The Malaysian Insider :: Features
The Malaysian Insider :: Features |
| Some US firms paid more to CEOs than taxes, study finds Posted: 31 Aug 2011 08:28 AM PDT  The study also found many of the companies spent more on lobbying than they did on taxes. — Reuters pic It also found many of the companies spent more on lobbying than they did on taxes. At a time when lawmakers are facing tough choices in a quest to slash the national debt, the report from the Institute for Policy Studies (IPS), a left-leaning Washington think tank, quickly hit a nerve. After reading it, Democratic Representative Elijah Cummings, ranking member of the Committee on Oversight and Government Reform, called for hearings on executive compensation. In a letter to that committee's chairman, Republican Darrell Issa, Cummings asked "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today." He also asked "why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high," and "the extent to which our tax code may be encouraging these growing disparities." In putting together its study, IPS chose to compare CEO pay to current US taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid. The group's rationale was that deferred taxes may or may not be paid, and that current US taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year. US$16.7 MILLION AVERAGE Compensation for the 25 CEOs with pay surpassing corporate taxes averaged US$16.7 million (RM50.1 million), according to the study, compared to a US$10.8 million average for S&P 500 CEOs. Among the companies topping the IPS list: * eBay whose CEO John Donahoe made US$12.4 million, but which reported a US$131 million refund on its 2010 current US taxes. * Boeing, which paid CEO Jim McNerney US$13.8 billion, sent in US$13 million in federal income taxes, and spent US$20.8 million on lobbying and campaign spending * General Electric where CEO Jeff Immelt earned US$15.2 million in 2010, while the company got a US$3.3 billion federal refund and invested US$41.8 million in its own lobbying and political campaigns. Though the companies come from different industries, their tax breaks fall into two primary areas. Two-thirds of the firms studied kept their taxes low by utilising offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation. Shareholders have responded favourably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings. But Chuck Collins, an IPS senior scholar and co-author of the report, said that is a mistake. "I think it's an exposure of weakness in a company if their profitability is dependent on their accounting department and not on making better widgets," he said. In prior reports, Collins said, out-sized CEO pay was often a red flag of bigger problems to come. The IPS has been putting a pay report together for 18 years. Among those whose leaders have made the high pay list in years past, only to have their businesses falter: Tyco, Enron and WorldCom. — Reuters |
| China’s ‘moon cake tax’ too much to stomach Posted: 31 Aug 2011 03:02 AM PDT  The tax is not new but the fact moon cakes given out by companies are now considered to be "income" that is taxable has set off a torrent of criticism. — foodhunt.net pic Tens of millions of brightly decorated boxes of the fist-sized moon cakes are exchanged at this time of year in a symbolic tribute to the full moon that is considered biggest and roundest on the holiday, which this year falls on September 12. Companies get into the act, and gifts between colleagues and customers have become a costly business ritual across the country. That made the so-called "moon cake tax" an easy choice for tax authorities looking for new sources of revenue. Actually, the tax is not new, but the moon cakes given out by companies are now considered to be "income" that is taxable, according to a new regulatory interpretation, setting off a torrent of criticism. "HURT FEELINGS" "The Mid-Autumn Festival is a traditional time for family reunions in China. The company is just being solicitous to the employees, and even that is being targeted by the tax department," a manager at a small state-owned company in Guangzhou told Reuters. "It hurts people's feelings." Others said the ruling added insult to injury because it fell disproportionately on average workers. "If the welfare of officials, such as the government cars, were all taxed, people would not have been upset about the moon cake tax", said Xie Wen in comments on a Twitter-like service called Weibo. China's taxpayers are increasingly sensitive to tax hikes as stubbornly high inflation erodes real purchasing power. For the first seven months of the year, fiscal revenues rose 30.5 per cent from a year earlier to 6.67 trillion yuan (RM3.12 trillion), and the growth rate was much higher than that of per capita income. Another online comment on people.com.cn urged the taxman to show a softer heart: "... when it comes to people's feelings and a happy festival, the government needs to consider more than legal taxing... State revenue has increased faster than people's salaries this year, so it would be a way to show the authorities' concern for the people by cutting a little tax before the Mid-Autumn Festival." — Reuters |
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