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"In the first five years following the 2017 giveaway, 35 companies raked in $277 billion in domestic profits and paid their executives $9.5 billion."
A group of congressional Democrats and Independent Sen. Bernie Sanders on Friday highlighted dozens of profitable U.S. corporations that have paid their executives more than they've paid in federal income taxes in recent years, a problem that the lawmakers attributed in large part to former President Donald Trump's massive tax-cut package that Republicans are working to extend.
"In the first five years following the 2017 giveaway, 35 companies raked in $277 billion in domestic profits and paid their executives $9.5 billion—more than they paid in federal income taxes," the lawmakers noted in letters to each of the companies, pointing to recent research by the Institute for Policy Studies and Americans for Tax Fairness.
"Next year, Congress will decide what to do with these corporate giveaways. Republicans have promised to go even further if elected and cut the corporate income tax rate from 21% to 15%," the lawmakers continued. "This additional tax giveaway would provide Fortune 100 corporations as a whole with another $50 billion each year, more than all current K-12 federal education spending."
"The windfall from TCJA to big businesses, executives, and wealthy shareholders is unmistakable."
Sens. Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) in the Senate and Rep. Greg Casar (D-Texas) in the House led the letters to the 35 companies, a list that includes high-profile names such as Netflix, Ford, and Tesla, whose CEO is the richest man in the world.
"Tesla is among the most dramatic examples of this phenomenon—big, profitable corporations that have actually been paying their top executives more than they pay the government in federal income taxes," the lawmakers wrote. "According to an analysis by the Institute for Policy Studies and Americans for Tax Fairness, in the period between 2018 and 2022, Tesla raked in $4.4 billion in profits and did not pay a single dollar in federal income tax."
During that same period, Tesla chief executive Elon Musk received "the largest pay package ever recorded for a company's CEO," the lawmakers observed.
The other companies that have paid their top executives more than they've paid in federal taxes in recent years are T-Mobile, AIG, NextEra, Darden, MetLife, Duke Energy, First Energy, DISH, Principal Financial, American Electrical Power, Kinder Morgan, Dominion, Oneok, Williams, Xcel Energy, NRG Energy, Salesforce, DTE Energy, Ameren, Sempra Energy, U.S. Steel, Entergy, AmerisourceBergen, PPL, CMS Energy, Evergy, Voya Financial, Atmos Energy, Alliant Energy, Match Group, UGI, and Agilent Tech.
The lawmakers demanded that the companies' CEOs answer several questions, including how much the corporations would have paid in federal taxes had the 2017 Tax Cuts and Jobs Act (TCJA) not been enacted and how much they've spent on lobbying to keep the Republican law intact.
"The windfall from TCJA to big businesses, executives, and wealthy shareholders is unmistakable," the letters read. "A recent analysis by the Institute on Taxation and Economic Policy found that 342 companies paid an average effective income tax rate of just 14.1% during the five years after TCJA passed, almost a third less than the 21% statutory rate. The gains do not 'trickle down'—90% of workers saw no earnings increase, while executives making $989,000 per year or more got an average raise of $50,000."
The letters were released days after the Economic Policy Institutereleased an analysis showing that CEO pay has soared by 1,085% since 1978 while the pay of typical U.S. workers has grown by just 24%.
The 2017 Trump-GOP tax law led major companies to splurge on stock buybacks, a major gift to corporate executives whose annual compensation packages consist largely of stock.
"President [Joe] Biden and Democrats in Congress are committed to making corporations pay their fair share," the lawmakers wrote in their letters. "In the 2022 Inflation Reduction Act, we passed the first corporate tax increase in 30 years with the 15% corporate minimum tax. Though significant, raising $222 billion from billion-dollar corporations, it is not enough on its own to undo the corporate tax giveaways signed into law by President Trump and ensure that corporations pay their fair share."
"Next year," they added, "Congress has an opportunity to take bigger strides in reforming our tax code—to raise the corporate rate, close loopholes, and hold big businesses to the same standards as everyday working Americans who pay their fair share."
The main concerns of the workers center around compensation on streaming platforms, such as Netflix and Amazon Prime, and artificial intelligence.
For the first time since 1960, actors and screenwriters are on strike at the same time.
As with many of the other strikes that have rippled across the United States over the past three years, this walkout is over demands for better pay and restrictions on their employers’ use of technology to replace paid work.
The actors’ strike began on July 14, 2023, after their union, SAG-AFTRA, voted to end negotiations with the Alliance of Motion Picture and Television Producers, which represents the major production studios. The main concerns of the union—which represents 160,000 actors and people in other creative professions—center around compensation on streaming platforms, such as Netflix and Amazon Prime, and artificial intelligence.
Screenwriters, who have been on strike since May 2, have similar concerns.
In 1965, executives made 15 times the average salary of their workers. By 2021 those top execs were earning 350 times more than the average worker—including actors.Screenwriters, who have been on strike since May 2, have similar concerns.
