9 ms·

Honestly I find this article's framing is quite funny. Ok, so first off, let's imagine your an early employee of an enormously successful company and you have s

Honestly I find this article's framing is quite funny. Ok, so first off, let's imagine your an early employee of an enormously successful company and you have stock options. Tough life right you're really the one feeling the squeeze. Let's also assume you're earning over $400k in salary. So you don't just have valuable options, you're also earning a great salary. Now under this proposal you'd only get a 50% exemption for your capital gains - so you're going to pay 10% capital gains tax when you sell. If you choose to sell. If you don't sell until a year where you don't earn $400k (god forbid) you'll still pay nothing. Oh but it's a disaster because in this hypothetical, you've already bought a mansion based on what you thought you were going to make selling your options and the 10% tax rate is going to ruin you. And you bought this mansion because you thought you were going to make a tonne of money from your options in a company that hasn't even IPO'd yet so you don't even have a clue what those options would be worth anyway, but somehow a 10% drop in the proceeds of your sale is going to be a disaster. Here's my take on it - if you were banking on having a 0% tax rate despite being in the top 1% of earners in the US maybe you have unreasonable expectations of how the tax system should work.

bojangleslover 5y ago
400k seems a bit hyperbolic for early stage startups
- Traster 5y ago
  The proposal is that the exemption will only drop to 50% if you're earning over 400k.
  - germandiago 5y ago
    Exemption? I would call it "ability to not be stolen".The vocabulary of states is very evil. By exemption it lookslike they are saying "we forgive you and do not make you pay what belongs to us" when in fact it is just the opposite, they take what does not belong to them. I am quite pissed with the political mafia. Not only there. Everywhere.
    - imtringued 5y ago
      The alternative isn't no government, it's getting the same treatment from a different authority with even less recourse. You're just blaming the messenger.
      - germandiago 5y ago
        no. I am not blaming anyone. Seriously. I just say that this vocabulary is a shitshow to brainwash: taxing is putting a penalty on your efforts. There is no more to it. You can give it 1million justifications, that will not change. Sorryif I sound harsh. I would likea place where politicians do not abuse us like this.
        AlexandrB 5y ago
        If you want to talk about brainwashing, have you considered how the company you work for puts a penalty on your efforts? Their literal model is paying you less than the value you provide and recording that difference as profit. The rate they collect is often much greater than 10% of your efforts.
        germandiago 5y ago
        Ok, let us talk about it. 1. how do you calculate that profit? 1.a. given that you could do it by yourself, why do we work for a company instead of running a business ourselves? are you sure you are not missing some variables there? 2. does the employer have any additional risk? In my country, for example, firing a person is quite a bit of money. This is effectively an insurance to pay for the worker, besides the taxes they already pay (a penalty for the economic activity, basically, or, as I think of it: a theft) 3. do I do work for my employer forced by them or I chose to work there because it is my best alternative without coactively forcing someone to do something they do not want? Of course we always want higher salaries. But taxes do not work like this: in taxing systems you do not have a choice to pay or not to pay, you pay and that's all the story. You also have no word on where your money goes or any control over it. The people who manage it do not pay penalties for mismanaging it. In private companies I can assure you this is much more sensitive and you are much more careful with what you do than in public instances. Please, let us keep the conversation rational. I would like you to discuss this topic rationally. Because I would really like to understand it. P.S.: noone explained me yet why taxes are not theft. For me they are, I said, because they are coactively putting penalties on something you produce. Coactively, not even by mutual contract as in the case you mention from the employer. Of course we want more from the employer and the employer more of us, but, at the end, this is a mutual contract, not a do it or I put you in jail.
  - dsugarman 5y ago
    Why are you assuming that means you need to make 400k / yr, you could make 50k in salary and sell stock worth more than 350k
    - Traster 5y ago
      Maybe I'm missing something about this - but the money you get from selling stock isn't income.
      - bombcar 5y ago
        It may not be earned income but it’s income. Capital gains.
        Traster 5y ago
        No, only the gain is income, the value of the stock is not. In your example you would need your stock to have gained 350k and to sell it all. You could sell 349k this year and pay nothing, and 1k next year and pay nothing.
      - jallen_dot_dev 5y ago
        It is for the purpose of calculating your tax rate. Otherwise rich people who have 0 earned income and make all their money from stocks would pay literally 0%[1] [1] https://www.irs.gov/taxtopics/tc409 https://www.irs.gov/taxtopics/tc409
        Traster 5y ago
        As I said in the other reply, this is wrong. Only the gain is accounted for as income, not the capital. So you basically have two scenarios - you have huge capital and a small gain, in which case you should pay your damn tax. Or you have small capital and a massive gain, in which case you should pay your damn tax. And remember- this is only paid if you chose to sell that amount in a financial year. Oh, and afer you pay your tax, phone up all the people you've met that day and explain to them how you've still payed less tax than they pay on their income despite your income literally being unearned.
deleted 5y ago
[deleted]
harryh 5y ago
You don't need to earn a 400k salary to have your QSBS qualification reduced, you just need to have 400k of income and proceeds from stock sales are income.

bojangleslover 5y ago

400k seems a bit hyperbolic for early stage startups

Traster 5y ago
The proposal is that the exemption will only drop to 50% if you're earning over 400k.
- germandiago 5y ago
  Exemption? I would call it "ability to not be stolen".The vocabulary of states is very evil. By exemption it lookslike they are saying "we forgive you and do not make you pay what belongs to us" when in fact it is just the opposite, they take what does not belong to them. I am quite pissed with the political mafia. Not only there. Everywhere.
  - imtringued 5y ago
    The alternative isn't no government, it's getting the same treatment from a different authority with even less recourse. You're just blaming the messenger.
    - germandiago 5y ago
      no. I am not blaming anyone. Seriously. I just say that this vocabulary is a shitshow to brainwash: taxing is putting a penalty on your efforts. There is no more to it. You can give it 1million justifications, that will not change. Sorryif I sound harsh. I would likea place where politicians do not abuse us like this.
      - AlexandrB 5y ago
        If you want to talk about brainwashing, have you considered how the company you work for puts a penalty on your efforts? Their literal model is paying you less than the value you provide and recording that difference as profit. The rate they collect is often much greater than 10% of your efforts.
        germandiago 5y ago
        Ok, let us talk about it. 1. how do you calculate that profit? 1.a. given that you could do it by yourself, why do we work for a company instead of running a business ourselves? are you sure you are not missing some variables there? 2. does the employer have any additional risk? In my country, for example, firing a person is quite a bit of money. This is effectively an insurance to pay for the worker, besides the taxes they already pay (a penalty for the economic activity, basically, or, as I think of it: a theft) 3. do I do work for my employer forced by them or I chose to work there because it is my best alternative without coactively forcing someone to do something they do not want? Of course we always want higher salaries. But taxes do not work like this: in taxing systems you do not have a choice to pay or not to pay, you pay and that's all the story. You also have no word on where your money goes or any control over it. The people who manage it do not pay penalties for mismanaging it. In private companies I can assure you this is much more sensitive and you are much more careful with what you do than in public instances. Please, let us keep the conversation rational. I would like you to discuss this topic rationally. Because I would really like to understand it. P.S.: noone explained me yet why taxes are not theft. For me they are, I said, because they are coactively putting penalties on something you produce. Coactively, not even by mutual contract as in the case you mention from the employer. Of course we want more from the employer and the employer more of us, but, at the end, this is a mutual contract, not a do it or I put you in jail.
- dsugarman 5y ago
  Why are you assuming that means you need to make 400k / yr, you could make 50k in salary and sell stock worth more than 350k
  - Traster 5y ago
    Maybe I'm missing something about this - but the money you get from selling stock isn't income.
    - bombcar 5y ago
      It may not be earned income but it’s income. Capital gains.
      - Traster 5y ago
        No, only the gain is income, the value of the stock is not. In your example you would need your stock to have gained 350k and to sell it all. You could sell 349k this year and pay nothing, and 1k next year and pay nothing.
    - jallen_dot_dev 5y ago
      It is for the purpose of calculating your tax rate. Otherwise rich people who have 0 earned income and make all their money from stocks would pay literally 0%[1] [1] https://www.irs.gov/taxtopics/tc409 https://www.irs.gov/taxtopics/tc409
      - Traster 5y ago
        As I said in the other reply, this is wrong. Only the gain is accounted for as income, not the capital. So you basically have two scenarios - you have huge capital and a small gain, in which case you should pay your damn tax. Or you have small capital and a massive gain, in which case you should pay your damn tax. And remember- this is only paid if you chose to sell that amount in a financial year. Oh, and afer you pay your tax, phone up all the people you've met that day and explain to them how you've still payed less tax than they pay on their income despite your income literally being unearned.

deleted 5y ago

[deleted]

harryh 5y ago

You don't need to earn a 400k salary to have your QSBS qualification reduced, you just need to have 400k of income and proceeds from stock sales are income.