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Don’t Tax Options and RSUs Upon Vesting

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Re: Don’t Tax Options and RSUs Upon Vesting

#151

Post by cbr »

jeffdavis wrote: post #106
ransom1538 wrote: post #98

Earlier quoted context omitted.

[deleted]

I think the law has language about how it's vested unless a substantial amount of additional work required of the employee (e.g. continued employment). It's like if a company receives a bill for something they bought in 2016, but don't technically pay it until 2017, the bill would still show up in their 2016 reports.

    if a company receives a bill for something they bought
    in 2016, but don't technically pay it until 2017, the
    bill would still show up in their 2016 reports.
Yes if you're using accrual basis, but not if you're using cash basis: https://en.wikipedia.org/wiki/Basis_of_accounting

(Any big company will be using accrual basis, though.)

Re: Don’t Tax Options and RSUs Upon Vesting

#152

Post by pc2g4d »

hatred wrote: post #96
ransom1538 wrote: post #75

Earlier quoted context omitted.

Yep. That isn't about publicly traded companies. The only people that would panic is if you are in a startup that cannot exercise.

Yeah, mostly applies to pre-IPO companies offering stock options/RSU's.

Large publicly-traded companies can also offer RSUs---doesn't this still apply in that scenario?

Re: Don’t Tax Options and RSUs Upon Vesting

#153

Post by Randgalt »

rb808 wrote: post #118

Surely if you have options or stock in an illiquid company where you can't sell it - they are worth zero on a mark-to-market basis, so you dont need to pay tax on it? If you can easily sell them for a price it makes sense that you pay tax on it.

If only life were that logical. Under the rules as they are today, there are many scenarios where illiquid options/stock have a taxable event. People's finances have been ruined by this. I had a friend lose a house when he sold his company for stock.

Re: Don’t Tax Options and RSUs Upon Vesting

#154

Post by walshemj »

conanbatt wrote: post #127
walshemj wrote: post #71

Earlier quoted context omitted.

Or like in the uk for approved (ie tax friendly) enforce the issuing of the same shares to employees as the others.

I'm not sure that is better. Extra provisions on capital might be adding more capital to the mix, which increase wages all around. It might be shooting yourself in the foot. But hiding the information is a way for investors to have more leverage over employees. That is an undoubtedly unfair surplus to them. Its not the only thing I'd change. I would do away with the restriccions of investing in startups as well. That…

Why its to stop some shareholders being taken advantage of by companies with different share classes.

Re: Don’t Tax Options and RSUs Upon Vesting

#155

Post by s73ver_ »

opportune wrote: post #124
s73ver_ wrote: post #120

Earlier quoted context omitted.

At the same time, wouldn't that talent be equally wasted at "Uber for cat-sitters"?

I agree, it's a bad comparison. What's more happening is that talent is being attracted to mid-stage startups, unicorns, and the big companies like Google and Amazon. Early-stage startups like "Tinder for people with green hair" don't employ enough people across the market for them to significantly impact it. I don't think this is about government fighting against stock-paying companies for tech workers by fucking up…

At the same time, most early stage startups aren't actually doing much that requires such high levels of talent and specialization. They really just require good amounts of "get shit done". And there are plenty of people in this country that have adequate levels of that. They're just mostly not in SV.

Re: Don’t Tax Options and RSUs Upon Vesting

#156

Post by ydt »

Gargoyle wrote: post #148
ydt wrote: post #111

Earlier quoted context omitted.

Why would you be shocked? There's all sorts of nasty things in these tax proposals for the less than wealthy. They are looking everywhere they can to find offsets to make the tax cuts for the donor class work under the budget rules.

If you're getting options and RSUs, you're going to be upper middle class at least, and thus wealthy by the definitions of most Americans.

The definitions of most Americans doesn't matter in this case. What's in the proposed congressional bills matters.

