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.

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Scoop: Inside the Trump campaign's big hedge on Facebook

Illustration: Eniola Odetunde/Axios

The Trump campaign has invested most of its advertising budget to date on Facebook, testing thousands of versions of ads per day to maximize its spending.

But behind the scenes, a source familiar with the campaign tells Axios, the thinking has shifted: "As everyone can see, we still have strong spending on Facebook, but the percentage of our total media budget [on Facebook] is shrinking."

Trump's revenge tour has the House in its sights

Illustration: Aïda Amer/Axios. Photo: Saul Loeb/Getty Contributor

In the lead-up to the 2018 midterm elections — buoyed by Republican control of both chambers — President Trump viewed campaigning for the House as a lower-tier priority and instead poured his energy into rallying for the Senate.

But after the GOP reckoning in 2018, and experiencing firsthand how damaging a Democratic-led House has been to him, Trump is now personally invested in helping Republicans regain the majority in November, several people familiar with his thinking tell Axios.

Pelosi warns U.S. allies against working with China's Huawei

Nancy Pelosi, Feb. 16. Photo: Sven Hoppe/picture alliance via Getty Images

House Speaker Nancy Pelosi on Sunday cautioned U.S. allies against allowing Chinese telecommunications giant Huawei to develop their 5G networks, arguing at the Munich Security Conference that doing so is akin to “choosing autocracy over democracy," CNBC reports.

Why it matters: Pelosi's hawkish stance marks a rare area of agreement with the Trump administration, which believes Huawei is a national security threat because the Chinese government may be capable of accessing its equipment for espionage.

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