Reforming how employee stock options are taxed is a good idea, but it won’t bring in the government revenue the Liberals and NDP promise, says University of Calgary economist Jack Mintz.

Employee stock options are currently taxed like capital gains, so only 50% are eligible for taxation at someone’s marginal rate.

Read: NDP wants to tighten stock options loopholes

The NDP wants to make all stock options fully taxable, like other forms of income. It would exempt start-up companies, which in their early days sometimes have no other way to pay employees. The party estimates its proposal would bring $500 million into federal coffers.

The Liberals would make any options-based compensation worth more than $100,000 fully taxable. They estimate this would raise government revenue by $560 million.

Read: Liberals would reform CRA

Mintz and researcher V. Balaji Venkatachalam say that while closing this personal tax loophole is a good idea, it would have to be accompanied by a change to corporate rules.

Right now, companies can’t deduct stock options on their taxes. If the government were to change personal tax rates, it should also allow corporations to deduct the options as they would a regular salary, say the economists. Otherwise, companies would be discouraged from using options as pay.

Read: Election 2015: The parties on taxes

Once the corporate tax break is factored in, the policy change would actually result in a slight drop in government tax revenue, the economists calculate. The net affect for federal and provincial governments would be a net loss of $12 million.

Read the economists’ full report here.

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