Report exposes 35 U.S. corporations that pay their execs more than they pay in taxes

Top executives at dozens of major, profitable U.S. businesses received more in total compensation in recent years than their companies paid in federal taxes, underscoring the twin outrages of skyrocketing CEO pay and rampant corporate tax dodging.

A report published Wednesday by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) identifies 35 profitable U.S. corporations that paid their top executives more than they paid the federal government in taxes between 2018 and 2022. The list of companies includes Ford, Netflix, NextEra Energy, and Tesla—whose CEO, Elon Musk, is the second richest man in the world.

ATF and IPS found 64 companies that paid their top five executives more than they paid in taxes in at least two of the five years examined.

Tesla, which has received hundreds of millions of dollars in federal subsidies and loans, paid nothing in federal taxes during the period examined by the new report, as the electric car company carried forward losses from previous years to offset the $4.4 billion in U.S. profits it made between 2018 and 2022—the first five years of the Trump-GOP tax law that slashed rates for the rich and corporations.

Additionally, the report points to Tesla's apparent use of "accounting schemes" such as "shifting American profits to offshore tax havens."

Meanwhile, in 2018, Tesla's board gave Musk a staggering $2.28 billion pay package, which was at the time "the largest compensation plan in public corporate history." (In 2021, the ratio of Musk's compensation and that of the median Tesla employee was roughly 18,000 to 1.)

"In the intervening years, with the rise in the price of Tesla shares, the value of those options has grown to an eye-watering $56 billion. It became so outlandish as compensation for a single individual that a court in corporate-friendly Delaware struck it down," the new report notes. "Even if that decision survives appeal, whatever Tesla winds up paying Musk will still be more than it pays Uncle Sam."

The other profitable companies that paid their top executives more than they paid in taxes during the five-year study period were T-Mobile, American International Group, Duke Energy, DISH Network, Principal Financial, Metlife, American Electric Power, Kinder Morgan, Dominion Energy, Oneok, Williams, Xcel Energy, FirstEnergy, NRG Energy, Salesforce, DTE Energy, Ameren, Sempra Energy, United States Steel, Entergy, AmerisourceBergen, PPL, CMS Energy, Evergy, Voya Financial, Darden Restaurants, Atmos Energy, Alliant Energy, Match Group, UGI, and Agilent Technologies.

"America's working families are cheated twice when major corporations pay too little to the federal government in taxes while paying too much to their top executives."

The new report argues it is "no coincidence" that companies notorious for paying little to nothing in federal taxes despite massive profits also grant their executives huge pay packages.

"Executives are rewarded for 'tax efficiency'—the euphemism for corporate tax dodging—which is often an easier way to raise profits than by creating goods and services more customers want to buy," the report notes. "And compliant corporate boards have more money to throw around the executive suite when their firms pay less in taxes."

CEOs are often able to make use of so-called "top hat" plans that allow them to set aside unlimited sums, tax-free, for retirement.

David Kass, ATF's executive director, said that "both kinds of corporate misbehavior—underpaying taxes and overpaying executives—ultimately make working families the victim through smaller paychecks and diminished public services."

Thanks to cuts to the corporate tax rate and persistent loopholes, the effective U.S. corporate tax rate has declined sharply in recent decades, falling from around 50% in the 1950s to 17% in 2022—depriving the government of revenue that could be used for key domestic priorities, from healthcare to housing to environmental protection.

"America's working families are cheated twice when major corporations pay too little to the federal government in taxes while paying too much to their top executives in lavish compensation packages," the study argues.

The report estimates that hiking the corporate tax rate from 21% to 28% would bring in $1.3 trillion in federal revenue over the next decade.

ATF and IPS also point to the "wealth of proposals" in Congress aimed at reining in out-of-control CEO pay. Earlier this year, progressive lawmakers in the House and Senate introduced legislation that would hike taxes on corporations that pay their top executives over 50 times more than their median workers.

The bill's supporters estimate that it could raise up to $150 billion over 10 years.

"For corporations to reward a handful of top executives more than they are contributing to the cost of all the public services needed for our economy to thrive reflects the deep flaws in our public regulation of corporations," said ATF and IPS. "Rather than more tax breaks, Congress should focus on addressing these deficiencies by cracking down on the use of tax havens, eliminating wasteful corporate subsidies, and closing loopholes that further enrich wealthy corporate executives."