Tax Professor Maureen B. Cavanaugh of Washington and Lee University – School of Law; Florida State University – College of Law, has posted this article: “Tax as Gatekeeper: Why Company Stock is Not Worth the Money.” Here is what the article is about:
This Article argues that company stock is not worth the money and individual ignorance of basic principles of prudent investing has been incorrectly identified as the problem. In fact, individuals who invest in company stock are acting predictably according to behavioral economics (whether because of simplifying heuristics or excessive extrapolation). This article identifies the real problem: tax incentives that encourage employers to contribute non-transferable company stock to these plans thereby providing endorsement for company stock. Current tax rules allow corporations tax benefits far in excess of that realized by individual employees whose adequate savings at retirement is putatively the goal of this very expensive tax subsidy.