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Canadians for Tax Fairness is pointing out that while the workers of Target have to pay full tax on their 16-week severance package, not all of the CEO's $70-million deal will be taxed.
Ottawa (27 Jan. 2015) — While many Canadians are justifiably outraged that the CEO of Target, Gregg Steinhafel, is getting a $70-million personal severance package, which equals the total amount being offered to all 17,600 laid-off Canadian employees, the organization Canadians for Tax Fairness (CTF) points out that this isn't the only outrageous aspect of the story.
Tax break for the rich but not for the rest
What isn't being reported is that while every one of those employees will be paying their full rate of taxes on each and every penny of their 16-week severance, the boss may not.
In Canada, there is a law on the books that says if you are a CEO, and you cash in the stock option part of your benefits, you don't pay tax on the first 50 per cent of that income.
Loophole that benefits the rich but costs the rest of us
This loophole provides the very wealthy with what is essentially a free pass on what is often millions of dollars in income. It is a loophole that has been used by the president of the Royal Bank, the TD Bank and many, many others. Pharmaceutical heads use it. So do former prime ministers and senators.
Anyone who sits on a board and gets part of their pay in stock options gets a tax-free pass on half that income. It is a practice that costs the rest of us.
CEOs of major corporations are compensated at rates that are often hundreds of times higher than their rank-and-file employees. And they employ high-priced tax lawyers to figure out how to pay less than the stated tax rate. CTF asks how this is fair?
The ultra-rich will tell us that it is because they are worth so much to the economy. CTF says that they should try telling that to the people who used to work at the 133 Canadian Target outlets.
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