The more a company pays its chief executive officer, the bigger the tax break it gets.

This is how the game is rigged, according to the Institute for Policy Studies, a progressive Washington think tank, which released a report last week titled, "The CEO Hands in Uncle Sam's Pockets."

"The tax code has become a prime enabler of bloated CEO pay," says one of the study's co-authors, Scott Klinger, a chartered financial analyst and former investment manager.

The study counts the many ways our tax code encourages companies to overpay their top executives. One of them is an unlimited deduction companies may claim for the "performance pay" they give their CEOs. The bigger the CEO's performance pay, the bigger the company's tax deduction.

The tax code simply begs companies to lavish CEOs with stock options, the study says. This, in turn, encourages the bosses to take more risks with other people's money, and gets us all into the economic trouble we face today.

The policy institute's study identified 26 CEOs who averaged $20.4 million in total compensation last year, including bailed-out Citigroup's Vikram Pandit and bailed-out AIG's Robert Benmosche. "That's a 23% increase over the average for last year's list of 2010's tax dodging executives," the study said.

All the major corporations cited in the report paid more to their CEOs than they did in federal income taxes (which the study calls "tax dodging"). The study also said that thanks to the Bush tax cuts, CEOs at 57 major U.S. companies each saved more than $1 million in personal income taxes.

CEOs have rigged the tax system for years, sending lobbyists to Washington through membership cliques like the Business Roundtable. If you don't believe the tax code is rigged in their favor, ask yourself this:

Why can't you put more money into your 401(k)? There are no limits as to what a CEO can stuff into a retirement account. But you have strict limits. Contributions cap out at $22,000 a year for workers older than 50.

Go ahead, count your thousands. The policy institute's study identifies nine CEOs with more than $50 million in tax-deferred accounts on the side while they continue bagging millions on the job. They might as well shove it all into an offshore account.

Actually, the world's wealthiest people have now stashed $21 trillion to $32 trillion in offshore tax havens, according to a recent estimate by the London-based Tax Justice Network in a report written by a former chief economist for McKinsey & Co.

The middle of that range is more than the annual gross domestic product of the U.S., China and Japan combined.

Much of America is struggling to pay for teachers, police and firefighters while also subsidizing grandiose CEO pay. Clearly, evolution has favored those who hire lobbyists to game the tax code for themselves.

One day, it will end like a game of Monopoly, with one player holding all the deeds and everyone else wiped off the board. I don't see any other conclusion. There is no force in the universe that can curb CEO pay. Not even our collective outrage over the economic destruction to our country or taxpayer bailouts.

"This isn't about beating up on some guy who has more money than you," says study co-author Sarah Anderson. "We're all picking up the bill for this problem."

Ms. Anderson has co-authored all 19 of the think tank's reports on excessive CEO pay. At this point, it's safe to say that nobody heeded the first 18.
