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> People subject to the wealth tax would report it to the Franchise Tax Board along with their income taxes. They would have to report all assets including stoc
by garmaine 6y ago
> People subject to the wealth tax would report it to the Franchise Tax Board along with their income taxes. They would have to report all assets including stock in publicly and privately traded corporations...
Does this mean that if you have paper wealth in the form of illiquid founder shares in a startup, you'd be subject to the wealth tax? There's a nontrivial number of people that have more than "$30M" in stock in their name, but that wealth only exists on paper.
If you are a co-founder with 20% ownership of a $500M company, that's an extra $280k a year of personal taxes even if your company doesn't make it to an exit.
This could kill the startup industry.
- Junk_Collector 6y agoCorrect, they are proposing that you would be able to defer those taxes up to 10 years until your exit but I don't think it has been very well thought out.
- garmaine 6y agoWhat if the company goes under?
- jdashg 6y agoGive the state the requisite number of shares in-kind. Or pay cash, since you own 10% of a unicorn, and if you can't extract enough cash from that, you might as well burn your shares.
- garmaine 6y agoIn many cases you can’t extract cash from non-public common stock shares with sale restrictions. I am, on paper, a multimillionaire from my last company because of the restricted common stock I hold. However I cannot sell those shares, and the current CEO seems determined to run the company into the ground. My actual liquid assets are just enough to cover rent for a few months and I still work for a living. A wealth tax would kill me (although thankfully my paper wealth is below the $30m threshold).