Teamsters President Says Current Tax Loophole Increases Inequality
WASHINGTON, Jan. 30, 2014 /PRNewswire-USNewswire/ -- Today, Teamsters General President Jim Hoffa praised U.S. Rep. Lloyd Doggett, D-Texas, for introducing a bill to end a taxpayer subsidy for excessive CEO pay.
Doggett's bill ends unlimited tax write-offs on performance-based executive pay. It is a companion to S.1476, the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act, sponsored by Sens. Jack Reed, D-R.I., and Richard Blumenthal, D-Conn.
"Congressman Doggett's bill would close a loophole that encourages corporate boards to enrich CEOs rather than growing their companies and providing jobs for hardworking Americans," Hoffa said. "We should be making sure CEO pay isn't out of control compared to what workers are earning, and this bill helps solve that problem."
In 1993, Congress limited the deductibility of certain executive pay to $1 million, with an exception for performance-based compensation. That has enabled corporate boards to structure CEO pay to avoid taxes on corporate earnings for the past 20 years.
The Economic Policy Institute estimates that $121.5 billion in executive compensation was deductible from corporate earnings over the last two decades. Of that, roughly 55 percent was for performance-based compensation.
Drug distributor McKesson Corp. is an example of the abuse that's resulted from such misguided tax policy. CEO John Hammergren was paid $112 million over the past three years, and 96 percent of that was based on his performance, according to Institutional Shareholder Services. Hammergren received six straight years of above-target awards, suggesting his performance hurdles were too low to be meaningful.
Over a 10-year window, the Joint Committee on Taxation estimates this legislation would save taxpayers over $50 billion.
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and "like" us on Facebook at www.facebook.com/teamsters.
SOURCE International Brotherhood of Teamsters