Re: Don’t Tax Options and RSUs Upon Vesting

#157

Post by kstrauser »

ihsw2 wrote: post #29
austenallred wrote: post #18

The importance of this change can’t be understated; this effectively kills compensation at startups in the form of equity, and would make startups completely unable to compete with incumbents. Anyone that has options at a company that grows quickly would be paying tens or hundreds of thousands in taxes to keep their equity, which is still effectively a very risky bet that a company will end up huge. No one would want…

While this is an unintended consequence, how do you otherwise tax the massive equity compensation packages offered to executives? It has to be across the board.

I don't think it's an unintended consequence. I think it was meant to punish Big Tech for their resistance to the Republican party in the 2016 election.

Re: Don’t Tax Options and RSUs Upon Vesting

#158

Post by pc86 »

austenallred wrote: post #53
logfromblammo wrote: post #43

Earlier quoted context omitted.

What if your goal is for technical talent to prefer companies that make parts for the F-35 that actually function as intended, instead of companies that could be described as "Uber for cat-sitters" or "the Snapchat of Etsy-linked Tumblr posts" or "Pets.com with more tulip bulbs" or "like Facebook, except fronting for GRU instead of NSA"? In that case, it would meet that goal very well. What a pity it is that the tech…

In this instance the exchange you would have to make would be crippling startups and small businesses, which is where the vast majority of the growth of the economy happens. As an aside, how many companies do you see actually building Snapchat for Etsy-linked tumblr posts? I see that criticism of Silicon Valley all the time, yet despite being in the heart of it I rarely see that kind of company. I’d guess an order of…

We need to draw a distinction between "startups" and "small businesses." Options and RSUs, as a vehicle for engineering talent, is largely a VC/SV thing. I work on the east coast in a non-NYC city, and options/RSUs simply do not exist, even at what most people would consider tech/software companies, even the ones with venture investment. Certainly, Bill's Hardware down the street does not offer stock options.

By and large, taxation of options and RSU at any point will have negligible impact on the SMB sector of the US economy. It's probably very, very damaging for startups if your definition of startup matches Paul Graham's, but if your definition of startup is "new business that happens to use JavaScript for something" this is unlikely to change anything about your day to day competitiveness.

Re: Don’t Tax Options and RSUs Upon Vesting

#159

Post by austenallred »

s73ver_ wrote: post #146
austenallred wrote: post #30

Earlier quoted context omitted.

That’s simply incorrect. I founded a company that raised a mammoth seed round in Silicon Valley (not $8m but more than $3m), and we do pay some high salaries, but Apple and Facebook still pay salaries that are much, much higher. Critical employees have joined us while taking $100,000/yr pay cuts, despite. Having a salary in the six figures. To think that startups can play that game of “equity doesn’t matter” is just…

So why are you going after these guys that need to take such big pay cuts? I can almost guarantee you that there are plenty of people with a high enough level of talent that are in other areas.

Find them for me, and I'll hire them and pay you a referral bonus.

Re: Don’t Tax Options and RSUs Upon Vesting

#160

Post by briandear »

dmode wrote: post #110
briandear wrote: post #23

Earlier quoted context omitted.

State tax write offs are fundamentally unfair. The US government effectively subsidized high tax states. A guy making $100k in Texas ought to have the same exact tax federal burden of a guy making $100k in New Jersey. As it stands now, those two guys pay a different amount to the federal government. That is unfair. A state can raise state taxes will little impact on residents however it results in lower tax revenue t…

What about property tax deduction? Why isn't that on the table if you are concerned about fairness. Texas has some of the highest property tax rates in the country. Why not focus on that deduction?

I was referring to all state and local deductions. At the end of the day, the same income should pay the same federal tax. What states choose to do is their business. My point is that states ought not benefit or be discriminated against based on their tax policy. My federal tax bill ought not be different because of the state I live in.

I actually live outside the United States, yet I get to file and pay taxes subsidizing a country in which I don’t even live. Aside from Eritrea, the US is the only country that does that.

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