How taxpayers subsidize CEO greed

8/26 UPDATE on income and poverty: next page

Why should the nation’s top CEOs worry about the American economy? After all, they’re doing fine – fabulously so. Last year their pay packages – at $10,500,000 each -- averaged 344 times the pay of typical American workers.

The top 50 hedge and private equity fund managers did better by far. Last year their compensation averaged 19,000 times that of typical workers.

What’s more, thanks to tax and accounting loopholes, average American taxpayers subsidize excessive CEO compensation to the tune of $20,000,000,000 a year.

Those are among the revelations in “Executive Excess: How Average Taxpayers Subsidize Runaway Pay,” a report released (August 25) by two think tanks, the Institute for Policy Studies and United for a Fair Economy. The report documents the five most direct tax subsidies that benefit executives at Wal-Mart, Target, the Citadel Investment Group, and other large corporations.

Another think tank, the Center on Budget and Policy Priorities, on August 21 issued a helpful report on “What to watch for in the new Census income and poverty numbers.” It was timed for the August 26 Census Bureau release of findings on household income and poverty for 2007.

Those 2007 figures may well mark “the most disappointing economic recovery on record from the standpoint of low- and middle-income households,” the Center warns. “For income or poverty levels to show long-term progress, rather than merely recover from the damage caused by the last recession,…the median income for working-age households would need to rise above $58,721, and the poverty rate would have to fall below 11.3 percent.”

Stay tuned.

UPDATE 8/26

The 2007 figures, as released in the new Census report, were:
-- Poverty rate: 12.5%, above, not below, 11.3 percent
-- Medium income for working age households: $56,545, below, not above $58,721

“This is unprecedented,” Robert Greenstein of CBPP, said in a statement. “Never before on record has poverty been higher, and median income for working age households lower, at the end of a multi-year economic expansion than at the beginning. The new data add to the mounting evidence that the gains from the 2001-2007 expansion were concentrated among high income Americans.”

What’s the outlook, since the economy is still in a slowdown? Greenstein’s answer:

“The 2007 levels – already disappointing because they are worse then for the 2001 recession – are likely to constitute a high-water mark for the next few years. This suggests that significant pain may lie ahead for many Americans.”

For a podcast on these developments, click http://www.cbpp.org/8-26-08pov-audio.htm



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