4 tax loopholes that encourage soaring executive pay
The special tax-deferred accounts loophole
Annual taxpayer cost: $80.6 million
Corporations can set up special tax-deferred accounts where a large amount of compensation can be shielded from taxes, and a lot of CEOs working for large companies participate. The majority of S&P 500 companies — 79% according to the compensation analytics firm Equilar — offered these special accounts in 2010. The Institute for Policy Studies notes that at least nine CEOs have more than $50 million stashed away in these types of accounts. The money grows untaxed until executives begin making withdrawals. The tax code in this case is giving corporations a way to let their executives save even more while the rest of us are limited to putting $17,000 per year in our 401(k) plans, or $22,500 if you're 50 or older.