Law Commons^™

Is Equity Compensation Tax Advantaged?, David I. Walker

Faculty Scholarship

Employees who receive stock options and other forms of equity compensation generally are able to defer paying tax on this compensation for years, sometimes decades. In a rising market this deferral results in a tax benefit at the employee level. This article asks whether the employee-level tax benefit in a rising market results in a global tax advantage for companies that rely heavily on equity compensation and their employees. There are two primary issues. First, on initial inspection one might conclude that the employee-level benefit in a rising market is offset by a disadvantage in a stagnant or declining market. …