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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

Tony Hsieh, longtime Zappos CEO, dies at 46

Tony Hsieh. Photo: FilmMagic/FilmMagic

Tony Hsieh, the longtime ex-chief executive of Zappos, died on Friday after being injured in a house fire, his lawyer told the Las Vegas Review-Journal. He was 46.

The big picture: Hsieh was known for his unique approach to management, and following the 2008 recession his ongoing investment and efforts to revitalize the downtown Las Vegas area.

Dan Primack, author of Pro Rata
2 hours ago - Economy & Business

The unicorn stampede is coming

Illustration: Annelise Capossela/Axios

Airbnb and DoorDash plan to go public in the next few weeks, capping off a very busy year for IPOs.

What's next: You ain't seen nothing yet.

16 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

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