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House Passes Employee Stock Options Bill Aimed at Startups

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Re: House Passes Employee Stock Options Bill Aimed at Startups

#41

Post by MichaelBurge »

rplst8 wrote: post #27
harryh wrote: post #8

Earlier quoted context omitted.

Why all the goofy eligibility rules? Just get rid of the rule where exercising stock options counts as income under the AMT(1). It's line 14 in Part 1 of Form 6251. Just get rid of it! When people talk about our tax system being too complicated bills like this are why. 1. For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane. That's a bigger stor…

> For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane. It really is. The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes. The AMT was originally enacted to catch a handful (less than 200 I believe) people who were at the time of enactment (19…

> The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes.

When the politicians were first proposing the constitutional amendment that allowed income taxes, they were throwing numbers like 1% or 2% around. It took only 4 years from the ratification of the 16th amendment for the maximum tax rate to shoot up from 7% to 67%. Now you get an effective 50% tax rate in some states. No wonder office workers spend so much time unproductively checking email and Facebook - that's the half of their time they're giving to the government.

Here's a history of the federal tax rate. Notice how it shoots up around World War 2, and takes a very long time to change even after the war ends. So it can't be that the taxes are high simply to fund government services that naturally arose:

https://www.scribd.com/doc/190499803/Fed-U-S-Federal-Individ...

They should just repeal the 16th amendment.

Re: House Passes Employee Stock Options Bill Aimed at Startups

#42

Post by koolba »

> Only startups offering stock options to at least 80 percent of their workforce would be eligible for tax deferrals, and a company’s highest-paid executives would not be able to defer taxes on their stock under the legislation.

Is this why I keep seeing nominal $1 salaries?

Re: House Passes Employee Stock Options Bill Aimed at Startups

#44

Post by emidln »

breerly wrote: post #4
martin_ wrote: post #2

This sounds great, though requiring "offering 80% of the workforce stock" and excluding highest paid executives seems vague - is this at time of hiring, when stock is issued, fully vested, when taxes are due, somewhere inbetween? I parted ways with a startup in the valley last year and exercised some shares on January 13th. If I had exercised just two weeks earlier, I'm told I would've been hit with north of 50k in A…

Sounds like it's 80% of employees must have been offered stock in the year you began employment. My guess is that this applies in most common cases, although I wonder what the situation they were trying to guard from was...

Would this be the case if your options have a 1 year cliff?

Re: House Passes Employee Stock Options Bill Aimed at Startups

#45

Post by aetherson »

koolba wrote: post #42

> Only startups offering stock options to at least 80 percent of their workforce would be eligible for tax deferrals, and a company’s highest-paid executives would not be able to defer taxes on their stock under the legislation. Is this why I keep seeing nominal $1 salaries?

No.

Re: House Passes Employee Stock Options Bill Aimed at Startups

#46

Post by revo13 »

More evidence as to why the income tax should be replaced with a consumption tax. Just let people make their dammed money already and apply a simple tax when they spend it. Windfalls wouldn't be "dangerous" or punitive in that model, and savers would be rewarded.

--Of course I oversimplify the consumption tax, and safeguard would need to be in place on that to ensure it is not regressive with respect to necessities...

Re: House Passes Employee Stock Options Bill Aimed at Startups

#47

Post by brianwawok »

MichaelBurge wrote: post #41
rplst8 wrote: post #27

Earlier quoted context omitted.

> For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane. It really is. The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes. The AMT was originally enacted to catch a handful (less than 200 I believe) people who were at the time of enactment (19…

> The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes. When the politicians were first proposing the constitutional amendment that allowed income taxes, they were throwing numbers like 1% or 2% around. It took only 4 years from the ratification of the 16th amendment for the maximum tax rate to shoot up from 7% to 6…

So you cap income tax at 2%. Congratulations you just tripled property tax and made sales tax 20%.

Taxes are like wackamole. You can't just limit 1 tiny piece and expect anything to change.

Furthermore you can't just lower the total take unless you want to explain where the cut is coming from.

Less school funding? Less roads? Less police? Less Army? More debt?

Re: House Passes Employee Stock Options Bill Aimed at Startups

#48

Post by brianwawok »

maxerickson wrote: post #38
MichaelBurge wrote: post #30

Earlier quoted context omitted.

Does Washington D.C. make a 53rd? And though income taxes are managed by the state, I suppose each county collects its own property taxes.

Many jurisdictions smaller than states levy income taxes. I think they are usually simpler to figure (often just a single flat rate).

My city adds a flat 2% to my state tax, based on my state AGI. Takes 10 seconds or less to calculate. Don't think cities usually go too crazy

Re: House Passes Employee Stock Options Bill Aimed at Startups

#49

Post by whamlastxmas »

revo13 wrote: post #46

More evidence as to why the income tax should be replaced with a consumption tax. Just let people make their dammed money already and apply a simple tax when they spend it. Windfalls wouldn't be "dangerous" or punitive in that model, and savers would be rewarded. --Of course I oversimplify the consumption tax, and safeguard would need to be in place on that to ensure it is not regressive with respect to necessities..…

High consumption tax creates an incentive to not spend your money, which is bad.This also means the millionaires and billionaires of the world get to invest their money tax-free to earn even more money, often with rent-seeking, while 95% of America is getting taxed essentially up front on the vas majority of their earnings because it gets spent on stuff like housing, food, and healthcare.

This creates a massively regressive tax system, which is a super shitty thing unless you're a libertarian who can't understand the concept of marginal utility.

Re: House Passes Employee Stock Options Bill Aimed at Startups

#50

Post by whamlastxmas »

koolba wrote: post #42

> Only startups offering stock options to at least 80 percent of their workforce would be eligible for tax deferrals, and a company’s highest-paid executives would not be able to defer taxes on their stock under the legislation. Is this why I keep seeing nominal $1 salaries?

$1 salaries is because they get paid through a complicated structure that eventually means they owe capital gains tax (20%) instead of income tax (40%).
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