The two strikes have halted U.S. TV and movie production. Premieres are being canceled, and Emmy-nominated actors aren’t campaigning for those prestigious TV awards.
Charlton Heston (R) and then-Screen Actors Guild President Ronald Reagan shake hands with members of the Association of Motion Picture Producers after SAG ended its 1960 strike.
(Photo: Getty Images)
Ever since Louis Le Prince filmed the first movie, Roundhay Garden Scene, in 1888, actors have earned a living through their work being shown on screens small and large.
The first hit shows on TV aired in the mid-1940s, but actors initially earned far less from television than movies. Around 1960, with the advent of hits like Leave It to Beaver, Beverly Hillbillies, and Bonanza, TV became very profitable. TV’s growing prestige and economic heft gave television actors newfound power at the contract negotiating table.
Actors demanded that their craft be compensated for TV shows about as highly as for their film appearances. Led by future President Ronald Reagan and Charlton Heston—who went on to serve as a National Rifle Association president—the Screen Actors Guild went on strike on March 7, 1960. Among that union’s top demands: health care coverage and residuals for movies aired on television, reruns, and syndication.
Hwang Dong-hyuk, the creator of Squid Game, forfeited all residuals when he cut a deal with Netflix. It earned Netflix nearly US$1 billion, but Hwang got none of that bounty.
Residuals are a form of royalty paid to actors when movies and TV shows air on television after their initial run. That can include reruns, syndication, and the broadcasting of movies on television.
The actors union’s strike, which coincided then as today with a screenwriters strike, successfully negotiated a contract with executives that resolved the residuals conflict and secured health care coverage for its members.
That contract applied to broadcasting and, years later, cable TV.
But it doesn’t work for streaming, because streamed shows aren’t scheduled. Whereas Friends, a sitcom that initially aired on NBC, is available today on Max, formerly HBO Max, through syndication, and its actors receive relevant residuals, Orange Is the New Black originated on Netflix. Because it never runs on a different platform via syndication, the actors in its cast earn paltry residuals in comparison—even though viewers are still watching the show’s seven seasons.
Hwang Dong-hyuk, the creator of Squid Game, forfeited all residuals when he cut a deal with Netflix. It earned Netflix nearly US$1 billion, but Hwang got none of that bounty.
As I explained in my 2021 book, Streaming Culture, streaming has fundamentally changed the production and consumption of both TV and film while blurring the lines between them.
People consume different types of media through subscriptions and streaming technology than they do while watching broadcast TV and cable television. Actors and writers are concerned that their compensation hasn’t kept up with this transformation.
And the actors who are on strike argue that the formulas in place since 1960 to calculate residuals don’t work anymore.
In contrast, streaming residuals pay a flat rate for foreign and domestic streams.
Residuals paid for roles in broadcast TV shows are based on the popularity of those programs, with actors earning far more for hits like Grey’s Anatomy and NCIS than for duds. Hit shows can have a second life on streaming platforms and result in actors getting paid again for that earlier work.
In contrast, streaming residuals pay a flat rate for foreign and domestic streams. A streaming original film or TV show earns a set amount for residuals in its domestic market and second set amount for foreign markets. This fee doesn’t change based on popularity or the number of times a production is streamed.
But streaming has changed more than residuals for actors and writers. It has also transformed how TV shows are made.
Many TV seasons have grown shorter since streaming became the norm, falling from 20 or more episodes to 10 or fewer per season.
That’s because streamers started making shows with lower budgets, as it costs less to produce fewer episodes. The studios also cut costs by hiring fewer writers.
Since actors are typically paid per episode in which they perform, their salaries have dropped by virtue of having fewer appearances in even the most popular shows.
As gaps between seasons grow, some actors are having a harder and harder time making ends meet.
The gaps between seasons have also grown longer and more unpredictable. Every season of the nine-year run of Seinfeld on NBC began in the fall and ended the next spring, then picked up again the next fall.
Streaming shows are far less predictable.
Amazon Prime’s The Marvelous Mrs. Maisel paused for more than two years between seasons 3 and 4.
The same streamer aired the first season of Lord of the Rings: Power of the Rings, in September 2022, but Season 2 won’t be released until late 2024.
As gaps between seasons grow, some actors are having a harder and harder time making ends meet.
Another change has to do with the question of whether particular shows will keep going. In conventional broadcast or cable television, networks determine whether they will renew a show during the period known as “sweeps,” at the end of a TV season. Since streaming television has no defined seasons, these decisions can drag on.
This can leave actors and writers in limbo. And their contracts often stop them from working on other shows between seasons.
SAG-AFTRA President Fran Drescher joins Writers Guild members at a picket line outside of Warner Bros studio in Burbank, California, on July 14, 2023.
