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Isn't this a change that makes the tax code fairer? It seems like options and RSUs have value associated with them. At the very least, the person who is receivi
by trothamel 9y ago
Isn't this a change that makes the tax code fairer? It seems like options and RSUs have value associated with them. At the very least, the person who is receiving them considers them to have value. Stock options are traded on markets, and priced some how.
Part of the new tax plan seems to be trying to lower the tax brackets, in exchange for preventing people from avoiding taxes. That's why it seems to be doing things like taxing these options and the free food some companies supply their employees.
It isn't clear why income shouldn't be taxed just because it's supplied in a different way.
- austenallred 9y agoThe value associated with them is illiquid. I can’t necessarily sell my stock options for what they’re “worth,” so taxing them at that level makes them pretty much worthless. It’s already taxed when I sell them - when I get dollars that I can spend. Taxing before then is (I hope) an oversight.
- kolbe 9y agoWould you be cool if you got taxed on the income tax scale upon selling them?
- nsxwolf 9y agoIt would be better than my accountant telling me I need to cash out my 401k to pay for taxes on something I'm probably never going to be allowed to sell anyway.
- austenallred 9y agoSure
- conanbatt 9y ago> and the free food some companies supply their employees. This is a long standing question. Are costs of benefits like these one not taxed in the US? The implications of not taxing that is huge.
- t_fatus 9y agocomparing free food, which you directly benefit, and RSUs seems really unfair.
- conanbatt 9y agoThankfully I'm not talking about that at all.
- gnopgnip 9y agoFree food is taxed unless it meets certain qualifications, the biggest one being that it is for the convenience of the employer.
- conanbatt 9y agoCan you elaborate? Does google pay 35% on the food it provides to employees?
- t_fatus 9y agoOptions and RSUs gain value the day you pay for the underlying stocks, not the day you're allowed to buy a stock which could later in time become worthless. don't forget they're aimed at employees so they can share the value created by the company they work within, and that these employees will pay taxes in time when they extract any value from their companies
- trothamel 9y agoDon't they gain value at both times? I mean, stock options are something people pay for.
- greenleafjacob 9y agoThe intrinsic-value of the options is required to be zero (strike price = FMV) at the time of grant. As for the time-value, how exactly would you calculate that for tax purposes?
- kolbe 9y agoIf they don't have any value, then you shouldn't have any problem with them going away. You obviously consider them valuable, or else you wouldn't be defending them.
- t_fatus 9y agoIndeed the right to buy a stock is valuable, but as an employee / the state you should postpone the taxation to when the value is actually retrieved by the person you tax. It's a bit like saying 'You're house is worth X, you should be taxed regarding this price, even if you don't have yet made any profit'
- kolbe 9y agoYou literally described property taxes just now.
- kelnos 9y ago> Isn't this a change that makes the tax code fairer? It seems like options and RSUs have value associated with them. At the very least, the person who is receiving them considers them to have value. Stock options are traded on markets, and priced some how. By that logic, you should have to pay tax on publicly-traded stocks that you own daily, every time the price goes up, even if you don't sell it. Taxing unrealized gains is insanity. How does it make sense to levy a tax on income that cannot be converted into money? > Part of the new tax plan seems to be trying to lower the tax brackets, in exchange for preventing people from avoiding taxes. That's a bit naive, if that's the case. I would never expect people to opt out of legal means to reduce their tax burden.