Friday, December 30, 2011
Taxes Corporations score tax windfall
Posted by Max Brantley on Fri, Dec 30, 2011 at 6:48 AM
Another reminder in the New York Times today of why income tax rates hold little meaning since so many loopholes reduce the effect of high marginal rates.
Here, the Times details how corporations score huge windfalls by being able to claim deductions for huge stock options granted top executives. The deductions far exceed the cost of the options. Corporations have resisted efforts to fix the law.
Comments (6)
Showing 1-6 of 6
According to the AFL-CIO, the average pay for CEO's of the S&P 500 companies in the U.S. in 2010 was $11.3 million. Because compensation is a deductible expense, even before loophole tricks, the taxpayers are subsidizing this wealth transfer.
I've always wondered why we don't cap the deduction (not the pay) at what we pay the President. The answer, of course, is that "we" don't write the tax laws.
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Corporations are people, don't forget. People who legally have no goal in life except making money and who don't have to pay taxes or go to jail for felonies. Shucks, those kind of people make the BEST neighbors.
If the executive pays income tax on the higher value of the options, then shouldn't the corporation expense the same amount? Or, the corporation could expense the smaller amount and the executive pay taxes on that smaller amount. It doens't seem likely that you don't balance the two. I guess one option would be for them both to use the smaller amount when issued, and then the executive pay tax on the gains when exercised/sold.
How about all these "corporations" peoples pay their taxes at the same rate as a "people" people would? If you want all the rights, you should get the privileges also.
Deducting bonuses and options as a business expense should only make sense on successful companies. There are too many large 7 or 8 figure bonuses being given out as parachutes for failure to perform. If the company is making enough money to pay taxes, they shouldn't be able to deduct any pay above the level of the president for anyone in the corporation.
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