taxpayers subsidize ceo pay

#5
#5
subsidize is not the correct word here - the tax payers are not contributing money to the CEO pay.

Not defending the loopholes but the article title is misleading.
 
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#6
#6
so a company gave more to an employee than they did to the govt? Not sure I understand the issue
 
#7
#7
News flash! We have effectively subsidized the pay of every CEO of every company that has ever received any sort of help from the government.
 
#8
#8
it does smack of a mentality that money earned is the government's and they decide how much you can keep - the subsidize word is really a poor choice here.
 
#10
#10
volinbham said:
it does smack of a mentality that money earned is the government's and they decide how much you can keep - the subsidize word is really a poor choice here.
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It's looking at spending vis a vis the tax code; every tax break effectively works as a subsidy. As far as I know it's common practice for tax economists to look at it this way.

It's both correct and probably not worthy of outrage unless one dislikes the entire tax structure as it is.
 
#11
#11
volinbham said:
How so?
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CEO pay is part of the cost of doing business. When you subsidize you are subsidizing every aspect of the cost of doing business. We can pretend like subsidies go to specific things, like production of sugarbeets, but ultimately the subsidy goes to the entire operation.

ItÂ’s like food stamps that canÂ’t be used to buy drugs and tobacco. Food stamps still subsidize the use of drugs and tobacco because cash that would have to be used on food can now be used for drugs and tobacco.
 
#12
#12
People need to understand how taxation works with a business. The only way a business will actually pay taxes is if it keeps some money made left in the corp account at the end of the year. If all income is either used for expenses or paid out through income the business will not pay a single tax other than franchise taxes, payroll tax etc.


You can also thank Clinton for changing the way CEO's are paid. He is the one who changed the million dollar pay tax so businesses simply went to paying out in stock for everything over a million.


Does this country want unemployement under 5% or do they want a bunch of pissed off businesses downsizing and offshoring? Because you won't get both.
 
#15
#15
CEO and all employees are still paying taxes on their income. Where does their salary come from, well the companies revenues and profits of course.

Sorry, hard for me to get mad at the lack of double taxation.
 
#16
#16
milohimself said:
It's looking at spending vis a vis the tax code; every tax break effectively works as a subsidy. As far as I know it's common practice for tax economists to look at it this way.

It's both correct and probably not worthy of outrage unless one dislikes the entire tax structure as it is.
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philosophically it is different. loopholes are distinct from subsidies. It's akin to saying the government subsidizes capital gains which is incorrect. Capital gains are taxed at a different rate. More so, it would be like saying the government subsidizes any income that is not taxed at the highest marginal rate.

I understand it impacts the total revenue but subsidizes implies the government is directing tax $ towards and entity, not reducing the amount of tax $ it collects from an entity.
 
#17
#17
The capital gains tax comparison is mostly correct, because that is different from income (or revenue/profit in this case)

But from an economic standpoint, loopholes are spending by definition; at the most basic level, there is no difference between the government spending money that it has or not taking it in the first place. Amounts my affect that decision, but at the end of the day it's money coming and going.
 
#18
#18
milohimself said:
The capital gains tax comparison is mostly correct, because that is different from income (or revenue/profit in this case)

But from an economic standpoint, loopholes are spending by definition; at the most basic level, there is no difference between the government spending money that it has or not taking it in the first place. Amounts my affect that decision, but at the end of the day it's money coming and going.
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Not necessarily true. Laffer curve. The higher the effective tax rate the more likely people are to start hiding income, etc. There's a point where tax rates get so high that tax revenue actually shrinks. That is why you can't consider the entire sum of the loophole the same as spending.
 
#19
#19
n_huffhines said:
Not necessarily true. Laffer curve. The higher the effective tax rate the more likely people are to start hiding income, etc. There's a point where tax rates get so high that tax revenue actually shrinks. That is why you can't consider the entire sum of the loophole the same as spending.
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I get that, what I was trying to convey when I mentioned amounts, that it's not a linear effect, but I think you hinted at what I'm getting at in that targeted tax breaks can be looked at as spending.
 
#20
#20
e.g. I get a tax break because I'm in college, so the federal government is subsidizing my education through taxes
 
#21
#21
But the pay of the CEO and the tax liability of the corporation are distinct. They are separate tax entities. Claiming that 26 CEOs made more money than the company they worked for paid in taxes is a meaningless number and in no way signifies tax payers subsidizing CEO pay more than any company that breaks even in a given year and pays no taxes (no profits). If my corp spent lavishly on offices, supplies and salaries for all employees and as a result broke even it would be nuts to say the government subsidized the employees of the company.
 
#22
#22
The latest edition of the institute's annual Executive Excess compensation study found that in 2011, 26 CEOs received more in compensation than their companies paid in taxes, and that the four major tax loopholes contributing to excessive executive pay cost taxpayers about $14.4 billion a year.
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so using this logic, if fuel prices go up and an airline pays less in taxes because they made less profit then tax payers subsidized the airline? Ridiculous.

If people's incomes drop across the board and they pay less taxes did we all subsidize each other? Ridiculous.
 
#23
#23
Here's another gem

Companies can deduct executive pay as a business expense, just as they do inventory and appreciation. Because of a tax rule enacted in the early 1990s that limited the amount of cash that could be deducted to $1 million, corporations have increasingly paid executives in stock options. Corporations can exempt stock option compensation, and other performance-based pay, from taxation.
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What's missing from the first sentence? They deduct ALL employee salaries as a business expense - that is not unique to CEOs.

The stuff about stock options is off as well as the carried-interest part because these get to the CEO's personal tax liability rather than the corporation's tax liability which is the hook of the article (CEOs paid more than the companies they work for paid in taxes). It's an absurd comparison. And the "think tank" uses it to say lowering CORPORATE taxes is the wrong thing to do. The whole article is a mess.

If you want to talk about are CEOs themselves paying enough taxes then that is another matter.
 
#24
#24
I finally got around to reading the link

The quote from the link in the OP is a statement of fact, making the jump that it is a subsidy is not

What I was saying is that tax breaks can be looked at as subsidies from the standpoint of gov't spending
 
#25
#25
Okay the more I read this article the dumber it becomes - I can't believe their are only 26 situations were CEO pay exceeded the company's tax liability. I would imagine more than 26 corporations lost money last year - wouldn't all of those be the same situation?
 
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