Tech workers and employers alike could wind up paying more U.S. taxes next year under a plan to impose new taxes on certain stock incentive programs widely used in the high-tech industry. Under the plan, the Internal Revenue Service would impose payroll taxes, including Social Security and Medicare taxes, on incentive stock options and employee stock purchase plans beginning Jan. 1, 2003. Those taxes already apply to some stock plans, but this rule would extend the taxes to ESPPs and other plans currently exempt. But critics say new taxes will discourage employees and companies from participating in what are some of the most widely used benefits to both attract and retain workers, particularly in the hard-hit technology industry. “This is silliness,” said Bartlett Cleland, a vice president and tax lobbyist for the Information Technology Association of America (ITAA), a trade association with more than 500 member companies. “We should be looking for ways to inspire workers, not take away their economic capabilities.” The regulations would have the greatest impact on ESPPs, said Corey Rosen, executive director of The National Center for Employee Ownership, a nonprofit research organization that focuses on compensation issues. Under an ESPP, a company takes a portion… Read full this story
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