The debate about President Obama’s plan to end Bush-era tax cuts for the wealthy is riddled with references to “the richest 2 percent.” Who exactly are these well-off Americans?
A new report from the Institute for Policy Studies that I helped research reveals some of their names. We identified 57 CEOs who saved at least $1 million on their 2011 taxes thanks to the Bush-era tax rates.
Topping our list is James Mulva, the recently retired CEO of ConocoPhillips. Last year, he accumulated nearly $146 million in taxable salary, bonuses and stock income at the energy company’s helm. If the Clinton-era top income-tax rate of 39.6 percent had still been in effect for incomes $250,000 or more – instead of today’s 35 percent – Mulva would have paid at least $6.7 million in additional taxes.
Then there’s Dave Cote, Honeywell’s CEO. The Bush tax cuts saved him about $2.5 million that he otherwise would have had to pay on his $55 million income last year. Cote is a high-profile crusader for low taxes on corporations and the wealthy. As a member of the Simpson-Bowles deficit reduction commission, he supported cuts to Social Security and Medicare while pushing for reductions to his own taxes.
Cote’s insistence that U.S. corporate taxes are too high is ironic, given his own firm’s ability to dodge them. Over the last three years, Honeywell reported $2.5 billion in U.S. pre-tax income and yet got net tax benefits back from the government worth $377 million. It’s also notable that Honeywell is no U.S. “job creator.” The corporation shrank its U.S. workforce from 58,000 to 53,000 over the last three years, while offshoring 4,000 jobs.
As vice chairman of the Business Roundtable, Cote regularly urges Congress to maintain the Bush tax cuts for the wealthy. Our report lists four other members of this CEO lobbying club who joined him in saving more than $2 million in taxes last year as a result of these cuts: Alan Mulally of Ford Motor, Richard Adkerson of Freeport-McMoRan Copper & Gold, Edward Breen of Tyco International, and Stephen Hemsley of UnitedHealth Group – the nation’s largest private health insurer and a major care provider for Medicare patients.
The tax code also empowers CEOs to save money in other ways unavailable to ordinary workers. Among the most lucrative are the executive deferred compensation programs at many large corporations. When ordinary workers, age 50 and up, put money in tax-deferred 401(k) or IRA retirement plans, the amount of income we can shelter is usually no more than $22,000. These rules don’t apply to CEOs. Uncle Sam lets any and all of their earnings grow tax-free until they’re withdrawn.
Walmart CEO Mike Duke sheltered more than $17 million of his income last year in his company’s deferred compensation plan, saving him nearly $6 million on his 2011 tax bill alone. At least six CEOs have used this loophole to squirrel away retirement nest eggs of more than $100 million.
The rest of us ordinary Americans have seen our wages plummet below the cost of living and the value of our homes and retirement savings sink. We’ve seen our teachers go from the classroom to the unemployment line. We’ve seen libraries close, roads and bridges crumble, and public safety threatened with police and firefighter layoffs. And we’ve heard CEOs and politicians declare that cutbacks in Medicare and Social Security are essential for the national bottom line.
Meanwhile, wealthy CEOs are enjoying million-dollar tax breaks. It’s time to change course.