DALLAS, August 25, 2026, 08:08 CDT
- Mark Cuban is calling for increased corporate taxes on firms that fail to provide equity to all employees.
- The proposal is a concept rather than formal legislation, and it does not specify any penalty rate or set out implementation guidelines.
- For a sample firm, a rise of two percentage points in taxes corresponds to a stock grant valued at 1% of payroll.
Mark Cuban has presented a new ultimatum to corporate America: either grant every employee equity or incur higher taxes. The idea lacks a formal bill, named supporter, or detailed rate. Still, it sets out a clear trade-off for investors ahead of Tuesday’s U.S. market open.
The impact may show up as increased taxes or a reduction in shareholder value. Which option costs less relies on factors like taxable income, payroll, and how the award is structured. Cuban’s proposal raises issues beyond just fairness.
Cuban stated that lawmakers should “increase the taxes of any company that doesn’t offer equity to every employee.” He further suggested that equity awards should be distributed on a pro rata basis compared to non-founder executives. The specific formula was not given. Fortune
For example, a hypothetical firm with $1 billion in taxable profits and $2 billion in cash payroll would incur a $20 million expense for a broad-based stock grant equal to 1% of payroll, based on its grant-date fair value. Similarly, a two percentage point rise in tax rates would result in an additional $20 million cost.
| Illustrative tax rate | Tax on $1B income | Additional tax over 21% | Payroll-equivalent value |
|---|---|---|---|
| 21% current rate | $210M | — | — |
| 22% scenario | $220M | $10M | 0.5% |
| 23% scenario | $230M | $20M | 1.0% |
| 25% scenario | $250M | $40M | 2.0% |
The break-even point varies significantly among business models. Employers with low margins and high payrolls would require more equity to match the same percentage award. Meanwhile, companies generating high profits might see a higher tax burden in relation to payroll.
The federal corporate tax rate stands at 21%, reduced from a previous maximum of 35% prior to the 2017 tax overhaul. Introducing a Cuban-style penalty would require Congress to specify the applicable rate, identify affected companies, and establish the criteria for eligible equity.
Wider ownership may influence the distribution of market returns. In 2022, 58% of U.S. households held stocks, either directly or through intermediaries. The share for direct holders stood at 21%. Stock ownership varied from 34% in the bottom 50% income group to 95% among the top 10%.
Employee ownership is already widespread, although typical programs are not structured like Cuban’s proposal. In 2023, U.S. employee stock ownership plans included 15.1 million participants and managed $2.06 trillion in assets. Of these, public-company plans represented 12.2 million participants.
The proposal addresses the difference in compensation between executives and employees. According to the Economic Policy Institute, chief executives at 350 major U.S. firms earned an average realized compensation of $22.98 million in 2024. This amount was 281 times higher than the pay of an average worker, based on the institute’s methodology.
Major issuers are already incurring significant equity expenses. Amazon.com, Inc. NASDAQ:AMZN reported $19.47 billion in stock-based compensation in 2025, compared with $22.01 billion in 2024. This figure illustrates the scale, but does not indicate whether Amazon would meet the criteria of Cuban’s unspecified test.
The accounting approach is important. Stock awards typically decrease reported earnings as they are counted as compensation expense. Issuing new shares or dilutive awards may also reduce earnings per share, but buybacks can counteract that impact.
Cuban referenced his experience at Broadcast.com, noting that 330 employees were granted equity ahead of Yahoo’s $5.7 billion purchase, which resulted in 300 becoming millionaires. He said this stemmed from a profitable acquisition, adding that it does not demonstrate a typical return under a nationwide requirement.
Risks: An employee’s income and position may be vulnerable if the company’s stock price declines, given both are tied to the same employer. Required equity awards might dilute existing shareholders, potentially prompt compensatory share repurchases, or lead to a reduction in cash-based pay. Valuation and liquidity challenges could also arise for private companies.
Investors can follow a straightforward checklist: monitor for released legislative text, outlined penalties, vesting provisions, tax deductibility details, and a precise pro rata award definition. Until these emerge, the two-point break-even remains a scenario rather than a forecast.
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