UHND.com - Notre Dame Football, Basketball, & Recruiting

them to get compensated with stock options...the vast majority received cash subject to the tax codes...now much of a CEOs compensation is in the form of stock options that get taxed at capital gains rates...big difference from the 1950s...no?

The attached link suggests a solution...
-----------------------
An Alternative Approach: Mark-to-Market Taxation of Stock Options
The Levin-McCain approach is not the only possible solution to the stock option book-tax mismatch. An alternative could make use of the mark-to-market valuation of financial instruments that is gaining greater attention in tax reform efforts. Under this alternate approach, the corporate employer could deduct the cost of the stock options at the time they are granted, matching the cost reported on the corporate books just as in the Levin-McCain proposal. In addition, this approach would require the employee to report taxable income in an equal amount in that same year and then subject the employee’s ongoing stock option holdings to mark-to-market taxation each year until the options are exercised, with any gains or losses taxed as ordinary income.

For example, assume that, in Year 1, a corporation grants an employee options to buy shares at a fixed strike price for the next 10 years, providing compensation estimated to be worth $10 million. Under this alternate proposal, in Year 1 the employer would record $10 million on its books as a compensation expense and deduct $10 million from its income for tax purposes. That same year, the employee would report $10 million in taxable income.

In Year 2, assume the value of the stock rises, and the value of the employee’s stock option holdings increases by $3 million over the previous year. The employer would not be able to claim an increased tax deduction, because the estimated value it recorded on the grant date was designed to take into account future fluctuations in the value of the options. At the same time, because the options actually increased in market value, the employee would report another $3 million in income for Year 2, to be taxed at ordinary rates.

Assume in Year 3, the stock options lose value. The employee would be able to use those losses to offset other taxable income.

Senator Ron Wyden, the ranking Democrat on the Senate Finance Committee, introduced a bill in the previous Congress called the Modernization of Derivatives Act, which would subject derivatives to mark-to-market taxation and tax the gains at ordinary income tax rates on an annual basis. Stock options are derivatives, since they derive their value from the underlying stock. However, as currently written, the Wyden bill would exempt derivatives that are paid as compensation. A better approach would be to drop that exemption, limit corporate tax deductions for stock option compensation to the value reported on the corporate books in the year the compensation was granted, and tax employees on the ongoing mark-to-market value of their stock option holdings until the options are exercised.
-----------------------

What do think about this?


Link: https://itep.org/how-congress-can-stop-corporations-from-using-stock-options-to-dodge-taxes/