Top Economists Call for Higher Taxes on Mega-Rich
A new study by a team of top economists finds that if the tax rate for the highest-income Americans was pegged at—drum roll please—83 percent—it wouldn’t impact anyone but the “mega-rich.”
When Ronald Reagan and his Republican successors began three decades of hacking away at the taxes the rich paid—once as high as 80 percent—they claimed it would spur unfettered, long-term uninterrupted economic growth for all. Great Britain’s Margaret Thatcher followed the same game plan. Well, say the authors:
Countries that made large cuts in top tax rates such as the United Kingdom or the United States have not grown significantly faster than countries that did not, such as Germany or Denmark.
Along with the tax cuts, the decades-long soaring level of executive pay, stock Read the rest of this entry »
Did Obscene Executive Pay Spark the Financial Crisis?
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You’ve heard all the reasons given for the economic implosion of 2008: the bursting of the housing bubble, the risky investments of financial firms, the use of incomprehensible financial instruments as get-rich-quick-schemes—all of them the result of a massive agenda of across-the-board deregulation pushed by Republican lawmakers since the 1980s.
But at the root of the behavior that led to the 2008 market crash that nearly took down the economy, according to experts who spoke yesterday at a conference at the AFL-CIO in Washington, D.C., is the soaring level of executive pay at the nation’s giant corporations—a system of salary, stock options and bonuses that is not tied to a company’s long-term performance, but rather to the short-term profits that stand to enrich CEOs via the options and bonuses. Consequently, explained AFL-CIO President Richard Trumka at yesterday’s conference, ”Executive Pay and the Dodd-Frank Act,” excessive executive pay led to excessive risk-taking by CEOs and other top officials in corporations and financial institutions.
In 1980, Trumka said, executives at the nation’s largest companies earned about 42 times the level paid the average factory worker, according to an estimate by BusinessWeek magazine at the time. Today, he said, the average CEO at a corporation in the Standard & Poor’s 500 collects a payout that is some 343 times larger than the median paycheck received by the average worker.
As an example of the kind of chaos such extreme pay gaps can create, Trumka cited the case of Angelo Mozilo, the former CEO of subprime mortgage giant Countrywide, who cashed out $400 million in stock options while the housing bubble was building, yielding him a windfall before his company collapsed under the weight of the bad loans that fueled the bubble—the very bubble that filled his coffers, while ultimately robbing regular Americans of their homes once it burst.
Conference Addresses CEO-to-Worker Pay Disparity
The Americans for Financial Reform Conference on Executive Pay and the Dodd-Frank Wall Street Reform and Consumer Protection Act will discuss this afternoon a provision that would disclose the CEO-to-worker pay ratio to investors and the public for the first time. The AFL-CIO is hosting the conference.
For investors, the CEO-to-typical employee pay disparity ratio is an important gauge of the effectiveness of the board. The pay disparity ratio is also important for investors in assessing the efficiency of a company because a steep gap affects employee productivity, morale and turnover. The SEC is drafting a rule on the CEO-to-worker pay disparity ratio, as it is required to under the Dodd-Frank law. Read the rest of this entry »
More Proof of CEO Greed (In Case You Had Doubts)
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In 1965, when the U.S. economy was humming, the average CEO collected $24 for every $1 earned by a worker. Today, as the economy struggles, that ratio is $243-to-$1. It sounds bad and as the chart shows, looks even worse. The Economic Policy Institute (EPI) shows the trend here.
The Snapshot graph is part of the EPI report, “Occupy Wall Streeters Are Right About Skewed Economic Rewards in the United States,” released late last month.
Contact Your Senator for the 99%
Working familes in Washington, D.C., and Cannes, France (where leaders of the G-20 are meeting), rallied yesterday for passage of a Robin Hood tax on Wall Street. You can join the action by telling Wall Street it’s time to pay its fair share.
The Robin Hood (financial speculation) tax is a tiny pinch that would be felt primarily by high-volume, high-speed traders who deal in stocks, bonds, foreign currency bets, derivatives and other Wall Street financial products. Yesterday, Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) introduced just such legislation, the “Wall Street Trading and Speculators Tax Act.”
Click here to call your senators in support of a financial speculation tax. If you complete at least one call, we’ll send you a free “I am the 99%” bumper sticker.
