One way employees can be compensated for their work, in addition to wages, salaries, and benefits, is through awards of company stock. The tax treatment of stock-based compensation has received attention for contributing to the gap between corporate taxable income and book income reported on financial statements, which President Biden has proposed targeting with a new minimum tax. It also adds to concerns over executive pay and income inequality.
Critics of stock compensation, however, neglect how it helps align incentives between employees and employers and the underlying rationale for how it is taxed. READ MORE