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A Key Source of Our Massive Deficit

Matt Koppenheffer
August 17, 2012

As the election season kicks into high gear, the U.S.'s budget and, specifically, the country's hefty deficit, is a central, hotly contested issue.

While I tend to steer clear of stepping onto political third rails in my writing, Reuters' coverage of the Institute for Policy Studies' recent study on CEO pay caught my eye. Titled "Executive Excess 2012: The CEO Hands in Uncle Sam's Pocket," the IPS' study looks at a handful of public-company CEOs whose paychecks are larger than what their companies pay in taxes. The list included drugmaker Abbott Labs (NYSE: ABT  ) , which IPS gave the cheeky heading "take 64 tax havens and call me in the morning," and natural-gas driller Chesapeake Energy, which IPS said was "drilling for loopholes."

The report is a controversial one for sure -- Reuters quoted Abbott spokesman Scott Stoffel as saying it was "a blatant misrepresentation of the facts." But while the tax-to-CEO pay comparison is eye-catching, I was particularly struck by what Reuters said about megabank Citigroup (NYSE: C  ) , which was one of the higher-pay-than-taxes targets:

A Citigroup spokeswoman said that, while the company did not pay federal income tax in 2011, that was due to substantial losses it recorded in 2008 and 2009, a break available to all businesses in similar straits. ... She also noted that Citi paid on average $3.7 billion