Corporations Pay CEO's Income Taxes

[AtomicKitten]

Sigh. It's good to be rich.

Excerpt:
Amid soaring CEO compensation, a number of companies are paying extra sums to cover executives' personal tax bills. Many companies are paying taxes due on core elements of executive pay, such as stock grants, signing bonuses and severance packages. Others are reimbursing taxes on corporate perquisites, which are treated as income by the Internal Revenue Service. They run the gamut from personal travel aboard corporate jets to country-club memberships and shopping excursions.

"This smacks of Leona Helmsley-like treatment, that only little people pay taxes," says Patrick McGurn, an executive vice president of Institutional Shareholder Services Inc., an influential adviser to big investors that often critiques companies' corporate-governance practices. For these top executives, he says, companies "are removing taxes from the list of inevitable life experiences, leaving only death."



More at: http://rawstory.com/news/2005/Corporations_paying_top_executives_personal_income_1222.html

[MercutioATC]

1. Actually, it's just like getting a larger bonus.

They can pay a bunus of $1M and pay the taxes on it or pay $1.3M and let the CEO pay them. Emotionalizing the issue won't help...it's just a 30% (or so) larger bonus.

[FloridaPat]

6. Might have something to do with $1 million being a special number

for corporations. If a company pays someone more than $1 million, the amount in excess of the first $1 million cannot be taken off company profits. So the corporation has to pay taxes on it along with the employee. By paying through other means, they probably can then take it off the corporate books.

[napi21]

2. Actually, some of that is available to us mere mortals too.

Accountants call it grossing up the payment.

Two of the Companies I worked for did that for me when they paid for my moving expenses (they are taxable as income), The one that gave me a bonus also did it for the bonus.

Believe me, I was NOT some high paid executive!!!!

The first job, my salary was $25,000/yr, and the second one it was a whopping $38,000. Not starvation wages for sure, but certainly not a high paycheck!

[Phoebe Loosinhouse]

3. If they (corporations)are paying the personal side of taxes on income,

(and I think it is irrelevant if that income is in the form of stock, severance, bonus, what-have you), then the money used to pay the tax would be ADDITIONAL income, which would need to be taxed, which they would pay, which would be ADDITIONAL income , which would need to be taxed, which they would pay, which would be ADDITIONAL income, which would . . .

So, where is the flaw in my logic? Why isn't this just one more sickening detail of the illegal, Ponzi scheme, wealth-transferring mechanism which seems to exist in the corporate world whereby the upper echelons fleece the shareholders. I want Elliot Spitzer on this right now!!!!

[MercutioATC]

5. Here's the flaw in your scenario:

We're not talking about the corparation paying ALL of their taxes, just the tax on their salary. If they're paid $1M in taxable income and the tax on that would be roughly $300k, the corporation will pay them the additional $300k. The CEO would still be responsible for paying taxes on $1.3M (unless, of course, the additional payment was made in the form of stock options or some other form of compensation that's not immediately taxable).

[Xenotime]

4. This is how the rich get richer.