Chief executive officers are poised to collect an additional retirement windfall if President-elect Donald Trump succeeds in cutting the taxes of the highest US earners, according to a new study.
The CEOs of Fortune 500 companies, who had accumulated almost US$3 billion in tax-deferred accounts at the end of 2015, will owe the Internal Revenue Service about $990 million if the top federal tax rate is reduced to 33 per cent, or $180 million less than they’d currently pay, the Institute for Policy Studies, a liberal think tank in Washington, said in a study released Thursday.
While rising executive pay and widening inequality across income groups have drawn increasing attention in the US, less has been made of the large gap in retirement savings, the authors say. Just 100 CEOs have accumulated retirement savings equal to the entire retirement accounts of 41 per cent of US families -- or more than 116 million people, according to the report.
“During the presidential campaign we heard the frustrations of workers about loss of jobs and security for old age, so it’s disturbing to see the growing CEO-to-worker retirement gap,” said Sarah Anderson, co-author and the institute’s global economy project director.
“CEOs with tax-deferred accounts have been gambling that the tax rate will go down before they withdraw their savings, and now that is likely to happen.”
The bulk of CEO retirement savings is in deferred-compensation plans that permit executives to set aside salaries, bonuses and in some cases stock awards on a pretax basis. Because they only pay taxes when they withdraw the funds, they’ll benefit if the maximum marginal tax rate is lowered to 33 per cent from the current 39.6 per cent, as Trump has proposed.