4 tax loopholes that encourage soaring executive pay

Why many CEOs earn more than their companies pay in taxes

While wages are stagnant for most Americans, pay is climbing for top executives. A new report from the Institute for Policy Studies — a multi-issue think tank based in Washington, D.C. — points out loopholes in the tax code that encourage and reward excessive executive pay. The four most direct tax subsidies alone that encourage high executive pay cost the government $14.4 billion a year in revenue, according to the IPS. Twenty-five of the highest-paid CEOs actually earned more than their employers paid in federal income taxes last year, receiving an average of $20.6 million in compensation. The four loopholes IPS identified knocked an average of $129 million from the tax bills of their employers. Just to add insult to injury, IPS says two of those companies, Citigroup and AIG, owe their existence to taxpayer bailouts.

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