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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

In photos: Protesters rally for George Floyd ahead of Derek Chauvin's trial

Chaz Neal, a Redwing community activist, outside the Minnesota Governor's residence during a protest in support of George Floyd in St.Paul, Minnesota, on March 6. Photo: Kerem Yucel/AFP via Getty Images

Dozens of protesters were rallying outside the Minnesota governor's mansion in St Paul Saturday, urging justice for George Floyd ahead of former Minneapolis police officer Derek Chauvin's trial over the 46-year-old's death.

The big picture: Chauvin faces charges for second-degree murder and manslaughter over Floyd's death last May, which ignited massive nationwide and global protests against racism and for police reform. His trial is due to start this Monday, with jury selection procedures.

Biden says $1,400 stimulus payments can start going out this month

Photo: Samuel Corum/Getty Images

President Biden said Saturday that the Senate passage of his $1.9 trillion COVID relief package means the $1,400 direct payments for most Americans can begin going out later this month.

Driving the news: The Senate voted 50-49 Saturday to approve the sweeping legislation. The House is expected to pass the Senate's version of the bill next week before it heads to Biden's desk for his signature.

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