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 leveraging a sorely outdated corporate tax break that allows a company to 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."