How Fast Food Giants Use Loopholes to Avoid Taxes


The fast food industry is known for handling out petty paychecks to the burger flippers and hefty ones to the CEO. What most people do not know is that the taxpayer subsidises such industries income from both ends.

Take, for instance, Yum Brands, which run Pizza Hut, KFC, Taco Bell chains. The wages for the entire corporation 380,000 workers is low forcing most of them to turn to taxpayers funded anti-poverty programs to survive. The government estimates that Yum Brands employees use up to $650 in medical and other public assistance per year.

At the top of the Yum corporate ladder is the CEO David Novak who pocket a whopping $94 million each year in bonuses, stock gains and the so-called performance pay. Under the country tax code, corporations can deduct an unlimited amount of performance pay from the federal income taxes. Therefore, higher performance pays to the CEO the less money they have to pay as tax.

McDonalds is the second largest government hand-out when it comes to executive pays. James Skinner who was the company CEO in 2012 and half of 201 took home $31 in exercised stock and performance pays. The Incoming CEO Donald Thompson took $10 in half a year. Both CEO “performance pay” added up to $14 taxpayer subsidy.

When the top fast food CEO “performance pays” are combined, they sum up to $183 lowering the companies IRS bills by an estimated $64. Such a figure is enough to cover the average cost of food stamp for 40,000 American families for a year.

The Institute for Policy Studies report indicates that the cost to taxpayers due to this performance pay loophole is evident in all the fast food chains in the country i.e. the Wendy’s, Dunkin’ Brands, McDonalds, Yum and Burger King.

The big fast food business are members of National Restaurant Association who work hard to block raise in the minimum wage at all levels leaving most of the fast food workers in difficulties.

The only way to eliminate such executive pay is to pass the maximum $1 million “performance pay” introduced by Senators Richard Blumenthal and Jack Reed. By passing the legislation, the committee will generate more than $50 billion over a period of 10 years.

It fails to make sense why profitable giant food corporations employees have to rely on government funds to meet their basic needs, yet the CEOs of the same companies are pocketing more money than they can spend in their entire extravagant lifestyles.

The public lie hopes to the Congress strategy and it is high time that DC put an end to this absurd subsidies. Enforcing such law in the country where most of the fast food headquarter are situated will help other governments follow suit in imposing the regulation hence sealing the tax evasion loophole.


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