July 23, 2013

Tuesday Tax Tradeoff: Cuts to Medical Research OR Tax Breaks on Inflated CEO Pay

By William Rice, Americans for Tax Fairness

Doctors work hard to find medical options for their patients. Corporations work hard to award stock options (the right to buy shares in the future, usually at a steep discount) to their top executives. Which effort would you like your tax dollars to support?

The National Institutes of Health (NIH) funds research on cancer, Parkinson’s, Alzheimer’s and many other serious diseases. The across-the-board budget cuts known as the “sequester” have impaired NIH’s ability to foster hope and find cures. 2013 Budget Cut: $2.5 billion.

Huge corporations shower their CEOs with stock options, which often make up the bulk of their millions of dollars of annual compensation. But because of a loophole in the law, companies get a tax windfall because they are allowed to deduct more from their taxes than these options are worth, according to normal accounting standards. Annual Tax Break: $2.5 billion.