The CEOs of 18 large corporations have published an open letter to the Treasury Secretary seeking to extend tax breaks on investment income that overwhelmingly benefit the very wealthy. Barring Congressional intervention, these special breaks for capital gains and dividends will expire at the end of this year, along with all of the 2001 and 2003 Bush tax cuts.
In an era when fiscal austerity is a reality in America, what makes this request even more obscene is that of these 18 CEOs, four of them head corporations which have paid less than zero in federal income taxes in recent years, in spite of consistent profits. Another two barely paid any, and another five have paid well below the statutory 35 percent corporate tax rate. In fact, among these CEOs is Lowell McAdam of Verizon, one of the most notorious tax dodging companies in the U.S.
The 11 corporations among the 18 that have paid less than the legal federal income tax rate are:
Gale E. Klappa, Wisconsin Energy Corp. — Average Negative 13.2% tax rate 2008-11
David M. McClanahan, CenterPoint Energy — Average Negative 11.3 tax rate 2008-11
Lowell McAdam, Verizon Communications Inc. — Average Negative 3.8% tax rate 2008-11
James E. Rogers, Duke Energy Corp. — Average Negative 3.5% tax rate 2008-11
Benjamin G.S. Fowke III, Xcel Energy — Average 1.0% tax rate 2008-10
Gerard M. Anderson, DTE Energy Co. — Average 0.2% tax rate 2008-11
Gregory L. Ebel, Spectra Energy Corp. — Average 13.6% tax rate 2008-10
Thomas A. Fanning, Southern Co. — Average 17.4% tax rate 2008-10
Glen F. Post III, CenturyLink Inc. —Average 23.5% tax rate 2008-10
Thomas Farrell II, Dominion Resources Inc. — Average 24% tax rate 2008-10
D. Scott Davis, United Parcel Service — Average 24.1% tax rate 2008-10
To bolster their case, these CEO’s are parroting the common claim that ending special preferences for dividends and capital gains (both of which are predominantly held by the wealthy) will depress economic activity. History shows this is not the case.
The fact is, about 85 percent of the expiring tax breaks for capital gains and dividends go to the richest five percent of Americans; most people won’t even notice if they expire.
The fact is, two thirds of all dividends are not subject to any personal income tax because they go to tax exempt entities rather than individuals.
Why is it that when corporate CEOs speak out on tax issues, they are treated like objective financial experts, as if they had no agenda other than job growth? You only have to think for a moment to realize that CEOs, for starters, typically own substantial amounts of stock in the companies they head, so in asking for reduced taxes on investment income, these 18 CEOs are pushing for substantial personal tax cuts for themselves – on top of the huge tax breaks their companies already receive. Futher, the corporate boards who hire and fire these CEOs are populated by the super rich who’d benefit from things like capital gains tax breaks, so they are also serving their bosses.
These 18 captains of industry are part of an ongoing and well financed effort to limit taxes on business and on the rich. Why? Because it serves their interest. Our media and lawmakers need to bear that in mind.