FACT: We're better off then we were four years ago

From Pat Garofalo – ThinkProgress

republished by Paddy Ryan

The Romney campaign this week is basing its message off of former President Reagan’s “are you better off?” question from his 1980 campaign, even though Romney himself admitted in an interview earlier this year that “of course [the economy is] getting better” under President Obama. And the numbers don’t lie.

While the economy is only recovering slowly, the trend lines when it comes to jobs, wealth, and the success of American business are all moving in the right direction, as these charts by the Center for American Progress Action Fund’s Christian Weller show:

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Gawker releases 'trove of documents' on Romney's secret Bain holdings

Mitt Romney’s Endless ‘Retirement’ Package

From John Cook - Gawker

republished by Paddy Ryan

Romney has long claimed, despite evidence to the contrary, that he retired from Bain Capital in 1999. The Bain documents we obtained indicate that his involvement with the company extended years past that date.

Romney owns a stake in Sankaty Credit Opportunities L.P., a Delaware-based partnership. According to its financial statements, it had $201 million in assets in 2009 and a $52 million gain on the year—that's after a stunning $91 million loss in 2008. But what's interesting about Sankaty Credit Opportunities is that, according to his 2012 financial disclosure, Romney's interest in the entity was part of his retirement package: It was made "pursuant to an agreement with Bain Capital regarding Mr. Romney's retirement" in 1999. But according to its audited financial statement, Sankaty Credit Opportunities didn't exist yet when Romney retired: "Sankaty Credit Opportunities, L.P., is a Delaware limited partnership which commenced operations on August 12, 2002." In other words, Romney's 1999 retirement agreement included an investment in an entity created in 2002—in fact, was created in the heat of his first gubernatorial campaign in Massachusetts. When Romney explained at an October 29, 2002, debate in Massachusetts that he wasn't responsible for Bain's actions after his 1999 retirement, it was just 8 weeks after the creation by Bain of a fund that was part of his retirement agreement.

Even more drastic, Sankaty Credit Opportunities IV—of which Romney owns more than $1 million in his IRA and which earned him between $50,000 and $100,000 in 2011, and which is likewise described as an investment made pursuant to his retirement package—wasn't even created until July 2008. That's nine years after his retirement from Bain and five months after he withdrew from the 2008 GOP primary.

Romney's defenders have claimed that the abundant evidence that his involvement with Bain extended past 1999—and therefore implicated him in some of the firm's more controversial actions—was a smokescreen, and that the various SEC forms listing him as "sole stockholder, chairman of the board, chief executive officer, and president" of Bain were mere formalities while his retirement was being negotiated. That may be true, but it's difficult to explain an apparent $1 million-plus payment from Bain, made in 2008, as being pursuant to a retirement package that was negotiated in 1999.

We're All Subsidizing Free Lunches for America's CEOs

It's time to close the tax loopholes that subsidize runaway executive compensation.

by Scott Klinger and Sam Pizzigati from CommonDreams

republished by Paddy Ryan

A generation ago, on National Secretary's Day, America's top corporate executives used to take their prized office assistants out to lunch.

Times change, and National Secretary's Day has become Administrative Professionals' Day. But something else has changed. These days, CEOs are getting the free lunches. Secretaries and all the rest of us are picking up the tab. And not at Burger King either.

Our current tax code has everyone in America essentially subsidizing the pay of millionaire and billionaire CEOs. Deductions, tax credits, and other executive-compensation loopholes total $14.4 billion annually, the equivalent of $46 for each of America's 311 million citizens.

That figure appears in "The CEO Hands in Uncle Sam's Pocket," a new report we helped write for the Institute for Policy Studies. Our research team dug deep into the tax code's weeds and pulled out one glaring example after another of tax code provisions enriching our already rich — at the expense of average Americans.

Our tax code, for instance, lets corporations deduct all "reasonable" costs of doing business. But what's "reasonable"? Over the years, corporate chiefs have stretched that definition beyond all reason. Years ago, they even claimed three-martini lunches as "reasonable" business expenses.

Congress eventually cracked down on that unpopular giveaway. Back in 1993, amid rising public outrage over sky-high executive compensation, lawmakers also tried to crack down on tax deductions for CEO pay. Under a new rule, corporations could only deduct up to $1 million on their tax returns for any individual executive's annual pay.

Unfortunately, this new rule came with a built-in loophole. Any executive pay over $1 million linked to "performance" could still be deducted. You can guess what happened next: an explosion of "performance-based" CEO compensation.

Corporate titans soon started landing annual performance pay deals worth tens of millions. Last year, Larry Ellison pocketed $76 million in "performance-based pay" for running Oracle, the giant business software company. That ploy saved Oracle $26 million in taxes. Overall, unlimited tax deductions on CEO pay cost U.S. taxpayers nearly $10 billion a year.

CEOs regularly partake in a variety of other tax-avoiding games that all share one element in common: CEOs always win, the rest of us always lose.

How outrageous have these CEO victories become? Try visualizing this: The IRS offers you a refund on all the taxes you've previously paid and then informs you that you also won't have to pay taxes on your future income for years to come. Sweet deal. Corporations get it all the time — by paying their executives in stock options.