(Photo: Valerie Macon/AFP via Getty Images)
Although residuals and the number of episodes have until now been negotiable, perhaps the strike’s biggest issue is the studios’ use of artificial intelligence
Actors fear studios will use AI to replace actors in the future. Without a contract that says otherwise, once a studio films an actor, it can potentially use the actor’s likeness in perpetuity. This means a background actor could be shot for one episode of a TV show and continue to be seen in the background for seasons without pay.
That hasn’t happened yet, but many actors are certain it will.
As Drescher continually points out in her media appearances, 99% of actors are struggling on working-class incomes.
Actors object to the possibility that studios will seek to “own our likeness in perpetuity, including after we’re dead, use us in their movies without any consent, without any compensation to our performers, especially background performers,” said actor Shaan Sharma, best known for his role on The Chosen. “It’s inhumane. It is dystopian.”
Until now, actors and writers say, the studios have refused to negotiate over AI with actors or writers. But both unions see AI as a threat to their members’ livelihoods, a point SAG-AFTRA President Fran Drescher made on MSNBC.
As Drescher continually points out in her media appearances, 99% of actors are struggling on working-class incomes. Meanwhile, studio executives continue to increase their own pay. For example, in 2022, Netflix co-CEOs Reed Hastings and Ted Sarandos earned roughly $50 million each. Warner-Discovery CEO David Zaslav earned $39 million.
The gulf between what actors and top executives earn is a major difference between today’s actors and writer strikes and the 1960 strikes. In 1965, executives made 15 times the average salary of their workers. By 2021 those top execs were earning 350 times more than the average worker—including actors.
And while today’s biggest stars, like Pedro Pascal and Natasha Lyonne, earn millions for every performance, most actors struggle to make ends meet.
In Los Angeles, actors earn an average hourly wage of $27.73.
Meanwhile, studios are pulling in huge profits. For example, Netflix and Warner Bros. earned $5.2 billion and $2.7 billion in 2022, respectively.
As I explain in my new book, Digital Feudalism: Creators, Credit, Consumption, and Capitalism, striking actors and screenwriters are part of the wave of labor unrest in recent years. In my view, U.S. workers are rejecting a system that expects workers to buy more on credit while making a living with increasingly precarious jobs.
From Starbucks baristas to Amazon’s union organizers to the workers planning the pending UPS strike, more and more Americans are fighting for higher wages and more control over their schedules.
In fighting threats to their livelihoods, actors and screenwriters are the latest example of a national movement for stronger labor rights.
"I wonder how it feels to have a group of people challenge your pay and worth," said one labor leader sarcastically.
Television writers who have been on strike for a month applauded a vote at Netflix's annual shareholder meeting on Thursday in which the streaming company's investors rejected an executive pay package that critics said exemplified the greed of Hollywood CEOs and their unfair treatment of the workers behind their lucrative content.
A majority of the shareholders voted against a pay package for executives including co-CEOs Greg Peters and Ted Sarandos as well as Netflix co-founder and board chair Reed Hastings.
Under the proposed pay package, Sarandos would earn up to $40 million in base salary, a bonus, and stock options, while Peters would take home $34.6 million.
"I wonder how it feels to have a group of people challenge your pay and worth,"
tweeted labor leader Lindsay Dougherty sardonically. Dougherty is secretary-treasurer of Teamsters Local 399 and represents more than 6,000 TV and film workers.
Meredith Stiehm, president of the Western branch of the Writers Guild of America (WGA), noted in the union's letter to studio executives last week that the shareholders were also asked to give retroactive approval to the company's 2022 CEO pay package, which amounted to $166 million.
"While investors have long taken issue with Netflix's executive pay, the compensation structure is even more egregious against the backdrop of the strike," wrote Stiehm, noting that in contrast to the executives' annual pay, "the proposed improvements the WGA currently has on the table would cost Netflix an estimated $68 million per year."
Thursday's vote was non-binding, and could be overturned by the company's board of directors, but writer Jelena Woehr tweeted that shareholders' rejection of Netflix's pay structure could ultimately pressure TV studios to meet the demands of the WGA, including higher residual pay and better compensation for writers who are hired before a show has been given a greenlight for production.
\u201cThis is a fairly mild action but if they get mad enough about watching their shares lose value, activist investors can start causing a lot more trouble, and I suspect by fall they will\u2026\u201d— Yell in a Strike (@Yell in a Strike) 1685661537
The WGA West noted that executive pay packages rarely fail to get approval from shareholders.
\u201cInstead, this money paid the top Netflix execs who are creating risk for the company and shareholders by not offering writers a fair deal. 3/6\u201d— Writers Guild of America West (@Writers Guild of America West) 1685659853
"Shareholders should send a message to Comcast that if the company could afford to spend $130 million on executive compensation last year," she wrote, "it can afford to pay the estimated $34 million per year that writers are asking for in contract improvements and put an end to this disruptive strike."