Executive-Pay Tax Break Saved Fortune 500 Corporations $27 Billion Over the Past Three Years
by CITIZENS FOR TAX JUSTICE
Apr 25, 2013 | 853 views | 1 1 comments | 1 1 recommendations | email to a friend | print

Executive-Pay Tax Break Saved Fortune 500 Corporations $27 Billion Over the Past Three Years

 

Read this fact sheet in PDF.

Apple & Facebook Biggest Beneficiaries of Stock Option Loophole

 

Earlier this year, Citizens for Tax Justice reported that Facebook Inc. had used a single tax break, for executive stock options, to avoid paying even a dime of federal and state income taxes in 2012. Since then, CTJ has investigated the extent to which other large companies are using the same tax break. This short report presents data for 280 Fortune 500 corporations that, like Facebook, disclose a portion of the tax benefits they receive from this tax break.

  • These 280 corporations reduced their federal and state corporate income taxes by a total of $27.3 billion over the last three years, by using the so-called “excess stock option” tax break.
  • In 2012 alone, the tax break cut Fortune 500 income taxes by $11.2 billion.
  • Just 25 companies received more than half of the total excess stock option tax benefits accruing to Fortune 500 corporations over the past three years.
  • Apple alone received 12 percent of the total excess stock option tax benefits during this period, enjoying $3.2 billion in stock option tax breaks during the past three years. JP Morgan, Goldman Sachs and ExxonMobil collectively enjoyed 10 percent of the total.
  • In 2012, Facebook wiped out its entire U.S. income tax liability by using excess stock option tax breaks.
  • Over the past three years, Apple slashed its federal and state income taxes by 20 percent using this single tax break.
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John Olagues
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April 26, 2013
The company tax deductions come early when the exercises of the employee stock options come early. That's why wealth managers and other "options experts" advise their clients to exercise early, sell and pay the tax early and diversify what is left.

These advisers are working for the company.

john Olagues