Specifically, in exchange for no tax to employees at exercise and long-term capital gains at sale, companies are not allowed a tax deduction for option gains. This should be changed for the twenty-first century. Employees should be encouraged to participate in ESPPs by permitting payroll deductions with pre-tax dollars. And employees should be encouraged to hold stock for the long run by deferring tax from option exercise to stock sale and by eliminating gains at exercise from being subject to employment taxes and the alternate minimum tax. The purpose of these changes is to address the growing wage gap between the top and the bottom.
Stock options are predominantly responsible for rising pay at the top.
Instead of clamping down or placing limits on the top, the better way is to raise up the bottom. And raising the bottom should be done through encouraging employees to become long-term shareholders of their company through stock options. Thank you for your attention to this important matter. Current Provision Comment 1. After tax Accepted practice 2.