Silicon Valley criticizes GOP proposal to tax employees' stocks

Some executives in the startup industry, however, have pushed for companies to move toward bigger salaries so employees are not so dependent on options to buy a house or pay for other large expenses.

Start-ups are anxious about one part of the Senate's tax reform proposal that would hurt their ability to compete: taxing stock options when they vest, instead of when they are exercised as is now done. To lure talented employees away from public companies and comfortable jobs, startup founders often have to dole out stock options.

That said, the Senate's proposal on taxing stock options may not make it into the final tax law.

In the high-growth, high-risk world of venture capital and startups, this change is monumental, as vested stock options can quickly turn worthless before they are exercised by employees. Since vesting typically occurs many years before a stock is sold (or even can be sold because startups restrict stock sales before a company goes public), that tax bill could be crushing.

"What this would mean is every month, when your equity compensation vests a little bit, you will owe taxes on it even though you can't do anything with that equity compensation", venture capitalist Fred Wilson wrote in a blog post. "You can't spend it, you can't save it, you can't invest it". "There's some larger companies, not just venture companies that are anxious about this".

The National Venture Capital Association said in a tweet that it is "working hard" to remove the provision from the proposal.

Although the tax plan has many startups and entrepreneurs anxious about their future, others believe that there is no way that the tax plan will make it through the Senate unchanged.

"This shift would have profound negative consequences for technology start-ups", Engine wrote in the letter, which was co-signed by companies like Airbnb, Uber, Lyft and luminaries such as Y Combinator President Sam Altman and Facebook co-founder Dustin Moskowitz.

"We can not overemphasize how essential stock-based compensation is to a startup's ability to recruit and retain talent", they wrote.

Republican Senator Rob Portman of OH, a member of the Senate Committee on Finance, has filed an amendment to repeal the provision in the tax bill, according to his spokesman.

The tax would be a major problem for startups and other new businesses, many of which use stock options to partially pay employees that they would otherwise be unable to afford.

The idea landed like a bomb in the Silicon Valley community this week.

Silicon Valley and other US startup hubs are outraged at a provision in the newly revealed Republican tax plan that some tech leaders say could have a devastating impact on the way startups are funded.

Senate Republicans have now proposed taxing those stock options as they vest and before startup employees have the opportunity to cash them in, resulting in annual tax bills that could easily climb into the tens of thousands of dollars, say startup founders and venture capitalists.

Thiel Foundation did not respond to a request for comment on the Senate proposal. Options are exercised when the price they were granted at-known as the strike price-is lower than the share price, and some shares can then be sold to pay the taxes.

Like this



14 November 2017
Global crude oil demand to ease on warm climate
The cartel, led by Middle East producers, will see its share of the market grow to 46 per cent in 2040 from 43 per cent now. The expected US surge will account for 80% of the increase in global supply over the time period.

14 November 2017
The Case for and Against American Tower Corporation (REIT) (AMT)
Heading into the stock price potential, Devon Energy Corporation needs to grow just 6.41% to cross its median price target of $43. Traders are feeling more bearish on shares of the company recently if you take into consideration the increase in short interest.

14 November 2017
Wasatch Advisors Inc Lowers Its Ownership in Cornerstone Ondemand (CSOD) Last Quarter
Cornerstone Ondemand (NASDAQ: CSOD)'s share price plunged -1.7% or -0.59 to reach at $34.17 during previous trading session. A number of analysts have issued reports on CSOD shares. (NASDAQ: CSOD ) on Wednesday, November 8 to "Neutral" rating.

14 November 2017
Government must fund expansion of Customs system, say MPs
It warned that using uncertainty over the outcome of Brexit negotiations as an excuse to hold back from action would not work. It was "deeply troubling" that HMRC did not have the funding to develop customs systems for Brexit or plan contingencies.

14 November 2017
Minerva Punjab, Mohun Bagan to kickstart 2017-18 I-League season
However, the release of the fixtures just 11 days ahead of the actual start of the league does not bode well for the tournament. For the first time since the inception of ISL in 2014, the franchise league and I-League will be held concurrently this season.

14 November 2017
Watch as Miami, Notre Dame fans brawl in stadium concourse
The scuffle comes one week after a fan slapped a police officer as she was being removed from the stadium for disorderly conduct. At the time of the fight, the game was already out of hand for the visiting Fighting Irish, who were down 27-0 at halftime.

14 November 2017
Annual event encourages tobacco users to stop for a day
However, in 2016, more than one in seven US adults were current cigarette smokers (3). The 42nd annual Great American Smokeout will be held on November 16, 2017.

14 November 2017
McLaren announces launch date for next Ultimate Series auto
Last month, McLaren teased the triple exhaust outlets of the auto as the first teaser of the upcoming Ultimate Series model. Like these two cars, the new generation of McLaren Ultimate Series models will be available in strictly limited numbers.

14 November 2017
Enphase Energy Inc (NASDAQ:ENPH) Institutional Investors Sentiment Drops in 2017 Q2
The Firm is engaged in designing, developing, manufacturing and selling microinverter systems for the solar photovoltaic industry. ValuEngine raised shares of Enphase Energy from a strong sell rating to a sell rating in a report on Wednesday, September 27th.

13 September 2017
Top Bookmakers Name Odds-On Favourites for 2017-2018 NBA Championship Success
As a result, the Warriors won the championship for a fifth time, taking back the title that they last won as recently as 2015. The two teams have met in the final for three consecutive years, with the Cavs picking up the title just once, in 2016.