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Teamsters Applaud Introduction of Legislation to Close Executive Pay Tax Loophole

‘Stop Subsidizing Multimillion Dollar Corporate Bonuses Act’ Would Stop Exploitation of Tax Law that Allows Corporations to Deduct Excessive Executive Pay from Earnings
Press Contact

Galen Munroe

Phone: (202) 624-6911

(WASHINGTON) – The Teamsters Union fully supports the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act as an important step toward ensuring corporations pay their fair share in taxes and curbing the trend of excessive executive pay.

Introduced today by Rep. Lloyd Doggett (D-TX) and Sen. Jack Reed (D-RI), the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act closes a loophole in the tax law that allows corporations to claim commission and performance-based executive compensation as a deduction. The current tax law restricts publicly traded corporations from deducting any employee’s base compensation over $1 million. However, the restriction does not include executive compensation received as a bonus.

“This loophole gives corporations incentive to give top executives massive bonuses that they can then turn around and deduct from their corporate revenue for tax purposes,” said Teamsters General Secretary-Treasurer Ken Hall. “This loophole has played a large part in the current trend of ever-increasing excessive executive bonuses.”

For example, under current tax law, XPO Logistics’ [NYSE:  XPO] recently adopted incentive compensation plan which allows for a potential payout to CEO Bradley Jacobs  of  up to 2.5 million shares of company stock – valued at more than  $100 million at today’s prices – would be fully  deductible from the corporate revenue. And while the corporation saves money, the burden of the lost tax revenue is passed on to U.S. taxpayers. The Joint Committee on Taxation estimates that this loophole in current tax law has cost taxpayers more than $50 billion over a ten-year period as corporations claim compensation packages like Jacob’s as deductions. 

“The Teamsters Union thanks Sen. Reed and Rep. Doggett for taking a stand against this practice,” Hall said. “All corporations should pay their fair share in taxes.”

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit for more information. Follow us on Twitter @Teamsters and “like” us on Facebook at

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