How the fast food industry is screwing you

Subsidizing KFC's Millionaires

By Sarah Anderson
Taxpayer Subsidies for CEO Pay in the Fast Food Industry
Institute for Policy StudiesWashington, D.C.
December 3, 2013.

Last Thursday, in over 100 American cities, thousands of fast food workers went out on strike against an industry that rakes in billions in profits every year and pays out — to millions of workers — wages that barely run over the $7.25 federal minimum wage.

But fast food execs aren’t just exploiting workers, details this welcome new study from the Institute for Policy Studies. They’re exploiting taxpayers, too.

In two ways. The first: Over half the nation’s fast food workers, a University of California-Berkeley study notes, make so little on the job that they have to rely on tax-funded social safety net programs to make ends meet.

The second: Taxpayers are subsidizing the sky-high compensation of the fast food industry’s top execs.

Under current tax law, U.S. corporations can deduct off their income any “performance pay” they shell out to their top executives. Over the past two years, the new IPS study documents, the CEOs at America's top six fast food chains alone pocketed over $183 million in “deductible ‘performance pay,’ lowering their companies’ IRS bills by an estimated $64 million.”

The biggest individual winner: the CEO at YUM! Brands, the corporate giant that owns Taco Bell, KFC, and Pizza Hut. Yum’s David Novak pocketed $94 million worth of “performance pay” in 2011 and 2012. The taxpayer subsidy for that largesse: $33 million.

How much overall is the corporate tax deduction for excessive executive pay costing taxpayers? One estimate comes from the congressional Joint Committee on Taxation. Passing legislation now pending that would prevent corporations from deducting more than $1 million in pay per executive, the panel concludes, would save taxpayers $50 billion over the next 10 years.