Tech start-ups fight Senate plan to change the way stock options are taxed

Wednesday, 15 November 2017, 05:38:53 AM. Senate Republicans have touted their tax bill as business-friendly, but technology startups — including Hyperloop One, Airbnb, Uber and Vimeo — are fuming over a provision that would make a major change to how stock options are taxed.
have touted their tax bill as business-friendly, but technology start-ups — including Hyperloop One, Airbnb, Uber and Vimeo — are fuming over a provision that would make a major change to how stock options are taxed. A key tool for start-ups to attract employees, stock options are currently taxed when they are cashed in. The Senate Republican tax bill unveiled last week would tax the options on the date they vest, meaning when the employee is allowed to begin cashing them in. The difference is significant because employees often hold on to their options, hopefully until those options’ value rises with the growth of the company. Under the proposed change, employees could face large tax bills before they realize the income from cashing in the stock options to pay them. The change would produce about $13.4 billion in additional federal tax revenue over the next decade, according to an analysis by the congressional Joint Committee on Taxation. “This shift would have profound negative consequences for technology start-ups by, among other things, undermining their ability to compete with large incumbents,” said from Engine, an advocacy group for technology start-ups, that was sent Tuesday to Senate Finance Committee Chairman (R-Utah). “Start-ups do not have the ability to compete with larger firms based upon cash compensation,” said the letter, signed by about 540 tech companies, start-up executives and venture capitalists, most of them from California. “A start-up’s ability to...Read more
Share this

You might also like

Similar