WASHINGTON (Reuters) - Two senior U.S. senators on Wednesday called for an end to a stock option-related tax break that lets companies avoid paying billions of dollars in taxes.
Democrat Carl Levin and Republican John McCain, who head the Senate Permanent Subcommittee on Investigations, called the tax break an unfair loophole and said that killing it would raise $23 billion over 10 years in federal revenue.
“Given the deficit and damaging sequester cuts facing this country, this corporate stock option tax deduction is the kind of tax loophole that ought to be closed,” the senators said in a joint statement.
Companies that issue stock options to employees as part of their pay package can take a tax deduction for the difference between what the employee pays for the options and what the stocks are worth when the options are exercised years later.
Stock options are typically a large part of compensation awarded to top corporate executives.
On Tuesday, Citizens for Tax Justice, a left-leaning tax activist and research group, said some leading U.S. technology companies have enough stock-option tax breaks to avoid paying billions of dollars in taxes in the next several years.
The group said it analyzed U.S. Securities and Exchange Commission 2012 filings for 11 public technology companies and Twitter, which is planning an initial public offering.
Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh