I'm confused. I bought shares this year and would be hit with 50K tax bill from AMT next year.
Does this mean I don't owe AMT addition next year?
House Passes Employee Stock Options Bill Aimed at Startups
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Re: House Passes Employee Stock Options Bill Aimed at Startups
#52> 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?
In addition to the other helpful replies there's some more information here: https://en.wikipedia.org/wiki/One-dollar_salary
>In the United States, this approach impacts personal tax liability, because although stock and option grants are taxed at federal income rates, they may be exempt from some portion of payroll taxes (typically 7.65%) used to fund Social Security and Medicare.
They're still considered highly-compensated, just not through payroll.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#53More 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..…
Totally agree! A consumption tax with a tax prebate (aka basic income guarantee) makes it progressive.
To head off the argument that it's regressive because wealthier people spend a smaller fraction of their income: true for a snapshot in time, but not over the course of their lives. Spending a fraction of your income = saving = spending later. So in retirement they could have an effective >100% income tax rate. Also, switching to this program would be a one-time double-tax on savings which will disproportionately affect those who've saved more; i.e. "progressive". I'm still not positive about intergenerational wealth transfers - that could be a way to avoid paying taxes, but maybe if we charged wealth transfers the same consumption rate, that could solve it.
I'm a big fan of a FairTax-esque approach since it simplifies things dramatically and lays the infrastructure for ramping up the prebate as time goes on, as our nation can afford it.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#54More 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..…
Interestingly, the currently-most-prominent plan in the US for a consumption tax includes a government "prebate", a pre-allocated consumption allowance based on household size, that amounts to a basic income. Under this proposal, every month, the federal government would send you a check for the household's consumption tax rebate (which is typically going to be in the hundreds of dollars).
Re: House Passes Employee Stock Options Bill Aimed at Startups
#55More 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 reg…
So you are content with having a tax system that treats you like a 1%er in the event that you cash in a payday (say $1mil - 35-40%) during a given year, despite the fact that you may have worked your whole life at a middle class level, scraping to save? A consumption tax would allow individuals to actually make choices about how/when they are taxed. Lets be honest, people will still want their "stuff". If they have more money in their pocket, they will spend. That is what America is built on. I would like the opportunity to defer spending at my choice in order to save more in the present without being taxed into oblivion.
And I'm sorry if you didn't read my entire comment. Of course an ignorant consumption tax is regressive. SAFEGUARDS would have to be in place to ensure that the population can acquire necessities without an undue burden being placed on them. Exactly the things you mention: housing (single home), food, healthcare. However, 50"+ 4K TVs do not fall in that category. 30' fishing boats do not fall in that category. Certain items in sales tax heavy states (Texas) already do this is the form of tax free checkout for certain item classes (food at grocery stores).
Re: House Passes Employee Stock Options Bill Aimed at Startups
#56> 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.
Based on this short Wikipedia page [1] it sounds like it's done to avoid payroll taxes like social security and medicare.
Any other reason to do this?
Re: House Passes Employee Stock Options Bill Aimed at Startups
#57> 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.
I understand the desire to avoid a regressive taxation system, but why is it that every tax rule we create comes with 2x the amount of caveats and rules? Our tax system is becoming a mess.
At this rate soon nobody will be able to file their own taxes without an accountant to sort through the muck. And complicated to systems tend to benefit the wealthy.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#58> 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. I understand the desire to avoid a regressive taxation system, but why is it that every tax rule we create comes with 2x the amount of caveats and rules? Our tax system is becoming a mess. At…
The tax system has always been a mess and there are exceptions and loopholes for everything. I don't disagree that it's bad, but I don't know why you'd expect it to change all of the sudden with these rules.
And those two specific exceptions don't seem particularly bad, IMO.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#59I'm confused. I bought shares this year and would be hit with 50K tax bill from AMT next year. Does this mean I don't owe AMT addition next year?
You'll (very probably) still owe AMT taxes.
Just because the house passes a bill doesn't mean it's a law. It also has to pass the Senate and be signed by the President (or go through the veto process).
Re: House Passes Employee Stock Options Bill Aimed at Startups
#60More 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..…
Interestingly, the currently-most-prominent plan in the US for a consumption tax includes a government "prebate", a pre-allocated consumption allowance based on household size, that amounts to a basic income. Under this proposal, every month, the federal government would send you a check for the household's consumption tax rebate (which is typically going to be in the hundreds of dollars).
Which seems highly preferable to a complex system of what to tax and what not to tax. Rather than maintaining an ever-changing list of what should and shouldn't have sales tax applied (with associated busybody politics on various items), just effectively exempt the first $X of purchases, whatever they might be.