Facebook Inc.s IPO will create billions in new wealth for its founders, staff and investors.

It will also save the company 16 billion dollars in federal taxes. Thats the amount Facebook will be in a position to subtract from its tax liabilit y for granting stock options to its owners and staff. The tax-break windfall, wh ich should be the largest ever claimed by a firm for stock option awards, is gen erally known as the stock option tax loophole. Its an entirely legal tax sidestepping technique. Tax law claims that if a busine ss issues options to staff to buy stock in the future at a pre-set price, the co mpany gets to subtract the largest difference between what the workers paid for the shares (the strike price) and the shares market price. That difference is tr eated by the IRS as though it were a work expense, which is deductible from reve nues. Facebook filings reveal that that difference is expected to be about $16 billion dollars. The business intends on employing the rebates to help it avoid taxes f or several years to come. It will also claim a $500 million refund for taxes pai d in the last two years. Senator Carl Levin has long sought to end the stock-option loophole and is utili zing the Facebook IPO to promote legislation that would stop it. Even as it tell s potential financiers about its growing income flow, Levin declared today, Faceb ook is planning simultaneously to tell Uncle Sam it has no taxable income, balan cing its income with stock option tax deductions. This profitable enterprise will stop paying any federal corporate income taxes, s imply because it gave millions of stock options to its executives, he revealed fr om the Senate floor. It will go from a corporate citizen that paid its taxes, to one that not only pays no taxes to Uncle Sam on its profits, but gets a huge tax refund. Levin has a point. But defenders of the loophole responded that the firms nonpaym ent of taxes will be offset by taxes paid by the recipients when they exercise t heir options. Levin has a rebuttal to that claim, too, saying that Facebook as a n enterprise benefits from administrative services, ranging from patent protecti on to trade enforcement. And, the senator claims, the fact that executives pay t axes doesnt mean corporations should not. Adding insult to injury, Levin stated, is that co-founder Eduardo Saverin renoun ced his U.S. Citizenship to get around paying taxes on his Facebook IPO. Saverin has denied that taxes are the reason he gave up his citizenship, but nonetheles s he could save about $67 million in federal taxes by having done so. JG Tax Group wants to know what you think. Facebooks founders and investors made a $100 billion dollar corporation that now employs more than 3,500 individuals a nd has changed the way the world interacts. Does it merit a $16 billion corporat e tax break? Or is it time to repeal the stock option loophole?