Michigan Senator Carl Levin is widely credited with doing the most to pad the paychecks of America's top executives. He was the man behind the single biggest factor influencing the stock option explosing in the 1990s - the change in the tax code that limited the tax deductibility of executive pay to $1 million unless that pay was "performance based". Since stock options are based on the appreciation of the underlying stock, it is considered a performance based alternative to cash. As a result, the issuance of stock options soared which has led to the spectacular increases in compensation seen during the past few years.

Last week, the Senator proposed another bill that would include stock options under the $1 million cap while also raising taxes on options grants generally. His theory is that this will net the treasury $5 billion a year. Sound familiar? It is nearly identical to the theory behind the past changes in executive compensation tax laws. However, instead of reining in compensation and increasing the tax rake it actually ended up in more compensation via other methods which ended up paying even better. The lesson: Corporations do everything they can to avoid taxes.