BOSTON— A new report, entitled ”Taxpayers for a Day: The Most to Gain, the Least to Lose” from United for a Fair Economy (UFE) and the Institute for America’s Future (IAF), finds that CEOs of Wall Street firms supporting the partial privatization of Social Security effectively pay into the system for only a few days a year. That is because Social Security tax payments are capped and most financial industry CEOs have compensation packages high enough to allow them to complete payments under the cap in the first few days of January.
“The CEO of Charles Schwab, David Pottruck, finished paying his Social Security taxes before the end of the Rose Bowl on January 1st, 2004,” said Scott Klinger, co-director of UFE’s Responsible Wealth project and a co-author of the report. “That’s $87,900 in a few hours. Most Americans pay all year long without ever reaching the annual cap.”
The report examines the pay structures of 26 CEOs of finance industry companies involved in backing privatization efforts and estimates the dates by which they will have finished paying Social Security taxes.
Of the 26 CEOs at public and U.S.-owned firms, average compensation in 2004 was $17,712,239. The average CEO within this group surpassed the $87,900 earnings cap after 4 days on the job, or at the end of the day on January 4th, after which no Social Security tax would be collected.
While 94 percent of workers effectively pay 12.4 percent of their annual income, including employer’s contribution, these CEOs pay an average effective rate of 0.16 percent of their annual income toward Social Security taxes. The average “Joe” taxpayer pays an effective rate that is more than 201 times the effective rate of the average CEO in this group.
Seven of the CEOs are “taxpayers for a day.” Their pay was so high, they exceeded the 2004 $87,900 earnings cap in eight hours or less. These include the CEOs of Bear Stearns, Charles Schwab, Goldman Sachs, Lehman Brothers, Morgan Stanley and Wells Fargo/Strong Financial.
“To these guys, $90,000 is play money,” said report co-author Adam Luna, IAF Policy Director. “Trouble is, they want Congress to privatize Social Security so they can play with our money.”
“As most Americans worry about their ability to pay their taxes by April 15, they should keep in mind that Social Security would be funded and solvent into the next century if the highest-earning 6% of Americans would pay taxes on their full income, just like everyone else,” concluded Klinger.
Authors of the report at United for a Fair Economy and the Institute for America’s Future are available to comment on the report, which can be found at http://www.faireconomy.org/WallStreetCEOs.
United for a Fair Economy is an independent national non-profit that raises awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart.
The Institute for America’s Future (IAF) is a center of progressive strategy, organizing and issue campaigns. IAF anchors a progressive leadership network, enlisting leaders at the national, state and local levels to build a more just and democratic society.