The Obama Administration Has Been Very, Very Good To Banksters And Wall Streetians

[JDPriestly]

79. Please forgive me for being a bit off-topic, but bonuses are something we should talk about.

It’s no secret that US CEOs are some of the best-paid people on earth. After all, for the first time ever, the two top-paid corporate executives took home billion-dollar pay checks. What seems to be a better-kept secret, though, is that a large portion of their pay is tax deductible – which creates, effectively, a government subsidy for corporate bonuses.

It’s all thanks to a lucrative tax break that's completely legal. In 1993, when Congress capped the tax deductibility of executive pay at $1m, it allowed US corporations to deduct performance-based pay –including stock options – from their federal income taxes. The companies use the tax-deductible stock options to lower their IRS bills. That, in turn, means that those rich executive bonuses turn into government subsidies.

The total cost to the US: in the neighborhood of $7bn a year at last count, according to the Economic Policy Institute.

The fast-food industry, in particular, has racked up $64m in tax savings by giving its CEOs big bonuses.

http://www.theguardian.com/money/us-money-blog/2013/dec/03/tax-breaks-for-ceos-pay-for-million-dollar-salaries

Bonuses are a tax loophole that Congress should close.