Hacker News Reader

Comment by rrhyne | Hacker News Reader

Really surprised how few people know about this legislation to fix the tax laws that cause one of the biggest issues with options.

https://www.gop.gov/better-way-startups/

It made it through the house and was approved by senate finance committee but is now stuck in a bill about retirement savings legislation.

Even finding information about the bill on the web or twitter is incredibly difficult. Please tweet, blog, etc and call your senators to support!

View on HN

Wow, did not know about that. What do you think the chances are it gets passed in the forseeable future?

No idea. It's so hard to find information on and no one, especially the valley rags are interested in reporting on it. I'm curious as to why the community thinks that is.

The chances of it getting through within the next few years, is 100%, in my opinion. There will be numerous opportunities to fix this particular problem, along with all the other items getting targeted when it comes to tax & regulation reform. It has wide bi-partisan support, and the tech industry is the largest lobbyist force on earth now, as such it'll be a matter of how soon rather than if.

One counter point... think about who is lobbying for changes. If it's primarily founders/executives at startups, know they do not stand to gain from removing these golden handcuffs. This bill will make turnover higher and hiring more expensive.

It's a double-edged sword. It also means that it will be easier to hire people away from the start-ups. Google/Facebook/Amazon, even Oracle, must be getting a lot of "nos" from start-up people who'd be interested, but are going to hold out for a year or two more (and who aren't quite valuable enough to buy out).

I think that will solve a lot of the headache around stock options. Exercising options could still be cost prohibitive depending on price and quantity but at least there wouldn't be any tax burden until a liquidation event. There would still be issues around percentage and dilution but that isn't something the government can or should solve in my opinion.

The relief of the tax burden is all the legislation addresses.

That seems incredibly relevant to the HN crowd. Maybe someone* could post it as it's own thread?

*Not me, I'm not in the U.S. =p

It has been and spent a very short time on the front page.

[EDIT]: I misread the bill, ignore this comment :)

So, the devil here is in the details: https://www.congress.gov/bill/114th-congress/house-bill/5719

The tax bill will come due when the employee leaves the company; so this doesn't really help a lot.

Has a few caveats that make it inapplicable to early employees too.

Interestingly, it seems like it applies to stock, not just options, which if it didn't come due when you left the company, would be great since it would mean that startups could stop dicking around with options for tax reasons and just issue RSUs.

> The tax bill will come due when the employee leaves the company; so this doesn't really help a lot.

I don't see where this is the case. In fact, it's against the spirit of the original proposal. Can you point to where you read this?

I think I misread the bill, the part that I saw was "The employee may defer the inclusion of income from the stock until the year that includes the earliest of the dates on which... the employee becomes an excluded employee", I'll go update my original comment.

Still, the conditions when the tax bill is due are unclear, e.g. what does "seven years have passed after the rights of the employee in the stock are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier" mean?

IANAL! Thanks for editing your earlier comment.

What's the name of the bill it's attached to right now?

Retirement Enhancement and Savings Act of 2016

https://www.congress.gov/bill/114th-congress/senate-bill/347...

Thanks! This URL gets you the same stuff without the highlighting.

https://www.congress.gov/bill/114th-congress/senate-bill/347...

Maybe there are some gotchas I'm not seeing but from the summary this should be supported.

If you read the bill [1] (it's quite short), there are a couple of gotchas, but not too many.

1 - Don't go work for your brother's startup. As a family member of certain C-level employees, you're ineligible. Some C-level employees are also excluded. 2 - Early employees that get more than 1% of the company are excluded.

I'm usually among the first to complain when I see the Republicans advocating policy that I find foolish, but it's certainly not the case here. This is sensible policy that corrects a decades-old problem in Silicon Valley and, for that, I support them in this legislation.

[1] https://www.congress.gov/bill/114th-congress/house-bill/5719

Does this bill help with RSUs?

Reply on news.ycombinator.com