Newsflash:
Campaigns End Corporate Rule Fast Food Giants Gorge on Subsidies
Monday, 02 December 2013 23:07

Fast Food Giants Gorge on Subsidies

Written by  Sarah Anderson | Common Dreams

Thanks to a loophole that subsidizes CEO pay, McDonald's, Yum Brands, Wendy's, Burger King, Domino's, and Dunkin' Brands trimmed $64 million from their tax bills in 2011 and 2012.

The fast food industry is notorious for handing out lean paychecks to their burger flippers and fat ones to their CEOs. What’s less well-known is that taxpayers are actually subsidizing fast food incomes at both the bottom — and top — of the industry.

Take, for example, Yum Brands, which operates the Taco Bell, KFC, and Pizza Hut chains. Wages for the corporation’s nearly 380,000 U.S. workers are so low that many of them have to turn to taxpayer-funded anti-poverty programs just to get by. The National Employment Law Project estimates that Yum Brands’ workers draw nearly $650 million in Medicaid and other public assistance annually.

Meanwhile, at the top end of the company’s pay ladder, Yum Brands' CEO David Novak pocketed $94 million over the years 2011 and 2012 in stock options gains, bonuses and other so-called “performance pay.” That was a nice windfall for him, but a big burden for the rest of us taxpayers.

Under the current tax code, corporations can deduct unlimited amounts of such “performance pay” from their federal income taxes. In other words, the more corporations pay their CEO, the lower their tax burden. Novak’s $94 million payout, for example, lowered YUM’s IRS bill by $33 million. Guess who makes up the difference?

My new Institute for Policy Studies report calculates the cost to taxpayers of this “performance pay” loophole at all of the top six publicly held fast food chains — McDonald’s, Yum, Wendy’s, Burger King, Domino’s, and Dunkin’ Brands.

Combined, these firms’ CEOs pocketed more than $183 million in fully deductible “performance pay” in 2011 and 2012, lowering their companies’ IRS bills by an estimated $64 million. To put that figure in perspective, it would be enough to cover the average cost of food stamps for 40,000 American families for a year.

After Yum, McDonald’s received the second-largest government handout for their executive pay. James Skinner, as CEO in 2011 and the first half of 2012, pocketed $31 million in exercised stock options and other fully deductible “performance pay.” Incoming CEO Donald Thompson took in $10 million in performance pay in his first six months on the job. Skinner and Thompson’s combined performance pay translates into a $14 million taxpayer subsidy for McDonald’s.

What makes all this even more galling is that these fast food giants are pocketing massive taxpayer subsidies for their CEO pay while fighting to keep their workers’ wages at rock bottom. All of the big fast food corporations are members of the National Restaurant Association, which is aggressively working to block a raise in the federal minimum wage to a level that would let millions of fast food workers to make ends meet without public support.

There’s an easy solution to the perverse “performance pay” loophole. A bill introduced by Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT) would simply set a firm $1 million cap for executive pay deductions — with no exceptions. Corporations could still pay their CEOs whatever they choose, but at least taxpayers wouldn’t be subsidizing anything above $1 million. The Joint Committee on Taxation estimates this legislation would generate more than $50 billion over 10 years.

It makes no sense for employees of highly profitable giant corporations to have to rely on government assistance for basic needs. It makes even less sense for ordinary taxpayers to subsidize the CEOs who are benefiting most from the fast food industry’s low-road business model.

With Congress again mulling deficit-reduction strategies, it’s high time that Washington stopped letting fast food giants gorge on both of these absurd subsidies.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

Link to original article from Common Dreams


Sarah Anderson

Sarah Anderson directs the Global Economy Project of the Institute for Policy Studies, a progressive multi-issue think tank, in Washington DC. She’s also the co-author of the IPS report, America’s Bailout Barons: Taxpayers, High Finance, and the CEO Pay Bubble.

Read 5325 times Last modified on Monday, 02 December 2013 23:15

Join our Twitter Storm

If you have a Twitter account you can help stop Fast Track on the TPP. Sign-in to your Twitter account and copy and paste the Tweets from our Twitter storm. Or you can copy your favorite Tweet and then click on the map and Tweet your legislator.

Twitter Storm Tweets for Tuesday, January 28th @ 9pm Eastern

Tweets for the special State of the Union Twitter Storm will be posted on January 28th at 8pm EST. Check back for the new Tweets.

Find Your Member of Congress

Click here to quickly find your member of Congress by putting in your home address. This site also features a one-click link to the same information in Spanish

ButtonFindElectedOfficials

Then call and ask them to oppose Fast Track on the Trans Pacific Partnership.

Sample script is below.

Script

“I'm a constituent, and I am strongly opposed to my representative giving away Congress’ constitutional authority to control our trade policy. We send people to Congress to stand up for us, not give away their power to stop more American job offshoring and protect us from dangerous imported food that doesn’t meet our safety standards. This latest so-called trade deal, the Trans-Pacific Partnership (TPP), would not only do that - but also ban Buy American and increase our medicine prices. That’s why it’s crucial that Congress not give away its authority to make sure every provision of TPP is in our interest before this massive deal can be signed. Good trade deals don’t need to be railroaded through Congress using Fast Track. I hope my representative will commit to opposing this outrageous legislation.”

Email Your Senators and Rep - Say No On Fast Track and TPP

Send an email directly to your Senators and Representatives courtesy of our partners at CWA. Enter your zip code and your members are automatically selected.

Button-EmailYourRep2

Sign the Petition - Sen. Sanders Run as a Democrat in 2016

Button-SandersPetition

Lori Wallach on the TPP from PDA Progressive Roundtable

Progressive Roundtable with Reps. Ellison and Pocan and Lori Wallach on TPP

TPP: The Biggest Threat to the Internet You've Probably Never Heard Of

Flush the TPP

Congress only has one more week in session this year, the week of December 9. So far our pressure to stop the TPP has been working. Visit Flush the TPP for calling scripts and links to Members of the Ways and Means Committee.

Flush the TPP