C-suite executives are being flooded with cash. Meanwhile, the companies they work for are playing hooky with their tax duties — well, at least paying far below what most do.
A new study found that between 2018 and 2022, 35 major U.S. companies, including Netflix and Tesla, spent more on the salaries for their top five executives than they did on federal income taxes.
The average compensation package for executives at the 35 profitable companies averaged to about $9.5 billion. Meanwhile, the collective tax bill for the companies was negative. Instead of paying taxes, the companies on average received a $1.8 billion refund, the study found.
The study, conducted by the left-leaning think tank Institute for Policy Studies and political coalition group Americans for Tax Fairness (ATF), analyzed pay data for executives over five years. In total, the organizations compiled executive pay data for 64 U.S. companies.
At 29 companies included in the study, firms paid their executives more in salary wages than they did in taxes for at least two years, researchers found.
In particular, the study found that 18 companies paid $0 in taxes but paid executives $5.3 billion in pay packages, the study found.
All 64 firms on average paid a federal tax rate of just 2.8%. The required rate is 21%.
A Netflix spokesperson told Quartz that “Netflix complies with tax laws and regulations in the U.S. and around the world. From 2018-2022 we paid global income taxes in excess of $2B and in 2023 we paid nearly $1.2B in global income taxes, the majority of which was US federal income tax.”
Below are the 10 companies that spent more on their top five C-suite executives than they did in taxes during the five year period.
Tesla
C-Suite pay: $2.5 billion
Income tax: -$1 million (0.0% tax rate)
T-Mobile
C-Suite pay: $675 million
Income tax: -$80 million (-0.4%)
Netflix
C-Suite pay: $652 million
Income tax: $236 million (1.6%)
American International Group
C-Suite pay: $406 million
Income tax: $385 million (2.2%)
Ford Motor
C-Suite pay: $355 million
Income tax: $121 million (1.5%)
NextEra Energy
C-Suite pay: $325 million
Income tax: $287 million (1.2%)
Darden Restaurants
C-Suite pay: $120 million
Income tax: $28 million (0.8%)
MetLife
C-Suite pay: $240 million
Income tax: $96 million (0.8%)
Duke Energy
C-Suite pay: $181 million
Income tax: -$1.2 billion (-7.9%)
First Energy
C-Suite pay: $121 million
Income tax: -$44 million (-0.7%)
Researchers said the lavish compensation packages for executives coupled with meager tax payments from major U.S. companies is not an “unrelated phenomena,” but is a “self-reinforcing cycle” that will continue to work for top executives, until it is broken.
Moreover, researchers argue that Congress should raise the corporate tax rate and close tax break loopholes. That may be an uphill battle, as certain companies, such as Tesla, receive government subsidies. Subsidies support sectors of the economy the government finds are key in driving economic development.