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Companies Paid Top Executives More Than They Paid in US Taxes – Report

Compensation for senior bosses at firms from Tesla to T-Mobile US worth more than those companies’ net tax payments, study finds

From left to right: Marc Benioff of Salesforce, Mike Sievert of T-Mobile US, Elon Musk of Tesla, Reed Hastings of Netflix and Brian Duperreault, formerly of AIG. ,Composite: The Guardian/Getty

Top bosses at some of America’s largest companies have received more in pay than their companies paid in federal taxes, according to a new report.

Senior executives at 35 different firms – from Tesla to T-Mobile US – received compensation worth more than the net tax payments of their respective employers between 2018 and 2022, the research found. All the companies generated billions of dollars in profit over the same period.

Analysis by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) found the collective net federal income tax bill of all 35 companies was negative $1.72bn over the five-year stretch – meaning they collectively received more money back from the government in refunds than they paid.

Over the same period, executive compensation for senior executives at these firms – including salaries, bonuses, perks, benefits, stock options and stock awards – stood at $9.49bn.

The advocacy groups called on Congress to increase the corporate tax rate, claiming that raising it from 21% to 28% would generate $1.3tn in revenue over a decade. Donald Trump signed a law in 2017 that slashed business taxes.

President Joe Biden declared it time for big businesses to “finally pay their fair share” during his State of the Union address last week, pledging to “end the tax breaks for big pharma, big oil, private jets, and massive executive pay”.

Pledging to fight “like hell” to make the tax system fair, Biden said: “Look, I’m a capitalist. If you want to make a million bucks – great! Just pay your fair share in taxes.”

Among the 35 companies, the report highlighted Tesla, led by the billionaire tycoon Elon Musk. The electric carmaker was a loss-making enterprise for years, but has in recent years generated significant profits as it ramped up production amid mounting demand for electric vehicles.

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Between 2018 and 2022, Tesla’s executive pay bill stood at $2.5bn, although this was largely due to a vast 2018 compensation arrangement for Musk that was struck down by a Delaware judge in January. Its net federal income tax balance over this period was -$1m – primarily because it carried forward excess losses from previous years, the report claimed.

Tesla did not respond to a request for comment.

While executive pay at T-Mobile over the five-year stretch stood at $675m, bolstered by the stock market boost triggered by the company’s takeover of Sprint, the report said its net federal income tax bill stood at negative $80m.

T-Mobile utilized a tax deduction for costs incurred buying spectrum licenses, according to ATF and IPS, and wrote off a $350m settlement over a cyber-attack which compromised the data of an estimated 76.6 million people, as part of a “variety of tactics” to reduce its bill.

T-Mobile did not respond to a request for comment.

Other companies listed, including Ford and Salesforce, also did not respond to requests for comment.

Netflix, which is on the list of 35 companies, said it globally paid income taxes of over $2bn between 2018 and 2022.

“Netflix complies with tax laws and regulations in the US and around the world,” a spokesman added.

Match Group, which is listed, disputed the report’s estimates for its company. “The study this list is based on claims to have excluded companies that completed corporate spins,” a spokesperson said. “Match Group was spun out of IAC in 2020, so the numbers here are not representative of our business.”

David Kass, the executive director of ATF, said: “Both kinds of corporate misbehavior – underpaying taxes and overpaying executives – ultimately make working families the victim through smaller paychecks and diminished public services.”

The report “shows how executives of big corporations are rewarded for aggressive tax avoidance”, added its co-author Sarah Anderson, global economy director at IPS, “while working families and small businesses are left to pick up the tab”.

Asked why the report focuses on the US tax payments of multinational companies, which operate across the world, Anderson said: “The primary objective of the report is to underscore the need to reform the tax code in the country where these [companies] are based and are making significant profits.”

Callum Jones is deputy business editor for Guardian US