Newsflash:
Rob Zerban 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 5217 times Last modified on Monday, 02 December 2013 23:15

ERA Legislation in your State

Unratified states Gold - Ratified States Purple

Latest News from the Zerban Campaign

  • Meet the Man Who's Trying to Force Paul Ryan to Look for a Real Job
    Meet the Man Who's Trying to Force Paul Ryan to Look for a Real Job

    Once again, Koch brothers cash will face off against a people-powered campaign in Wisconsin this November. The race is for a House seat in the first Congressional District, a seat now held by Paul Ryan. His challenger – the first serious challenge he's faced in 14 years in Congress – is Rob Zerban, a restaurateur and County Commissioner.

    Written on Sunday, 02 September 2012 17:49 Read more...
  • The Real Cost of the Ryan Budget
    The Real Cost of the Ryan Budget

    Everywhere I go during my campaign — parades, farmers markets, even the local deli — I keep hearing the same thing from Wisconsin voters. “We need real representation,” they tell me, “representation that’s focused on the people and what we need.”

    Written on Thursday, 09 August 2012 19:51 Read more...
  • Zerban Submits 230% of Required Nomination Signatures Today
    Zerban Submits 230% of Required Nomination Signatures Today

    "The message is clear: Paul Ryan must be held accountable for his 14 years of failed decisions"

    Written on Saturday, 02 June 2012 01:34 Read more...
  • A Man Who Looks Paul Ryan's Storm Dead in the Eye
    A Man Who Looks Paul Ryan's Storm Dead in the Eye

    "He had a minor in economics," Rob Zerban says of his opponent. "What experience does he have to say that he's the great budget oracle?" "The people of the First District can see where that budget impacts their lives. Their bridges start to crumble. We've got 16 bridges on federal highways alone in the district that have been declared structurally deficientm and that doesn't include county and local municipal bridges.

    Written on Friday, 27 April 2012 01:52 Read more...
  • Rob Zerban Has My Vote in 2012
    Rob Zerban Has My Vote in 2012

    Typically during an election cycle, it often comes down to voting for the lesser of two evils. You choose the one who supports the issues most meaningful to you – or at least doesn’t outright defy them. It can be difficult to encounter a candidate who personifies the conviction and integrity you would imagine only in a perfect political world.

    Written on Sunday, 15 April 2012 18:11 Read more...
  • Rob Zerban Statement on Paul Ryan’s FY2013 “Path to Poverty”
    Rob Zerban Statement on Paul Ryan’s FY2013 “Path to Poverty”

    Today, Rob Zerban, Democratic Congressional challenger to Congressman Paul Ryan, released the following statement in response to the introduction of Paul Ryan’s FY2013 “Path to Poverty” budget.

    “In yet another misguided handout to Wall Street at the expense of Main Street, Congressman Paul Ryan today introduced his latest budget plan, designed to place the blame for his 14 years of poor decisions squarely on the backs of our hardworking families.

    Written on Sunday, 15 April 2012 18:07 Read more...
  • WI-01 Rob Zerban Campaign Kickoff Tour Highlights
    WI-01 Rob Zerban Campaign Kickoff Tour Highlights

    When I began this campaign, I made a commitment to serve as a voice of the people- not of corporations.

    I have been putting that into action. In the last few weeks, I have been working overtime to kickoff my campaign with rallies across the district.

    Written on Monday, 12 March 2012 00:00 Read more...
  • John Nichols: How Rob Zerban forced Paul Ryan to defend Internet freedom

    The American Civil Liberties Union, Free Press and the Save the Internet campaign have made it clear that the Stop Online Piracy Act poses a genuine threat to human rights advocacy and whistleblowing on the Web.

    Written on Tuesday, 17 January 2012 00:00 Read more...

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