Nov 7, 2017

Republican tax bill includes big break for startup employees

House Majority Leader Kevin McCarthy, who has backed changes rules for stock options. Photo: Cliff Owen / AP

House Republicans may win some new fans in Silicon Valley, with a new tax proposal that would help employees of highly valued startups that have not yet gone public.

Why it matters: If a startup employee wants to change jobs, he or she is often required to exercise vested stock options within 90 days or else lose them. But that employee also is on the hook for associated taxes, despite there not being a way to sell any of the shares. In other words, the employee has to pay real money to cover paper gains — a situation that is often untenable, particularly given that startup compensation is usually cash-light and stock-heavy.

The new rule, introduced Monday night via an amendment to the House GOP tax bill first released last week, would defer taxes on exercised stock options and restricted stock units for up to five years (so long as the company remains privately-held). If passed into law, this should help remove the "golden handcuffs" that effectively prevent many startup workers from changing jobs, or from requiring them to give up shares that they had helped to make valuable.

Some startups, like Pinterest and Quora, have remedied this situation on their own. But most haven't, and the number of those affected has grown due to a recent trend of top "unicorn" startups choosing to remain private longer than ever before.

Go deeper

China approves Hong Kong national security law

Hong Kong riot police round up a group of protesters during a demonstration on Wednesday. Photo: Willie Siau/SOPA Images/LightRocket via Getty Images

Chinese lawmakers approved a plan on Thursday for a sweeping national security law for Hong Kong that would criminalize sedition, foreign influence and secession in the Asian financial hub.

Why it matters: China bypassed Hong Kong's legislature and chief executive to introduce the law, prompting Secretary of State Mike Pompeo to announce Wednesday that the city is no longer autonomous from the Chinese mainland and does not warrant special treatment under U.S. law.

Minneapolis unrest as hundreds protest death of George Floyd

Protesters and police clash during demonstration on Wednesday over the death of George Floyd in custody outside the Third Police Precinct. Photo: Kerem Yucel/AFP via Getty Images

A man died in a Minneapolis shooting during a second night of clashes between police and protesters in the city over the death of George Floyd, an African American man who died in police custody, per AP.

The latest: Police said officers were responding to reports of a stabbing just before 9:30 p.m. and found a man lying in "grave condition on the sidewalk" with a gunshot wound, CBS Minnesota reports. On man is in custody over the incident.

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 5,695,968 — Total deaths: 355,701 — Total recoveries — 2,351,638Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,699,933 — Total deaths: 100,442 — Total recoveries: 391,508 — Total tested: 15,192,481Map.
  3. Public health: CDC issues guidelines for reopening officesFauci says data is "really quite evident" against hydroxychloroquine.
  4. States: California hospitals strained by patients in MexicoTexas Supreme Court blocks mail-in expansion to state voters.
  5. Business: MGM plans to reopen major Las Vegas resorts in June — African American business owners have seen less relief from PPP, Goldman Sachs says.
  6. Tech: AI will help in the pandemic — but it might not be in time for this one.
  7. World: EU proposes a massive pandemic rescue package.
  8. 1 🎶 thing: Local music venues get rocked by coronavirus.
  9. 🎧 Podcast: Trump vs. Twitter ... vs. Trump.
  10. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  11. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 1 hour ago - Politics & Policy