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As a founding member of a startup I can say that to early exercise using QSBS while the capitalization of the company is <50M is to take a huge risk. If the co

As a founding member of a startup I can say that to early exercise using QSBS while the capitalization of the company is <50M is to take a huge risk. If the company folds, my stock is worth $0 and I lose. It's a gamble. Why does the government get to take money from me, risk free, when I'm the one taking the risks and starting a company which, if successful and grows, will employ many people? Is it fair to pay on an unrealized gain, such as with certain option exercises where you have to pay AMT without first selling? All risk to me, none to the government. They're like mobsters who shake you down, rich or poor. Eliminating QSBS will be the death of Silicon Valley. Raising capital gains will likewise kill incentive to build businesses and invest. It's insanity, pure insanity. There is no avenue the Democrats are leaving un-pursued in their quest to raise taxes. Insanity in this economy. Insanity.

iaw 5y ago
> Eliminating QSBS will be the death of Silicon Valley. Silicon valley existed before QSBS it can survive it's removal.
mbesto 5y ago
> Why does the government get to take money from me, risk free, when I'm the one taking the risks and starting a company which, if successful and grows, will employ many people? Why do you get to use the internet my tax dollars paid for? That same internet that your startup so heavily requires to function, heck, even exist?
- grapist420 5y ago
  okay but the adage of “VC profit is mostly the huge winners”, so your marginal benefit goes down only at the highest valuation companies, and does that really harm much? There’s a great argument that yes, I’d rather have Elon be able to pump billions into spaceX or bezos billions into his ventures than have poor people spend them, but incentives? No clue, genuinely
johnrgrace 5y ago
I think you've forgotten that with a company you've been given some amazing legal rights by the goverment. If the company goes bankrupt you as founder don't personally have to pay off the debits you get to walk away.
- nlitened 5y ago
  As far as I understand, government has very little to do with it. It's a signed mutual agreement between the investor and the founder.
ohashi 5y ago
I love this logic, if you're going to take some of my money away I will do nothing instead. Really? Bullshit. Why should anyone get to take hundreds of thousands or millions of dollars without paying anything back to society in taxes? Simply because they took a risk? They owe nothing to the society that let them do that? All those jobs they created, hired people, who relied on government services at some point from education, roads, healthcare, food, security, etc. Of course they did too, but no. Now that they are making more than almost everyone in the society, they shouldn't have to pay anything back to it? It's a greedy load of crap justified with weak, self interested nonsense.
- sbacic 5y ago
  > I love this logic, if you're going to take some of my money away I will do nothing instead. Really? Bullshit. Is it? Why is it so hard to imagine that higher taxes on risky ventures might cause somebody to go "Eh, not worth it, I can make better use of my time - like spending it with friends and family"?
  - Applejinx 5y ago
    If that is you, why should we trust you with a tech unicorn? Is there no other value or purpose to your venture?
  - imtringued 5y ago
    You will be replaced by someone who pays their taxes.
    - sbacic 5y ago
      I'm fairly sure I'll still be paying taxes when I go out to eat with my family or go camping with friends. It's just not going to be as much as if I had spent that time working.
      - ohashi 5y ago
        If your entrepreneurial drive is only as strong as the capital gains rate, I don't really have any faith in you as an entrepreneur. We're talking about people exiting for substantial amounts that this really impacts.
dillondoyle 5y ago
Maybe I'm missing something. But equity for work is income. Which should be taxed like everyone else. Or if you view it solely as an asset just like all other stock, you should pay cap gains just like everyone else. Is there something hidden in the draft to tax unrealized gains? I know that was an idea thrown out by some super progressives but it is not in the draft bill and won't get passed. Looking at inheritance only even that got stripped too because of 'family farms'
imtringued 5y ago
>They're like mobsters who shake you down, rich or poor. Well, that is how it began. There were mobsters that shake you down. Then people decided that they don't want to be shaken down. They formed a government to fend off mobsters and then it turned out that the ruler is also a mobster so they implemented limited terms and elections to decide on the next mobster knowing that a society will inevitably succumb to external mobsters if it does not manage its own mobsters. Therefore the moral argument that governments are bad because they are mobsters is extremely weak.

iaw 5y ago

> Eliminating QSBS will be the death of Silicon Valley. Silicon valley existed before QSBS it can survive it's removal.

mbesto 5y ago

> Why does the government get to take money from me, risk free, when I'm the one taking the risks and starting a company which, if successful and grows, will employ many people? Why do you get to use the internet my tax dollars paid for? That same internet that your startup so heavily requires to function, heck, even exist?

grapist420 5y ago
okay but the adage of “VC profit is mostly the huge winners”, so your marginal benefit goes down only at the highest valuation companies, and does that really harm much? There’s a great argument that yes, I’d rather have Elon be able to pump billions into spaceX or bezos billions into his ventures than have poor people spend them, but incentives? No clue, genuinely

johnrgrace 5y ago

I think you've forgotten that with a company you've been given some amazing legal rights by the goverment. If the company goes bankrupt you as founder don't personally have to pay off the debits you get to walk away.

nlitened 5y ago
As far as I understand, government has very little to do with it. It's a signed mutual agreement between the investor and the founder.

ohashi 5y ago

I love this logic, if you're going to take some of my money away I will do nothing instead. Really? Bullshit. Why should anyone get to take hundreds of thousands or millions of dollars without paying anything back to society in taxes? Simply because they took a risk? They owe nothing to the society that let them do that? All those jobs they created, hired people, who relied on government services at some point from education, roads, healthcare, food, security, etc. Of course they did too, but no. Now that they are making more than almost everyone in the society, they shouldn't have to pay anything back to it? It's a greedy load of crap justified with weak, self interested nonsense.

sbacic 5y ago
> I love this logic, if you're going to take some of my money away I will do nothing instead. Really? Bullshit. Is it? Why is it so hard to imagine that higher taxes on risky ventures might cause somebody to go "Eh, not worth it, I can make better use of my time - like spending it with friends and family"?
- Applejinx 5y ago
  If that is you, why should we trust you with a tech unicorn? Is there no other value or purpose to your venture?
- imtringued 5y ago
  You will be replaced by someone who pays their taxes.
  - sbacic 5y ago
    I'm fairly sure I'll still be paying taxes when I go out to eat with my family or go camping with friends. It's just not going to be as much as if I had spent that time working.
    - ohashi 5y ago
      If your entrepreneurial drive is only as strong as the capital gains rate, I don't really have any faith in you as an entrepreneur. We're talking about people exiting for substantial amounts that this really impacts.

dillondoyle 5y ago

Maybe I'm missing something. But equity for work is income. Which should be taxed like everyone else. Or if you view it solely as an asset just like all other stock, you should pay cap gains just like everyone else. Is there something hidden in the draft to tax unrealized gains? I know that was an idea thrown out by some super progressives but it is not in the draft bill and won't get passed. Looking at inheritance only even that got stripped too because of 'family farms'

imtringued 5y ago

>They're like mobsters who shake you down, rich or poor. Well, that is how it began. There were mobsters that shake you down. Then people decided that they don't want to be shaken down. They formed a government to fend off mobsters and then it turned out that the ruler is also a mobster so they implemented limited terms and elections to decide on the next mobster knowing that a society will inevitably succumb to external mobsters if it does not manage its own mobsters. Therefore the moral argument that governments are bad because they are mobsters is extremely weak.