MS and Cisco avoid taxes

— 12:22 AM on October 10, 2000

Some folks have their panties in a rather nasty wad over this San Francisco Gate story about how Microsoft and Cisco avoided Feneral income taxes in their last fiscal year. How could such incredibly profitable companies end up tax-free? Simple. By handing out stock options, which employees then exercise:

Like many high-tech firms, Cisco and Microsoft are allowed to take a tax deduction for money their employees earn when they ``exercise'' options and buy stock in the company at a preset price.
I saw this story at Slashdot, where the poster remarked that it was "Pretty scary."

Oooh, I'm terrified.

Sometimes, I get the feeling the Slashdot types think just about everything is "pretty scary," from the prospect of the most miniscule, never-gonna-happen restriction of online "free speech" to the bathroom soap. Must be a fragile world to live in.

But no matter. The idea that Cisco and Microsoft employees have been so richly compensated it offsets the companies' entire federal tax liability, why, that's the epitome of the classic evil, greedy corporation. Right?

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