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[quote=Anonymous][quote=Anonymous][quote=Anonymous]NP. It is idiotic. Among other profound issues, it will destroy the startup ecosystem that is making and has made the US into a global technology powerhouse because it doesn’t differentiate between realized and unrealized gains. So, a young person who has no hard assets whatsoever but who founds a company that gets paper-valued at (say) 5 billion to justify a $500m cash investment will suddenly have a completely unpayable tax bill the day after closing a successful funding round. This would have killed every single transformative technology of the last 30 years in the cradle.

As far as I can tell, the people supporting this want just want to cede every single successful market segment the US has created to Chinese dominance. It is short-sighted and utterly stupid. I mean, it’s stupid to the point where the conspiracy theorist in me is wondering if the CCP is funneling money into social media to drive up support for it, so the US startup market will be killed off. I don’t really think that, but it has crossed my mind. [/quote]

People hold stocks then take out loans to live on.  Why can't they do the same to pay their taxes?[/quote]

Oh my God. The ignorance is killing me. First of all, no, this is not what happens with startup equity. There are shady companies that will try to issue loans to rank-and-file employees (not founders) based on illiquid equity, though many companies now have restrictions on that practice and won’t allow illiquid equity to be used as collateral. And that is enforced with transfer restrictions: it can’t be used as collateral because of transfer blockages put into place by the transfer agents.

But founders couldn’t do that even if they wanted and the company allowed it (which would be non-standard in the first place now, under most company stock plans). They are bound by a different set of company rules to preserve the value of the startup. Pre-IPO or other exit, they are pretty limited in what they can do. And they most certainly cannot take out a loan big enough to pay this ridiculous and rapacious tax bill, using their nascent startup equity as collateral.

This is a tax designed to destroy the innovation engine of the US and cede control to China, plain and simple.

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