Stop Subsidizing Multimillion Dollar Corporate Bonuses Act Would Close Loophole Which Allows Companies to Write Off CEO Bonus Pay
Statement of Lisa Gilbert, Director of Public Citizen’s Congress Watch
Public Citizen: http://www.citizen.org/
WASHINGTON – August 2 – Public Citizen commends U.S. Sens. Jack Reed (D-R.I.) and Richard Blumenthal (D-Conn.) for their newly introduced groundbreaking legislation (PDF), which would close a serious loophole in the tax code that allows corporations to deduct executive bonus compensation from their taxes.
In an era when executive compensation has risen 725 percent since 1978 — 127 times faster than worker compensation — the loophole in section 162(m) of the federal tax code is particularly appalling. The code limits corporate tax deductibility for executive compensation to $1 million, but the law includes no limit in deductibility for performance pay, or CEO bonuses. Partly due to this, bonus pay has become a significant driver of excessive corporate executive pay.