Companies are getting an excessive $52 billion tax break on stock options issued to their executives, new data from a U.S. Senate panel showed on Wednesday.
The Senate Investigations Subcommittee released new data from U.S. tax authorities on Wednesday that showed in 2008, companies claimed stock option tax deductions that were $52 billion larger collectively than the expenses for stock options that the companies reported on their financial books.
The mismatch between the financial books and tax returns is producing huge tax windfalls for companies that heavily use stock options to pay their executives, Democratic Senator Carl Levin said in a statement.
The $52 billion figure is up from 2007, when a $48 billion tax break was recorded, but down from 2006, when the figure was $61 billion, the panel said, citing tax return figures from the Internal Revenue Service.
It's a stock option tax break we can no longer afford and ought to end, Levin said.
Last July, Levin, who is from Michigan, and Republican Sen. John McCain of Arizona introduced a bill that seeks to end the tax break by requiring the corporate tax deduction for compensation paid in stock options to be no greater than the stock option expense filed on companies' financial reports.
The tax rules regarding treatment of stock options have been mostly unchanged since 1969, they said.
The bill was referred to the Senate Finance Committee last year.
(Reporting by Emily Chasan, editing by Gerald E. McCormick)