CEOs Rake in More than Their Corporations Pay in Taxes
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Of last year’s 100 highest-paid U.S. corporate chief executives, 25 took home more in CEO pay than their company paid in 2010 federal corporate income taxes, according to a new report from the Institute for Policy Studies (IPS).
As IPS puts it:
Corporations don’t dodge taxes, the people who run corporations do. And these CEOs are reaping awesomely lavish rewards for the tax dodging they have their corporations do.
“Executive Excess 2011: The Massive CEO Rewards for Tax Dodging“ shows the 25 tax-dodging CEOs the IPS report spotlights averaged $16.7 million in pay last year, well above the $10.8 million Standard & Poor’s 500 CEO average. Most of their companies registered substantial profits. Yet these same companies actually came out ahead at tax time. They collected, on average, $413 million in refunds from the IRS.
At Verizon, where CEO compensation totaled $18.1 million, the corporation got a federal $705 million federal income tax refund.
45,000 Verizon Workers on Strike
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UPDATE: Tomorrow morning, Aug. 8, thousands of striking workers will join mass picket lines and rallies at more than 100 Verizon work locations across New York and New Jersey to push the highly profitable company to back off its sweeping demands. The list of picket lines and rallies is here.
And in the Washington, D.C., area, you can show your support for striking workers at a mobilization rally Monday at noon at the Chesapeake Complex, 13100 Columbia Pike, Silver Spring.
More than 45,000 workers from New England to Virginia went on strike just after midnight today at Verizon Communications. Since bargaining began July 22, Verizon has refused to move from a long list of concession demands. As the contract expired, Verizon, a $100 billion company, still was looking for $1 billion in concessions from 45,000 workers and families. That’s about $20,000 in givebacks for every family, nearly 100 concessionary proposals remained on the table.
U.S. Workers’ Share of National Economy Nosedives into the Lower Depths
This chart, published today at Talking Points Memo, pretty much says it all. Except, of course, that CEO pay has skyrocketed—with CEOs of the largest companies receiving, on average, $11.4 million in total compensation in 2010.
Why are so few in Washington, D.C., listening?
Boeing Exec Says $3.7 Mil Not Enough
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Boeing Co. Executive Vice President and General Counsel Michael Luttig pulled in $3.7 million in compensation in 2009. That’s a whopping 34 percent increase from 2008—and it came during a major recession.
Meanwhile, as Sen. Tom Harkin (D-Iowa) pointed out during a hearing yesterday (see video) on the shrinking American middle class, Boeing’s workers have seen just a 3 percent increase in their average compensation over the past 20 years!
Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee, wanted to know that if things were going so swimmingly for Boeing that Luttig could pocket a 34 percent pay hike,
Why shouldn’t employees have a share of that? I’m just asking about fairness for workers.
Luttig turned to the old let’s-duck-the-question-with-a-little-humor dodge. But his lame attempt at humor just showed how out of touch he is with the real-life, middle-class problem of stagnant wages.
2011 PayWatch: Average CEO Salary–$11.4 Million
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While 25 million unemployed and underemployed U.S. workers are drowning, CEO pay skyrocketed by 23 percent, for an average salary of $11.4 million in 2010, according to the AFL-CIO Executive PayWatch. Released today, data compiled at PayWatch also show CEOs have done little to create badly-needed jobs, instead sitting on a record $1.93 trillion in cash on their balance sheets.
The 2011 Executive PayWatch features the compensation of 299 S&P 500 company CEOs and provides direct comparisons between those CEOs and the median pay of nurses, teachers, firefighters and others. For instance, while a secretary makes a median annual salary of $29,980, someone like Wells Fargo CEO John Stumpf rakes in $18,973,722 million—632 times the secretary’s salary. The pay gap between Wall Street and Main Street has widened egregiously—as recently as 1980, CEOs made 42 times that of blue-collar workers.
(Check out the 2011 Executive PayWatch to read case studies of six CEOs and find out how many firefighters it takes to make the salary of one CEO. You also can compare salaries of nurses, secretaries and others with CEOs and share the results with your friends on Facebook. Click here to share on Facebook.)
Maybe CEOs can’t focus on job creation because they have more pressing issues—like lobbying to repeal key provisions of a financial disclosure reform bill Congress passed last year. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations to reveal the CEO-to-worker pay gap—and the Wall Street rulers don’t want to do that. (Click here to urge your member of Congress not to weaken Wall Street reform in any way.)