That's just what Facebook did in a move that saved the company an estimated $5.6 billion, including an approximately $500 million return of previously paid taxes. But let's not pick on Facebook. Apple used this loophole to save $260 million on its 2011 taxes alone, and hundreds of other corporations have played this same game.

Add up all the Facebooks and Apples out there, compute the cost of the tax giveaways they use to stuff the pockets of their top executives, and you end up with corporate tax bills over $14 billion a year less than they should be. With this $14 billion, our nation could provide health care for 7.3 million low-income kids or rehire over 200,000 laid-off public school teachers.

Warren Buffett famously quipped that he has a lower tax rate than his secretary. But that's an understatement. The secretaries of America's CEOs are actually subsidizing their bosses' pay.

Let's end this free lunch for CEOs. It's time to close the tax loopholes that subsidize runaway CEO pay.

The new robber barons: how taxpayers subsidize CEOs’ multimillion salaries

By Pratap Chatterjee from The Guardian
republished by Paddy Ryan

Lanai, a tiny resort island in Hawaii, has 18 miles of secluded beaches, no traffic lights and a population of just over 3,000. This summer, Larry Ellison, the CEO of Oracle, a California-based software company, bought 98% of the island for a sum reported to exceed $500m.

The Institute for Policy Studies, a Washington DC thinktank, says that a chunk of the money Ellison spent buying Lanai should have paid for elementary school teachers and clean energy jobs, instead of fulfilling the billionaire CEO’s vacation fantasies. That’s one conclusion of theirnew report, “The CEO Hands in Uncle Sam’s Pocket: How Our Tax Dollars Subsidize Exorbitant Executive Pay”, which points out that Oracle took advantage of a 1993 loophole in tax law to designate $76m of Ellison’s income as “performance-related pay”, which allowed him to avoid paying any taxes on the money.

Dozens of US CEOs have cashed in on this major tax incentive at an estimated cost to US taxpayers of $9.7bn last year. Statistics provided by National Priorities Project suggest that the same amount of money could have paid for 142,625 elementary school teachers, or healthcare for 4.96 million low-income children.

“At a time of austerity, it’s beyond absurd that billions of our tax dollars are pouring into executive pockets,” says Sarah Anderson, a report co-author.

In 1980, the average US CEO was paid 42 times as much as the average worker when tax rates for the richest stood at 70%. Today, that ratio has widened to 380 times – exacerbated in part, no doubt, by the fact that CEOs are able to dramatically reduce their tax burdens by a reduction in top tax rates, as well as several new loopholes introduced in recent years.

In fact, some companies paid their CEOs more money than they paid in taxes. Take Aubrey McClendon, CEO of Oklahoma-based Chesapeake Energy, who was paid $17.9m in 2011, while his company gave Uncle Sam just $13m on sales of $11.64bn.

Chesapeake achieved this startlingly low tax liability by claiming a “drilling-costs tax benefit” that allows generous income tax deferrals in case an oil well comes up dry. Yet, this decades-old tax incentive to encourage oil companies to prospect far and wide is now largely irrelevant since sophisticated technologies allow them to accurately gauge where to drill.

“McClendon’s primary goal is not to solve America’s energy problems, but to build a pipeline directly from your wallet into his,” writes Jeff Goodell of Rolling Stone this past March, describing the CEO as “a rightwing billionaire who profits more from flipping land than drilling for gas”.

McClendon is not alone. The Institute for Policy Studies found that 26 of the 100 highest-paid US CEOs took home more in pay than their companies paid in federal income taxes. On average, each of these company bosses was paid $20.4m last year.

Another scam that CEOs pull on the taxpayer is called “deferred compensation”. The way that works is simple – most taxpayers are expected to pay 35% of their income in taxes the year they earn it. But a CEO does not have to pay the tax until they claim the cash which can be earning interest in the mean time. Depending on how the money is invested, CEOs can engineer a substantial profit.

This allowed Michael Duke, CEO of Walmart, to sock away $17,028,615 tax free in 2011, roughly 774 times more than one of his employees would have been allowed to do under normal tax rules.

Yet the money these CEOs makes shrinks into insignificance compared to the money that hedge fund managers make. Take Raymond Dalio, who was paid an astronomical $3bn in 2011. This titan of Wall Street had to pay just 15% in taxes because the money was considered “capital gains”, as opposed to the average citizen who would be required to pay 25% (in income tax). Cost to the taxpayer in 2011: $450m.

“Some tax breaks do have a redeeming social value. Most don’t,” write report authors Sarah Anderson, Chuck Collins, Scott Klinger and Sam Pizzigati.

“In fact, most create incentives for things companies would have done anyway or reward corporate behaviors that deserve no encouragement from taxpayers, especially at a time of fiscal crisis.”

The report proves the case made by thousands of protesters who took to the streets last September as part of the Occupy movement, and that of investors who stormed annual meetings this year as part of the “Shareholder Spring” to reclaim enterprises from many overpaid CEOs.

The authors of the new report have an even better solution: make these executives pay their fair share of taxes, just like the rest of us.

© Guardian News and Media 2012