351–360 of 388 posts
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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.
How about taxing the options when they are actually sold, and gains are actually realized?
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…
Yes, it would be like here in Australia, where I paid higher rate tax on non-public shares allocated to me. I didn't even have the luxury of waiting until they vest! I think if you leave a company before vesting you have to try and get that tax money back from the ATO. In fact, you could, in theory, bankrupt someone by giving them enough shares. I think they may have changed this for small enough companies, but still…
In Australia or the US? Because they do in the US.
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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.
When people talk about this package benefiting the wealthy, they mean very wealthy people. The upper-middle-class would probably take more damage from it than most.
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It is not the strike price or the exercise price. It is more-or-less the fair market value of the options when they vest, but if you need to compute your taxes, consult an accountant. (Yes, this rule is terrible for planning, because you don’t know what fraction of your shares are ISOs until they vest). Today, ISO’s are commonly given to engineers at pre-IPO startups. Nothing says they have to go to execs. Those engi…
"It is not the strike price or the exercise price. It is more-or-less the fair market value of the options when they vest, but if you need to compute your taxes, consult an accountant" This is not correct. The $100k threshold is calculated based on the fair market value of the option at the time of grant , which by definition is the exercise price. So you calculate how many shares you will vest in each year, multipli…
Strike and option value are not the same thing. (Not sure which one this bill refers to.)
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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…
You get what you pay for. California is able to spend my state taxes on things that I want, and the federal government gets to not pay for those things. Texas has to spend federal dollars if they want similar things. Their options are either to not have nice things, or to spend more federal dollars than California does. That's what the deduction attempts to account for.
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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 subsid…
> At the end of the day, the same income should pay the same federal tax. I suspect you say this with the belief that things like state/local tax deductions are unique in how they cause the same income to pay different tax, but that's simply not true, and there's precedent littered across the federal tax code that enables this. Consider simple things like dependent exemptions and the difference between filing status…
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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 subsid…
>the same income should pay the same federal tax. Given the vast difference between local economies, this would result in huge disparities in effective tax rate depending on where you live. For example, a person who makes $100k in Kansas City, MO is far wealthier than someone making that much in San Jose, CA. Taxing them at the same rate is essentially a massive tax break for one and not the other. The SALT deduction…
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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…
Don't you have to do more work to make a claim about who is subsidizing who? How much does each state receive in federal grants and aid? And the guy in Texas has more money in his pocket than the guy in New Jersey no matter what. It's a weird thing to get hung up on. Nobody ever talked about the fairness of this deduction before. This was cooked up as a GOP talking point in some smoke filled room somewhere. Class env…
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It seems completely absurd to me that preferred shares exist, and one of the reasons I always hesitate whenever I'm offered equity. For anyone curious, here's a good explaination: https://www.capshare.com/blog/how-preferred-stock-affects-th... They basically shift a lot of downside risk from the preferred share owners (usually a VC firm I guess) to the founders and employees in the startup, which in theory makes them…
I made another comment about them below, but i will repeat in a different way. People have their own assessment of what is valuable, and getting exactly what they want means they are willing to part with as much utility. A person that loves sandwiches with blue cheese is willing to pay more for that cheese than he would with the a regular sandwich. The existence of blue cheese sandwiches is moderately irrelevant to t…
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I don't think this is true anymore. I think this is one of those funny vestigial things that evolved in a different era. If you think of a startup as a true "garage venture" with a few people toiling away trying to ship a product, maybe that's the right model. That isn't really the model for SV entrepreneurship anymore, though, even though we kinda pretend it is. How it works today is, $8 million-dollar "seed" rounds…
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…
I think significant amount of people would be fine with "just risk". They are not fine with risk plus malicious business practices - diluting stocks, delaying IPO indefinitely, creating different tiers of stocks with multipliers, preferential stocks for non-employees, etc.