Across the country, fast-food workers in about 150 cities are walking off the job in their largest effort yet to push for higher wages. All of this comes as a new report exposes how fast-food CEOs have not just saved money by paying workers low wages, they’ve also used the government to subsidize their own million-dollar salaries with taxpayer dollars. That’s because a loophole in the tax code lets companies deduct the costs of performance-based executive pay.
Sarah Anderson talking:
this is a perverse loophole in our tax code that essentially means that the more corporations pay their CEO, the less they pay in taxes. And that’s because there is this loophole that allows companies to deduct unlimited amounts from their corporate income taxes for the expense of executive pay, as long as it’s so-called performance pay—so, stock options and other bonuses that are configured in a way to qualify for this tax loophole. And what it means essentially is that ordinary taxpayers are subsidizing excessive CEO pay.
And we looked in this report at how much the top six fast-food corporations are benefiting from this tax loophole, and it was really astounding. The most extreme example was the CEO of Yum! Brands. That’s the company that runs the KFC, Taco Bell and Pizza Hut chains. And their CEO, just in the past couple of years, has raked in $94 million of this so-called performance pay, and that translates into a tax benefit for Yum! Brands of $33 million.
how much ordinary people have a stake in this fight around fast-food wages. As it is now, wages in that sector are so low that more than half of workers in that industry have to rely on public assistance. And I think they’ve done a beautiful job of helping people understand that point, that this low-wage model is a burden on taxpayers. And what we’re trying to add here is an understanding of how taxpayers are also subsidizing pay at the top of the corporate ladder.
there is a cap on the tax deductibility of executive pay at a million dollars. But that doesn’t cover the performance pay. So what they tend to do is give CEOs somewhere around a million dollars’ worth of salary and other non-performance-based pay, pay that you just get automatically, and then structure the rest of it in a way so that it can qualify for this tax deduction. It’s called performance-based pay, but there’s been a lot of research done to show that even when a CEO is performing miserably, they can still rig the rules and qualify for this performance-based compensation.
They’re exploiting workers, and they’re exploiting taxpayers. It is completely absurd to have highly profitable corporations steering their workers towards public assistance instead of paying them the wages that they need to make ends meet. And they’re doing it, as I said before, at both the bottom and at the top end. They’re taking taxpayer money to prop up this ridiculous business model that is based on exploiting the rest of us taxpayers. And that’s why we all have a fight in this—we all have a stake in this fight.
And for this perverse loophole that supports excessive CEO pay, there is such a simple fix for it. All we have to do is get rid of the exemption in the tax deductibility cap for executive pay for this performance pay. And there’s a bill that’s been introduced in the Senate by Senators Reed, Jack Reed, and Blumenthal. And it’s just such a no-brainer to fix this loophole that right now means that ordinary taxpayers are subsidizing the pay of people like Don Thompson at McDonald’s and David Novak at Yum! Brands, who are out there fighting to keep worker wages so low that they have to rely on public assistance.
we’re just looking here at the publicly held companies that are required to report their executive pay. And so, that limited us somewhat, but the top ones are McDonald’s, Yum! Brands, Wendy’s, Dominos and Dunkin’ Brands, the ones that run Dunkin’ Donuts.
– source democracynow.org