzker

    Pritzker's nomination could prove controversial. She is on the board of Chicago-based Hyatt Hotels Corp., which was founded by her wealthy family and has had rocky relations with labor unions, and she could face questions about the failure of a bank partly owned by her family.

    With a personal fortune estimated at $1.85 billion, Pritzker, 54, is listed by Forbes magazine among the 300 wealthiest Americans.

    And Tom Wheeler, a venture capitalist and “former top lobbyist for the cable and wireless industries” to serve as chairman of the FCC
    ~

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