Levin, left, and McCain reminded the public of one of a number of “inequitable special-interest tax loopholes.” (CQ Roll Call File Photo)
The Twitter IPO set for Thursday has Congress all wound up — this time, about tax policy.
On Tuesday, the House Ethics Committee took the Twitter initial public offering as an opportunity to remind members they can’t participate in IPOs in a manner “other than is available to members of the public generally.”
On Wednesday, it was the Senate’s turn.
Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., the chairman and ranking member of the Senate Homeland Security and Governmental Affairs Subcommittee on Investigations, reminded the public of one of a number of “inequitable special-interest tax loopholes.”
“When Twitter goes public later this week, the company may avail itself of this existing tax loophole,” a joint press release from Levin and McCain said. “Under this loophole, the company will be able to take an estimated $154 million tax deduction for a stock option compensation expense which its own books show cost Twitter only $7 million.”
The release said the loophole allows a company to report stock option compensation expenses one way on its financial statements, and report it a different way to the IRS for tax purposes.
“Nowhere else in the tax code can compensation costs produce a tax deduction several times larger than that same expense shown on its corporate books,” the release said. Full story