You're Secretly Subsidizing A Fast Food CEO's Million-Dollar Salary

By: Jillian Berman

Fast-food giants save money by paying their typical workers very little, but they also save money by paying their CEOs millions, thanks to a quirk of the tax code. In both cases, American taxpayers cover the cost.

McDonald’s saved $14 million in taxes over the past two years using a loophole that lets companies deduct the costs of performance-based executive pay, according to a report released Monday by the Institute for Policy Studies, a progressive think tank. McDonald’s isn’t alone: Over the past two years, the six largest fast-food companies have used the loophole to save an estimated $64 million in taxes, the report found. (Story continues after graphic)



Infographic by Jan Diehm for The Huffington Post.

Companies of all types can and do take advantage of the performance-pay loophole, but this study focused specifically on fast food. It's at least the second way the industry hits the federal government's budget: Low wages at the nation’s 10 largest fast-food companies --which typically hover about a dollar above the federal minimum wage -- cost taxpayers $3.8 billion per year, because workers have to rely on government assistance to get by, according to a recent study by the National Employment Law Project.

“(Fast food companies) are a double burden on the taxpayer,” said Sarah Anderson, the author of the IPS report. “We’re trying to expose the disparity here between CEOs’ policies when it comes to worker pay versus the generous subsidies that they’re getting from their own pay.”

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