Sociology 315: Foundations of Social Welfare

Fall 2009

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Increasing inequality? Time for a tax cut!

 

  1. Former Kmart CEO Charles Conaway received nearly $23 million in compensation during his two-year tenure.
  2. Former Tyco CEO Dennis Kozlowski made nearly $467 million in salary, bonuses and stock during his four years running the company into the ground.
  3. The CEOs of 23 large companies under investigation by the SEC and other agencies earned 70 percent more than the average CEO, banking a collective $1.4 billion between 1999 and 2001.
  4. In the year before Enron collapsed, about 100 executives and energy traders collected more than $300 million in cash payments from the company. More than $100 million went to former CEO Kenneth Lay.
  5. Wal-Mart CEO H. Lee Scott, Jr. received more than $17 million in total compensation in 2001.
  6. Citigroup offered hot initial public offering shares to WorldCom CEO Bernie Ebbers and other telecom giants in exchange for their investment banking business. Ebbers is alleged to have made nearly $11 million on IPO shares sold to him by Citigroup.
  7. Between 1990 and 2000, average CEO pay rose 571 percent.
  8. In 2000, the average CEO earned more in one day than the average worker earned all year.
  9. The top 1 percent of stock owners hold 47.7 percent of all stocks (Do measures of income distribution reflect this?)

Don't think it's just a few rich white men:

  • More than 1 million US corporations and individuals have registered as citizens of Bermuda to avoid taxes, a practice OK'd by the IRS. Although the exact number is unknown, the IRS estimates that "tax-motivated expatriation" drains at least $70 billion a year from the US Treasury.
  • Citigroup provided Enron with $8.5 billion in loans disguised as commodity trades. The deals allowed Enron to artificially inflate cash flow and hide debt, which deceptively boosted share price and ultimately led to the company's collapse.

On the other hand:

  1. When Kmart filed for bankruptcy in 2002, 283 stores were closed and 22,000 employees lost their jobs. Total amount of severance pay for them: $0.00.
  2. Shareholders lost a massive $92 billion when Tyco's market value plunged.
  3. Between January 2001 and August 2002, the market value of these 23 companies nose-dived by over $500 billion, or roughly 73 percent. And since January 2001, these companies have laid off over 160,000 employees.
  4. After filing for bankruptcy, Enron lost $68 billion in market share, 5,000 employees lost their jobs and Enron workers lost $800 million from their pension funds.
  5. Wal-Mart employees in 30 states are suing the company alleging that managers forced employees to punch out after an eight-hour work day, and then continue working for no pay. Nevermind the Fair Labor Standards Act, which says employees who work more than 40 hours a week must be paid time-and-a-half for their overtime. WalMart lost a suit in Oregon last year, and is now facing a class-action suit for sex discrimination in promotion.
  6. Citigroup agreed to pay $215 million in fines to the FTC to settle allegations of "predatory lending," loosely defined as mortgage lending that preys on customers, especially ones with bad credit. through abusive practices like deceptive marketing and inflated fees on unnecessary refinancings.
  7. If you were a worker poor enough to apply for the Earned Income Tax Credit in 2001, your chance of being audited was one in 47. If you made more than $100,000 a year, your chance of being audited was one in 208.
  8. The bottom 80 percent of stock owners own just 4.1 percent of total stock holdings.
  9. In 2000, 25 percent of workers earned less than poverty-level wages.
  10. Between 1990 and 2000, average worker pay rose 37 percent.

 

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