You know what really PO’s me? Having to pay taxes on the free personal trips that I take on my company’s corporate jet.
Oh… wait. We don’t have a corporate jet. Still, I empathize – as I’m sure you do – with fat cat CEOs of big corporations who are happy to get free personal use of the company airplane, but are furious that they then have to pay taxes on the value of the rides they take. Our “intrusive” government, you see, counts free jet rides, company-paid country club dues, and other executive perks as extra compensation, which, therefore, is taxable.
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Luckily, however, America’s clever CEO-class has found some suckers to whom they can pass this unwelcome tax tab: shareholders. Top corporate executives have devised a new perk for themselves with the appropriate name of “gross-up.” What it means is that the company – ie, the rank and file shareholders – pay the taxes that the honchos owe on their freebies. It’s a perk for receiving perks. See, in CEO-land, you can have your cake and eat it too!
Never mind that CEOs of major corporations now average some $15 million each in yearly pay. With that kind of cash, you’d think they could spring for their own tickets to Aspen or Paris, or at least cover their own income tax obligations for receiving the free trip.
But, no, these are the pampered princes of modern commerce, so the rules of personal responsibility don’t apply to them. A study by a watchdog group called The Corporate Library finds that 20 percent of the chieftains of major corporations are now taxing their shareholders for this gross-up perk.
For more information on the fun and games that CEOs play on shareholders, taxpayers, workers, and others, check with The Corporate Library: www.thecorporatelibrary.com.
“Firms picking up CEOs’ taxes,” USA Today, April 2, 2008