(04-08-2016 08:04 PM)Machiavelli Wrote:  It’s no secret that US CEOs are some of the best-paid people on earth. After all, for the first time ever, the two top-paid corporate executives took home billion-dollar pay checks. What seems to be a better-kept secret, though, is that a large portion of their pay is tax deductible – which creates, effectively, a government subsidy for corporate bonuses.

It’s all thanks to a lucrative tax break that's completely legal. In 1993, when Congress capped the tax deductibility of executive pay at $1m, it allowed US corporations to deduct performance-based pay –including stock options – from their federal income taxes. The companies use the tax-deductible stock options to lower their IRS bills. That, in turn, means that those rich executive bonuses turn into government subsidies.

The total cost to the US: in the neighborhood of $7bn a year at last count, according to the Economic Policy Institute.

The fast-food industry, in particular, has racked up $64m in tax savings by giving its CEOs big bonuses.

According to recent research by the Institute for Policy Studies, “the CEOs of the top six publicly held fast-food chains pocketed more than $183m in fully deductible 'performance pay,' lowering their companies’ IRS bills by an estimated $64m” over the past two years.

Those companies included McDonald's, YUM! Brands, Wendy’s, Burger King, Domino’s and Dunkin’ Brands.

According to IPS's figures, last year the CEO of McDonald's, James Skinner, received a performance bonus of $23m, making his company eligible for a $8m tax break. Within that same year, his successor, Donald Thompson, received a performance bonus of $10m, making McDonald's eligible for a $3.5m tax break.

David Novak, the CEO of Yum! Brands, which includes Taco Bell and KFC, did even better with a $48.8m performance-based bonus, which shaved $17.1m from the company's tax bill, IPS found.

http://www.theguardian.com/money/us-mone...r-salaries


This was the tax break. It actually saves the corporation the money.

Please tell me you are joking with these posts.....

(04-08-2016 08:30 PM)Machiavelli Wrote:  Dfarr there is something that we're missing. If it was profit or his salary you would think that X amount of money would be taxed at the same rate. One would think.

No, "we" are not missing something, you are.

For a company: income- expense=profit, thus a larger expense (big ceo bonus) leads to smaller profits, which leads to a smaller amount of taxes paid by the business.

For an individual a salary plus bonus is all taxed at your same tax rate, so the McDonald's ceo pays a rate of 39.6% of all his earned income, which is the top federal tax rate. Now, there might be some subtle differences when someone is paid in stocks.

http://taxfoundation.org/blog/deduction-...ot-subsidy

(04-08-2016 02:53 PM)Owl 69/70/75 Wrote:  

(04-08-2016 07:16 AM)Machiavelli Wrote:  Even $152 billion pales in comparison to tax breaks and loopholes to the fabulously wealthy. Through loopholes and tax breaks $1.5 trillion each year is set aside for the pharmaceutical industry, the fossil fuel industry, too-big-to-fail banks, performance-based bonuses for corporate CEOs, (not salary, BONUSES) corporate jets, and other superfluous programs that get special special privileges by our tax code.

We make it inherently disadvantageous to conduct business here in the US, and then we try to offset that by providing advantages to those favored few who can bribe or otherwise get the attention of their congresscritters.

I'd be really interested in seeing a derivation of that $1.5 trillion number. Do you have a source? I'd like to see exactly what makes up that number. My guess is that the majority of it represents efforts to narrow the gap between the US and foreign jurisdictions, but I can't say that with certainty without knowing what actually comprises the number.

If it includes 'bonuses', that's employee expenses. So now we're going to deny a business the ability to deduct the cost of doing business?? even though as others have noticed, the recipients generally pay more in taxes than the company would have. I don't know if this is the case here, but I've often heard similar points that include legitimate 'loopholes' (often intentional to encourage businesses as you note) but also very obvious things that aren't loopholes at all.... generally related to 'evil' companies. That's not Mach's fault or anyone else's on here...

(04-08-2016 09:56 PM)Hambone10 Wrote:  If it includes 'bonuses', that's employee expenses. So now we're going to deny a business the ability to deduct the cost of doing business?? even though as others have noticed, the recipients generally pay more in taxes than the company would have. I don't know if this is the case here, but I've often heard similar points that include legitimate 'loopholes' (often intentional to encourage businesses as you note) but also very obvious things that aren't loopholes at all.... generally related to 'evil' companies. That's not Mach's fault or anyone else's on here...

It's going to be taxed one place or the other.

You can have these conversations one of two ways. Enjoyable where the ideal goal is to promote understanding. Is this material simple or complex? Can you point out an area where your counterpoint could have merit over someone else's thoughts. Can you change someone's opinion? Can you disagree without being disagreeable. That is the truest test of one's argument.



The other way to have a conversation is to be a snarky gotcha poster.

"I've noticed that this one thread of the cloth of the poster is awful." The cloth is the main idea. A couple of critics has found fault with one thread of the tapestry. I'm ok with that. I just typed in google how do CEO bonuses avoid taxes. This popped up. I'm not the author of article and I sometimes post articles for the discussion purposes, but it derails the op. Maybe this is the goal of the snark. To defeat the whole idea by drowning one part of it in the muck. This has been a successful strategy in the Spin Room for many years, however I have sensed a sea change in here over the last few months. Some regular posters may have noticed it as well.
We have some more posts of the first variety. Those are the ones I enjoy and want to be a part of.

(04-09-2016 06:31 AM)Machiavelli Wrote:  You can have these conversations one of two ways. Enjoyable where the ideal goal is to promote understanding. Is this material simple or complex? Can you point out an area where your counterpoint could have merit over someone else's thoughts. Can you change someone's opinion? Can you disagree without being disagreeable. That is the truest test of one's argument.



