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> I hate that trope because, yeah technically it's the right advice for most people, since it applies to 99% of companies. But there's that 1% that raised seed

> I hate that trope because, yeah technically it's the right advice for most people, since it applies to 99% of companies. But there's that 1% that raised seed or series A from a16z or Founders Fund where your equity has a relatively high chance of a decent payout Then it's _excellent_ advice. In Canada we have endless amounts of kids who bust their butts to get themselves into the NHL, and only a fraction of a fraction make it, and only a fraction of _those_ get a jaw-dropping contract. From your own admission, and from what seems to be generally accepted, this is also the case for winning the equity lottery in Tech Startups. For those trying to make a living, buy a house, and have a family then valuing your equity at $0 is the only rational option.

fossuser 6y ago
Canada taxes capital gains at 50% anyway so it’s probably not a great idea to value it as much there. That said, if you’re comparing FAANG and startups you’re already pretty selected which is not true of all the kids trying for NHL.
- otoburb 6y ago
  >>Canada taxes capital gains at 50% anyway so it’s probably not a great idea to value it as much there. Can you elaborate on this a bit more? I thought that Canada only taxes half of the capital gains which is then added to your taxable income.[1] So the amount of tax paid on the capital gains might be 50% or more but only if your taxable income for that year places you in the highest tax bracket. In the US, you're generally on the hook to pay tax on 100% of any capital gains, compared to Canada where you're only paying tax on half of any capital gains. [1] https://turbotax.intuit.ca/tips/capital-gains-tax-in-ontario-11064 https://turbotax.intuit.ca/tips/capital-gains-tax-in-ontario...
  - fossuser 6y ago
    Ah interesting - I’m not Canadian so don’t know much about their tax law. You’re probably right and I had a confused misunderstanding. I only looked briefly to see what it’d be like if the election goes south and things get worse in the US. US long term capital gains is only 15% up to 400k and 20% after that which is really good. [Edit] Reading that turbo tax article it seems like only 50% of the gain is taxed at all and of that gain the maximum tax is under 15%? Is this just Ontario tax and there’s more federal or something else? That seems really good?
    - fossuser 6y ago
      Looks like that's in addition to federal income tax: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html https://www.canada.ca/en/revenue-agency/services/tax/individ... So I think most of the time it's probably a lot worse than the long term gains tax in the US.
- wing-_-nuts 6y ago
  I'm pretty sure you misunderstood. I believe canada taxes half your capital gains as regular income. Frankly, seeing the number of wealthy folks in the US paying lower tax rates than the plumber that fixes their toilet, maybe it's a better system.
  - fossuser 6y ago
    Yep I was wrong (and this is good to know!). It looks like it's a lot better than I thought, but probably still worse compared to US long term capital gains tax in most cases. Thanks for pointing this out. (I think tax incentives for growth are good for society, but that's somewhat of a tangential discussion).

fossuser 6y ago

Canada taxes capital gains at 50% anyway so it’s probably not a great idea to value it as much there. That said, if you’re comparing FAANG and startups you’re already pretty selected which is not true of all the kids trying for NHL.

otoburb 6y ago
>>Canada taxes capital gains at 50% anyway so it’s probably not a great idea to value it as much there. Can you elaborate on this a bit more? I thought that Canada only taxes half of the capital gains which is then added to your taxable income.[1] So the amount of tax paid on the capital gains might be 50% or more but only if your taxable income for that year places you in the highest tax bracket. In the US, you're generally on the hook to pay tax on 100% of any capital gains, compared to Canada where you're only paying tax on half of any capital gains. [1] https://turbotax.intuit.ca/tips/capital-gains-tax-in-ontario-11064 https://turbotax.intuit.ca/tips/capital-gains-tax-in-ontario...
- fossuser 6y ago
  Ah interesting - I’m not Canadian so don’t know much about their tax law. You’re probably right and I had a confused misunderstanding. I only looked briefly to see what it’d be like if the election goes south and things get worse in the US. US long term capital gains is only 15% up to 400k and 20% after that which is really good. [Edit] Reading that turbo tax article it seems like only 50% of the gain is taxed at all and of that gain the maximum tax is under 15%? Is this just Ontario tax and there’s more federal or something else? That seems really good?
  - fossuser 6y ago
    Looks like that's in addition to federal income tax: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html https://www.canada.ca/en/revenue-agency/services/tax/individ... So I think most of the time it's probably a lot worse than the long term gains tax in the US.
wing-_-nuts 6y ago
I'm pretty sure you misunderstood. I believe canada taxes half your capital gains as regular income. Frankly, seeing the number of wealthy folks in the US paying lower tax rates than the plumber that fixes their toilet, maybe it's a better system.
- fossuser 6y ago
  Yep I was wrong (and this is good to know!). It looks like it's a lot better than I thought, but probably still worse compared to US long term capital gains tax in most cases. Thanks for pointing this out. (I think tax incentives for growth are good for society, but that's somewhat of a tangential discussion).