Startups Say Senate Tax Plan Would Be Catastrophic for Their Industry
Exec: it’s like paying tax on lottery winnings without knowing whether you've won
Fred Wilson
Photographer: Scott Eells/Bloomberg
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Startups and venture capitalists rarely get worked up over laws before they pass, but the tax plan currently winding its way through Congress is causing an uproar in Silicon Valley.
The Senate version of the bill requires employees pay tax on stock options at the time they vest, rather than when they are exercised. That means staff would be liable for tax long before reaping any financial benefit from owning and selling stock. These options are a big part of compensation at startups, giving staff a long shot at serious wealth in the unlikely event their startup succeeds.