Wholly Misleading Half-Truth: Tax Break for Executive Bonuses

Technically, this is probably true. The business pays 300m$ in bonuses, which are a business expense, so it has 300m$ less in earnings and therefore, with a corporate income tax rate of about a third, pays about 100m$ less in income taxes.

However, this ignores the second part of the equation. The bonus money does not disappear somehow. It goes into the income of the executives that receive it. It gets taxed at the highest marginal rate, 39.6%. In other words, the government gets an extra 4.6% of that money (39.6%-35%), or about 14m$.


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