The other way to have a conversation is to be a snarky gotcha poster.

"I've noticed that this one thread of the cloth of the poster is awful." The cloth is the main idea. A couple of critics has found fault with one thread of the tapestry. I'm ok with that. I just typed in google how do CEO bonuses avoid taxes. This popped up. I'm not the author of article and I sometimes post articles for the discussion purposes, but it derails the op. Maybe this is the goal of the snark. To defeat the whole idea by drowning one part of it in the muck. This has been a successful strategy in the Spin Room for many years, however I have sensed a sea change in here over the last few months. Some regular posters may have noticed it as well.
We have some more posts of the first variety. Those are the ones I enjoy and want to be a part of.

Mach this board is not a place for serious discussion. It is basically a urinal because most of the time, the only thing that goes on here is a giant pissing contest. Many of the issues, and CEO pay is a perfect example, are way too complex to be discussed here in any depth. Heck, very high paid lawyers argue this stuff every day.

There was your thread on inversions and I had a PM with another regular wherein we pretty much agreed that trying to discuss the issue was impossible in this venue.

(04-08-2016 08:02 AM)Machiavelli Wrote:  Bonuses should be taxed the same as income. I have no problems with performance based salary either but it shouldn't be treated differently in the eyes of tax laws.

In my experience bonuses are taxed more than regular income.

I've conflated two issues.

One in the form of CEO pay by stock options. These are treated differently.

Two is the loopholes between a corporate tax rate vs. individual. That is the gaurdian article. That is confusing too.

(04-09-2016 09:55 AM)VA49er Wrote:  

(04-08-2016 08:02 AM)Machiavelli Wrote:  Bonuses should be taxed the same as income. I have no problems with performance based salary either but it shouldn't be treated differently in the eyes of tax laws.

In my experience bonuses are taxed more than regular income.

That has been mine also. The % of federal income tax withheld from our bonuses/commissions is higher % than the % withheld from monthly paychecks (salary).

When I file taxes, in the end I am taxed on my total income (salary, bonuses, commissions) and pay the appropriate % based on that total (We usually get money back because too much was withheld.)

But the two employer paid income streams — salary and bonus/commission — are definitely subject to different tax withholding.

(04-09-2016 06:31 AM)Machiavelli Wrote:  You can have these conversations one of two ways. Enjoyable where the ideal goal is to promote understanding. Is this material simple or complex? Can you point out an area where your counterpoint could have merit over someone else's thoughts. Can you change someone's opinion? Can you disagree without being disagreeable. That is the truest test of one's argument.



The other way to have a conversation is to be a snarky gotcha poster.

"I've noticed that this one thread of the cloth of the poster is awful." The cloth is the main idea. A couple of critics has found fault with one thread of the tapestry. I'm ok with that. I just typed in google how do CEO bonuses avoid taxes. This popped up. I'm not the author of article and I sometimes post articles for the discussion purposes, but it derails the op. Maybe this is the goal of the snark. To defeat the whole idea by drowning one part of it in the muck. This has been a successful strategy in the Spin Room for many years, however I have sensed a sea change in here over the last few months. Some regular posters may have noticed it as well.
We have some more posts of the first variety. Those are the ones I enjoy and want to be a part of.

You started this thread and acted like you knew what you were talking about. Then clearly showed that you didn't...

It would be like me starting a thread saying, "Hey guys, I think the sun is dying out. Yesterday the sky was blue and the sun was shining super bright. Today the sky is gray and sun is really dim. We better figure out how to live without the sun."

Try not to be snarky after this....

(04-09-2016 10:50 AM)mptnstr@44 Wrote:  That has been mine also. The % of federal income tax withheld from our bonuses/commissions is higher % than the % withheld from monthly paychecks (salary).

When I file taxes, in the end I am taxed on my total income (salary, bonuses, commissions) and pay the appropriate % based on that total (We usually get money back because too much was withheld.)

But the two employer paid income streams — salary and bonus/commission — are definitely subject to different tax withholding.

This is a function of your employer's payroll department not direct federal law. They have a dilemma because they don't know if you will jump tax brackets when you add in the bonus, so they must assume that your marginal rate will be higher and withhold accordingly. The one thing they can get into trouble with the IRS is if they under withhold. So to be safe, they over withhold.

Nooooo Blah. I started the thread as a thought. Wasn't any snark in it at all. The room is better when you are not participating in it.

(04-09-2016 01:52 PM)Machiavelli Wrote:  Nooooo Blah. I started the thread as a thought. Wasn't any snark in it at all. The room is better when you are not participating in it.

I know there wasn't any snark from you. My point in my post was it is hard not to have snark when the post is as misdirected as yours was.

P.S. I feel the same way about you. It was a vacation from idiocy for me during Lent.

(04-09-2016 01:28 PM)QuestionSocratic Wrote:  

(04-09-2016 10:50 AM)mptnstr@44 Wrote:  That has been mine also. The % of federal income tax withheld from our bonuses/commissions is higher % than the % withheld from monthly paychecks (salary).

When I file taxes, in the end I am taxed on my total income (salary, bonuses, commissions) and pay the appropriate % based on that total (We usually get money back because too much was withheld.)

But the two employer paid income streams — salary and bonus/commission — are definitely subject to different tax withholding.

This is a function of your employer's payroll department not direct federal law. They have a dilemma because they don't know if you will jump tax brackets when you add in the bonus, so they must assume that your marginal rate will be higher and withhold accordingly. The one thing they can get into trouble with the IRS is if they under withhold. So to be safe, they over withhold.

That's what I figured. i.e. they were preemptively withholding.
...but I hate it. :(