171–180 of 232 posts
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?
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).
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You're forgetting that options/equity/shares/whatever have many conditions AND on top of that there are complex schemes which can render them nil. The stockholders/VC know that and they are very good on the legal stuff. A salary comes with no trap. You can ensure every month that you got the money.
No, I remember all those. You should know what they are and how they may be used against you, and you also should have a fairly good idea if your founders are likely to do that. Just because some people are untrustworthy sociopaths does not mean all people are. If your boss wants to fuck you over, there are plenty of ways for them to do so, in career-ruining ways, even at a salaried job.
That's what everyone is saying: knowing all of that stuff, the reasonable thing is to take salary. You're just choosing to ignore that that line of reasoning makes sense because you'd prefer yours.
Have you ever been on either side of this sort of thing when it's gone down, or are you just regurgitating the party line?
This is good news, but it may not go anywhere - "the Administration strongly opposes H.R. 5719 because it would increase the Federal deficit by $1 billion over the next ten years." [1] So a really bad tax rule is in place, but since it happens to bring in ~$100M/yr, we shouldn't fix the rule? [1] https://www.whitehouse.gov/sites/default/files/omb/legislati...
> So a really bad tax rule is in place, but since it happens to bring in ~$100M/yr, we shouldn't fix the rule? Assuming, for the sake of argument, agreement that the rule is bad, fixing it without paying the cost at the same time may still be worse.
That's probably true if we're talking about a tax that's more than a rounding error on the total federal budget.
In an ideal world, you'd have a criteria for what makes a tax worth it.
For instance, some criteria might be:
1) Does the tax raise substantial money for the on-going operation of the government or to fund critical programs? (In this case, the answer would be "no" since $100M/yr is a fraction of a fraction of our federal budget.)
2) Does it incentivize a certain type of behavior that society has deemed "good" or penalize a behavior society has deemed "bad"? (In this case, penalizing people for working at a quickly growing but illiquid company doesn't seem like it benefits/hurts society one way or the other.)
3) Can the tax be paid without undue burden to the person paying? (In this case, the burden on gains that the employee doesn't actually have in their bank account could be $100,000+ on gains they don't have yet. I'd call that undue.)
I'm sure we could come up with more criteria too, but at face value, it doesn't seem like this tax has too many good legs to stand on.
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> So a really bad tax rule is in place, but since it happens to bring in ~$100M/yr, we shouldn't fix the rule? Assuming, for the sake of argument, agreement that the rule is bad, fixing it without paying the cost at the same time may still be worse.
> fixing it without paying the cost at the same time may still be worse. That's probably true if we're talking about a tax that's more than a rounding error on the total federal budget. In an ideal world, you'd have a criteria for what makes a tax worth it. For instance, some criteria might be: 1) Does the tax raise substantial money for the on-going operation of the government or to fund critical programs? (In this…
> That's probably true if we're talking about a tax that's more than a rounding error on the total federal budget.
Its true in any case; the fact that the total cost is very small compared to the budget means that, yes, the magnitude of any net harm from not paying for it is likely to be small (but, it also means that its also extremely easy to pay for.)
Disregard net costs because they are small means that large harms that you would block if they were proposed together become acceptable so long as they are broken up and spread out among separate bills.
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No, I remember all those. You should know what they are and how they may be used against you, and you also should have a fairly good idea if your founders are likely to do that. Just because some people are untrustworthy sociopaths does not mean all people are. If your boss wants to fuck you over, there are plenty of ways for them to do so, in career-ruining ways, even at a salaried job.
> You should know what they are and how they may be used against you, and you also should have a fairly good idea if your founders are likely to do that. That's what everyone is saying: knowing all of that stuff, the reasonable thing is to take salary. You're just choosing to ignore that that line of reasoning makes sense because you'd prefer yours. Have you ever been on either side of this sort of thing when it's go…
I'm arguing that the reasonable thing to take is not salary, the reasonable thing to do is get a different job. It's not worth fighting over the scraps of a company that's going nowhere. Find someplace where the pie is expanding and then you avoid all the fights and backstabbing over who gets the pie. If you can't find such a place, create one. (That's why I'm founding a startup now; I'm not averse to working as an employee for someone else as long as they have their shit together, but I see relatively few such companies that I'd like to work for right now.)
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> You should know what they are and how they may be used against you, and you also should have a fairly good idea if your founders are likely to do that. That's what everyone is saying: knowing all of that stuff, the reasonable thing is to take salary. You're just choosing to ignore that that line of reasoning makes sense because you'd prefer yours. Have you ever been on either side of this sort of thing when it's go…
I've worked as an employee for 2 startups, both of which failed. I had options for one and took all-cash compensation for the other. I've also founded two, one of which outright failed and the other of which is still in search mode. And I worked at a big company, where roughly 50% of my rather generous compensation was in equity. I'm arguing that the reasonable thing to take is not salary, the reasonable thing to do…
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If the company goes bust before you get liquid, isn't that a loss commensurate with your gain that could be used to offset it?
No, you realize ordinary income tax on the spread, which is payable in full in the year realized (or in the year to which it is deferred under this measure) while the loss of the stock value is a capital loss, which can only be offset against other capital gains or deducted at the rate of $3,000 per year. So you could easily have a situation in which you realize tens or hundreds of thousands in ordinary income on whi…
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No, you realize ordinary income tax on the spread, which is payable in full in the year realized (or in the year to which it is deferred under this measure) while the loss of the stock value is a capital loss, which can only be offset against other capital gains or deducted at the rate of $3,000 per year. So you could easily have a situation in which you realize tens or hundreds of thousands in ordinary income on whi…
$3k/yr, right? So your loss offset in taxes plays out over a long period of time (like from 2001-2015, for your 2000 return)
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> 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.e. "putting retirees out on the street". Such a bill would need to provide a fix for that case, where someone has a fixed amount of savings intended to provide for themselves in retirement and cannot afford a sudden 10% increase in all prices. For instance, on…
But wouldn't this encourage the rich to spend overseas? They would pay no tax on their income, and then they'd be free to go and spend it abroad in countries where there is an income tax, but no/lower consumer tax.
First, if they're traveling that often, they're going to be paying a substantial amount of travel expenses, subject to sales tax. Might also be worth considering if currency conversions should be subject to sales tax.
Second, who can afford to do the majority of their spending in another country, while not actually being a resident of that country instead?
Third, a country would get significant additional tax revenue from visitors and tourists, who don't make income in that country but do spend money in that country.
Fourth, where's the money coming from? The business they derive their income from has to pay sales taxes too.
And finally, a vanishingly small fraction of people could actually do that, and it's not worth making the tax code a hundred times more complicated to target a tiny number of people who will still end up paying a huge amount of tax in other ways. The administration alone isn't worth the additional revenue; you'd spend more administrating the more complex tax code for everyone than you'd have any hope of recouping.
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> This "tax breather" is a positive step I'm really not sure that's true. Its usually a bad idea to take stock options instead of a market rate salary because most options are worthless in the long run. Lots of people do it anyway because they have a fantasy about making it big. As it stands now this is a life lesson that people spend some time in their 20s figuring out and probably walk away with nothing but some va…
This is the current meme on Hacker News, but IMHO the pendulum has swung too far. You should absolutely be very careful about working for an early-stage startup as an employee and taking options or equity in lieu of part of your salary. You should feel that you trust the founders. You should insist that they've figured out a.) who their customers are b.) why they want the product and c.) how to make money, and have s…
Off the top of my head I can only think of a handful of companies today, and even with those I'm not sure I would take a six-figure gamble with most of them. If I were a decade or two older things would be significantly different.