http://www.cnbc.com/id/44337105/US_Firms_Paid_More_to_CEOs_Than_Taxes_in_2010_Study

Our country had been bombarded by political mayhem like unproductive congress, as well as a burden of national debt that keeps hanging over our head and reminds of itself on almost every national headline. While the political elite is trying to slash and reduce the debt jeopardizing ideologies of its own parties, the private sector’s elite – CEOs of large corporations are filling their pockets with bonuses and salaries, as if we were still in 2003. According to the report conducted by Institute of Policy Study: “Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax”. The report has been ordered by Committee on Oversight and Government Reform. The conducted study upon the topic stated that the average pay of a CEO that surpassed taxes was 16.7 million dollars yearly. An interesting point has been brought up in this article, comparing a higher-than-taxes pay to cases of corporate fraud, such as Enron and WorldCom. According to Collins, the congressman who ordered the report to be conducted, outsized CEO pay was often a red flag for bigger problems to come. I would like to get to the very bottom of this issue right away. This story is much deeper than this corporate fiscal year, the house elections or even the national debt. This is an issue directly connected to the de-regulation of not only our economic system, but Capitalism itself. United States and the Western World are not ready for a structure like Capitalism, as we don’t have enough ethical bases in our society, to be able to run corporations without greedy outlook on profit and wealth accumulation. Situations like this will exist whether these companies that are brought to our attention will follow footsteps of Enron or not. Our society needs to regulate our economic system until ethical values will be so strong that they will make the regulation unnecessary. From a standpoint of a reasonable investor, who would choose to accure stock of let’s say eBay or Boeing, the situation is rather rainy. An investor would want a company to produce profit in a natural manner: through successful business model, right management and demanded product. Profit should not depend whether there was a hefty transfer enterprise to tax haven or not, in that I do agree with the article. Another fact, a reasonable investor such as me would look is the reason why the management of the company decided to pay the CEO more money than they declared in taxes, knowing the current economic and political situation surrounding bailouts and taxes. A reasonable citizen or a law maker would look at this situation from a position of what is right in regards to today’s economic situation. The thesis question for him would be “Why actions like this are still continued after the Great Recession that had shaken this World?” Reasonable citizens are the ones doing protests, putting together petitions and questioning some of the ways of lobbyists. The author of this article is obviously on the side of the questioning party. Information in the article is presented underlying the absurdness of this situation and showing the actions of congressional committee while investigating this matter. I feel like the author wants to point out the ridiculousness of the situation and the CEO’s disregard to the Great Recession in the recent times. The accuracy of the numbers provided in this article are acute as well as the supporting sentences such as GE’s oversized lobbying budget comparing to the taxes paid.

US Firms Paid More to CEOs Than Taxes in 2010: Study
Published: Wednesday, 31 Aug 2011 | 1:48 AM ET
By: Reuters

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 said on Wednesday. It also found many of the companies spent more on lobbying than they did on taxes. |
At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies (IPS), a left-leaning Washington think tank, quickly hit a nerve.
After reading it, Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation.
In a letter to that committee's chairman, Republican Darrell Issa, Cummings asked "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today".
He also asked "why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high", and "the extent to which our tax code may be encouraging these growing disparities".
In putting together its study, IPS chose to compare 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 deferred taxes may or may not be paid, and that current U.S. taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year.
$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 [.SPX 1204.09 -11.92 (-0.98%) ] CEOs. Among the companies topping the IPS list: eBay [EBAY 33.10 -0.59 (-1.75%) ] whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S.taxes.
Boeing [BA 64.15 -1.23 (-1.88%) ] , 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 [GE 16.18 -0.15 (-0.92%) ] 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.
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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 [TYC 44.75 1.05 (+2.4%) ] , Enron [ECTPQ 0.005 --- UNCH (0) ] and WorldCom.
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