Behind the stock options uproar

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Simplifying the tax code

"Sec. 162(m) of the U.S. tax code limits companies' ability to deduct pay for certain executives if the amount exceeds $1 million a year. There's an exception in the tax code, however, for 'performance-based compensation,' ..."

"In fact, if Congress had simplified the tax code and made CEO salaries fully deductible, it's likely that no backdating scandal would have occurred."

Ahem. Congress could also simplify the tax code by limiting companies' ability to deduct all compensation for certain executives in excess of $1 million a year. This would have the same effect on backdating, since it would significantly reduce the motivation for companies to compensate executives with stock options rather than with salary.

While I'm not entirely certain it's fair, I have to admit, from a middle-class guy's perspective, I have little sympathy for the tax burden on companies that are wealthy enough to pay its top executives over $1 million in compensation per year.

Posted by: FamilyManFirst   Posted on: 07/26/06 You are currently: a Guest | Members login | Terms of Use

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