Amazing.

Why parts of Wall Street and big tech don’t love the Trump 2017 tax cuts.

(Hint, the Trump cuts actually crack down on a big stock option loophole).

A thread...

A large reason for massive CEO pay in last 20-30 years, compared to history, was a President Clinton move to not allow CEO salary to be deductible by the corporation as a business expense past $1 million/yr.

This seems populist, but it wasn’t. Stock options were exempted from Clinton’s rule. So companies started massively favoring pay via stock options.

Investors usually ignore the cost of these stock options, and when companies value the cost for financial documents, they are able to low ball the cost.

But when companies report the cost to the IRS, they report what they are actually worth—much more than reported to investors.

This allows companies to take big deductions for the cost of granting these options, reducing their tax bill. Sometimes massively.

All companies do this. But Big Tech and technology in general are famous for paying in stock options. Capping the deductability of salary but not capping the deductabilty of stock options was a handout to tech companies.

The Institute in Taxation and Economic Policy notes just this. https://itep.sfo2.digitaloceanspaces.com/120919-How-Congress-Can-Stop-Corporations-from-Using-Stock-Options-to-Dodge-Taxes.pdf