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Series

Columbia Law School

1999

Tax Law

Articles 1 - 2 of 2

Full-Text Articles in Law

Randolph W. Thrower Lecture: Your Tax Dollars At Work: Why U.S. Tax Law Needs To Be Changed, Michael J. Graetz Jan 1999

Randolph W. Thrower Lecture: Your Tax Dollars At Work: Why U.S. Tax Law Needs To Be Changed, Michael J. Graetz

Faculty Scholarship

I focus here on prospects for tax reform. Things are quiet, politically, on the tax reform front. The Republicans in 1999 are talking about an across-theboard tax cut less extensive than Ronald Reagan's tax cut of 1981. On February 1, 1999, President Clinton, in his budget proposals, offered thirty-eight "targeted" tax reduction proposals and seventy-four tax increase proposals. It took the Treasury Department 197 closely typed, single-spaced pages to describe the proposals. We do not appear to be on the verge of major tax simplification.


Executives And Hedging: The Fragile Legal Foundation Of Incentive Compatibility, David M. Schizer Jan 1999

Executives And Hedging: The Fragile Legal Foundation Of Incentive Compatibility, David M. Schizer

Faculty Scholarship

In the capital markets, the 1990s have been the decade of executive stock options and the derivatives market. Legal scholars and economists have begun to realize that, in combination, these two trends raise a serious concern. Options are supposed to inspire better performance by tying pay to the stock price. Yet, what if an executive could use the derivatives market to simulate a sale of her option – a practice known as "hedging" – without violating her contract with the firm? The incentive justification for option grants would no longer hold.

This Article demonstrates that the tax law helps avert this consequence ...