By Siobhan Hughes
WASHINGTON--The left lobbed a fresh attack on Republican tax policies on Thursday, as a liberal-leaning group made oil, media, and drug-company executives poster children for their concerns that expiring Bush-era tax cuts have bestowed excessive benefits on the wealthiest Americans.
In a wide-ranging report, the Institute for Policy Studies put former ConocoPhillips (>> ConocoPhillips) Chief Executive James Mulva at the top of the list of public-company executives who benefited from the tax cuts, estimating he saved almost $6.7 million in federal taxes on his 2011 taxable pay of $145.9 million due to the lower individual rates signed into law by former U.S. President George W. Bush and extended under U.S. President Barack Obama. The group projected that CBS Corp. (>> CBS Corporation) Chief Executive Leslie Moonves saved almost $3.8 million last year on a taxable pay of $82.1 million.
In total, some 57 executives received more than $1 million in breaks on their individual income taxes--collectively gathering more than $100 million that in another era would have gone to the federal government, the report said. The top tax rate on earned income was 39.6% in the Clinton era, and Democrats want to reinstate that rate for household income above $250,000. The current top rate is 35%.
Corporate executives are just one segment of the group of taxpayers who have benefited from the Bush tax cuts, and Internal Revenue Service data suggest that even bigger beneficiaries are those who earn their money from capital gains and dividends, which are taxed at 15%, compared to the current 35% top rate for earned income.
Still, by focusing on executive compensation at public companies, the Institute for Policy Studies is aiming to personalize the debate and make a case that U.S. taxpayers are subsidizing sky-high executive pay even as the country is mired in deficits.
"All the CEOs on this list certainly saved significantly more from the Bush tax cuts than the sums listed here, since they had additional income from other sources, including their investments," the Institute for Policy Studies said in its report. "But considering the tax savings on just corporate pay alone can help us understand how much the benefits from the Bush tax cuts have been concentrated at the top."
A spokesperson for CBS declined to comment. A spokesperson for ConocoPhillips said he couldn't comment on a report he hadn't seen, but noted that Mr. Mulva's reported 2011 taxable pay reflected the exercise of stock options granted in 2001 when he was CEO of Phillips Petroleum Company before its merger with Conoco. The options would have expired in 2011 had Mr. Mulva, who has since retired, not exercised the shares, the spokesman said.
The Institute for Policy Studies calculated taxable executive pay by factoring in options exercised and stock awards that vested--and thus were taxable--in 2011. That is a different approach from an alternative practice of calculating pay based on the date when awards are granted, even if the pay package includes restricted stock or options that haven't yet vested.
Many companies paid their chief executives more than they paid in federal taxes, the report said. Companies challenged the characterization.
Abbott Laboratories (>> Abbott Laboratories) was the most prominent example. Abbott awarded Chief Executive Miles White $19 million in total pay in 2011--including stock and options--but received a $586 million tax rebate, the report said. The report blamed what it identified as Abbott's 64 subsidiaries located in 16 countries considered tax havens.
An Abbott spokesperson called the findings "a blatant misrepresentation of the facts." He said that Abbott paid $700 million in federal income taxes in 2011, and that the number cited in the report "represents a non-cash accounting adjustment as a result of the resolution of various tax matters."
In the meantime, AT&T Inc. (T) paid no corporate income taxes last year, the report found, due to a provision in the 2009 stimulus package that allowed companies to write off the value of investments on an accelerated basis more quickly than the erosion in value of the underlying asset.
An AT&T spokeswoman said that "the whole point of the stimulus legislation was to encourage investment by allowing companies to immediately depreciate assets." She said that last year AT&T paid $3.8 billion in total taxes--including state and local taxes--and that "it's misleading to focus on a single jurisdiction in one year when our tax liability fluctuates so much annually." She said that AT&T paid hundreds of millions in federal income taxes in 2010.
The subtext is the 2012 presidential election, which occurs just months before the Bush tax cuts expire--a situation that has brought tax-policy negotiations on Capitol Hill to a near standstill. Republicans and Democrats alike are engaged in a high-stakes gamble for their candidate to win the presidency, which would provide the crucial negotiating leverage in the fight over whether the wealthiest Americans should continue to receive tax breaks.
Democrats want the Bush tax cuts to lapse next year for households with income above $250,000. Republicans want the tax cuts to continue for another year while Congress overhauls the tax code. The tax cuts lowered the top tax rate to 35% from 39.6%.
Write to Siobhan Hughes at firstname.lastname@example.org
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