Report: You’re Subsidizing CEOs’ Massive Pay

What's Hot


5 Reasons to Shop for a Home in DecemberFamily

Shoppers Boycott Businesses Selling Trump-Branded ProductsBusiness

Giving Thanks: Why Foreigners Find America AmazingAround The House

Why Washing Your Turkey Can Make You IllFamily

50 Best Gifts Under $25 for Everyone on Your ListFamily

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

What the Richest 1 Percent Earns in Every StateFamily

10 Ways to Retire Earlier Than Friends on the Same SalaryGrow

The 10 Best Ways to Blow Your MoneyCredit & Debt

7 Foods That Can Lengthen Your LifeFamily

The 50 Hottest Toys of the Past 50 YearsFamily

New Email Phishing Scam Targets Amazon ShoppersMore

7 Government Freebies You Can Get TodayFamily

A tax loophole allows corporations to deduct millions when they give CEOs huge stock options and other types of "performance pay."

If you shake your head when hearing about multimillion-dollar pay packages for executives, you’re probably not going to be happy to hear that you as a taxpayer have helped subsidize that huge CEO pay.

It’s true. A new report by the left-leaning Institute for Policy Studies found that a tax loophole has allowed corporations “to deduct unlimited amounts from their income taxes for the cost of executive compensation — as long as the pay is in the form of stock options and other so-called ‘performance pay,’” the institute said.

In other words, the more a company pays its top executive in performance pay, the less the company has to pay in taxes.

This loophole has provided a massive subsidy for exorbitant executive compensation.

The report focuses specifically on the restaurant industry, and for good reason. The industry has proven to be a double burden for taxpayers. While restaurant workers are often paid so little that they are forced to rely on taxpayer-funded programs for the low-income, taxpayers are also unknowingly helping to subsidize millions in executive compensation.

At the same time, the National Restaurant Association is lobbying to block minimum wage increases.

According to CBS MoneyWatch:

The chief executives of the NRA’s 20 largest members take home more than $662 million in fully deductible “performance pay” over the past two years, which reduced their corporate tax bills by $232 million, the study found. Meanwhile, many low-paid workers at restaurants run by NRA members — such as McDonald’s and Chipotle — rely on government programs for services they can’t afford on their earnings.

A number of restaurant corporations are using tax subsidies to boost executive pay, CNN Money said. Here are a few of the heavy hitters.

  • Starbucks. The company gave CEO Howard Schultz a total of $236 million in performance pay for 2012 and 2013. “That translates into an $82 million taxpayer subsidy — enough to raise the pay for more than 30,000 baristas to $10.10 per hour for a year of full-time work,” the institute said.
  • McDonald’s. The fast-food chain dished out $34 million in CEO stock options in 2012 and 2013, which generated a taxpayer subsidy of $12 million.
  • Chipotle. Handing out nearly $200 million in performance pay to its CEO in 2012-2013 led to a $69 million tax break.
  • Yum! Brands (owner of Taco Bell, KFC and Pizza Hut). The company received a $23 million tax break after handing out $67 million in performance pay in the past couple of years.

How do you feel about subsidizing executives’ excessive performance pay? Share your thoughts below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 15 Things You Should Always Buy at a Dollar Store

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,807 more deals!