Employees who receive stock options and other forms of equity compensation generally are able to defer paying tax on this compensation for years, sometimes decades. In a rising market this deferral results in a tax benefit at the employee level. This article asks whether the employee-level tax benefit in a rising market results in a global tax advantage for companies that rely heavily on equity compensation and their employees. There are two primary issues. First, on initial inspection one might conclude that the employee-level benefit in a rising market is offset by a disadvantage in a stagnant or declining market. But this is not the case. This article demonstrates that the apparently symmetric disadvantage of equity compensation in a declining market is undermined by capital loss limitations, the likelihood of employee-favorable ex post adjustments to equity compensation contracts, and the general upward drift in stock prices. Thus, equity compensation and deferral do provide a tax benefit at the employee level on an expected value basis. The second question is who bears the burden of the employee-level tax benefit? This article demonstrates that the key to determining the overall winners and losers lies in tracking the actual corporate investment of the cash that is saved when employees are compensated with equity. The evidence suggests that this investment results in significant corporate tax revenues for the fisc that offset the employee-level tax savings. In aggregate, taxpayers do not appear to be subsidizing corporate equity compensation programs and these programs are not producing a global tax advantage. However, this does not mean that equity compensation tax reform should be off the table. The aggregate global tax advantage (and taxpayer subsidy) could increase if companies become more adept at hedging stock and option grants. In addition, the employee-level tax benefit associated with equity compensation is concentrated in the hands of senior executives, which 1) results in vertical inequity between the taxation of these executives and rank and file employees who tend to be cash compensated and 2) could undermine the formation of broad-based qualified savings plans. Thus, a modest reform to the taxation of equity compensation, such as the imposition of a special employee-level tax on equity gains, may be justified.