IP: Absurd multi-billion dollar deductions eradicate Cisco, Microsoft federal tax liabilit Good Morning Silicon Valley Tue Oct 10 12:00:13 EDT 2000

[Dave Farber <farber@cis.upenn.edu>]

>Absurd multi-billion dollar deductions eradicate Cisco, Microsoft federal 
>tax liability: Although the annual reports of both companies made it 
>appear that they had paid billions of dollars in federal income taxes, 
><http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/10/09/MN3707.DTL>Cisco 
>Systems and Microsoft reportedly paid no federal income tax last year. By 
>leveraging a sorely outdated corporate tax break that allows a company to 
>offset tax liability by deducting gains employees realize from stock 
>options during the company's most recent fiscal year, Cisco was able to 
>eradicate $1.8 billion in federal taxes. Microsoft was reportedly able to 
>avoid a tax liability of about $4.74 billion. As one might imagine, the 
>practice has drawn no small amount of criticism. As Jon Coupal, president 
>of the Howard Jarvis Taxpayers Association said, "for a company that makes 
>that kind of money not to pay taxes raises serious tax-equity questions."