Making the R&D Tax Credit Permanent (adopted prior to 2003)
Council supports the permanent extension of the research and
development tax credit. This tax credit is an effective and proven
incentive to businesses to maintain and increase their investment in
US-based development activities.
Expensing of Stock Options (adopted in 2003)
The Council favors full and frequent disclosure to investors of the dilutive effects of stock options on earnings per share.
Council opposes legislation that would force companies to expense the
granting of stock options. Such legislation would severely damage the
ability of technology entrepreneurs to build and retain their workforce
through granting stock options to their employees and would likely end
the use of stock options except for the most senior executives.
real cost of employee stock options lies in the potential dilution of
each investor’s share of company ownership. Requiring that employee
stock options be counted as a compensation expense would result in
double counting in the earnings per share calculation, which would
provide misleading information to investors.
assuming that employee stock options are an expense, there are
presently no pricing models that adequately value them. The only model
for valuing stock options that does not mislead investors is the
"intrinsic value” method set forth in APB Opinion No. 25, where the
difference between the fair market value at the time of the grant and
the grant price is expensed.
important, the Council believes that the intrinsic value method of
valuation is particularly appropriate for broad-based employee stock
ownership plans. The Council urges FASB to redirect its efforts to
reform Statement No.123 toward stimulating a discussion of the intrinsic
value method as it relates to the promotion of broad-based plans.
Alternative Minimum Tax on Incentive Stock Options (adopted in 2003)
Council supports enactment of legislation providing relief from the AMT
for ISOs because employees should be encouraged to acquire and hold
stock in their employers. ISOs should be subject to tax upon their sale,
not upon their exercise.
Payroll Taxes on Incentive Stock Options (adopted in 2003)
the exercise of ISOs to be subject to payroll taxes would be costly to
employees, discouraging many of them from participating in stock option
plans; this would be a disincentive for companies to offer these
incentives to their employees, because companies would pay additional
payroll taxes. Moreover, allowing ISOs to be subject to payroll tax
withholding would encourage the IRS to require the withholding of income
taxes on ISOs and to impose payroll and income tax withholding on
Telecommunications Tax (adopted 2007)
Council supports public policies that foster innovation and
entrepreneurship and create a favorable business environment in the
Commonwealth of Massachusetts. We support policies that are fair to all
companies and provide a level playing field for all competitors. We
also believe in and support policies that lower the overall tax burden
on corporations, while recognizing the responsibility of the business
community to pay its fair share to support the services and
infrastructure that make Massachusetts a great place to live and work.
We believe that, together, these policies will foster innovation,
investment, and job growth within the Commonwealth of Massachusetts."