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From left, Senate Majority Leader Mitch McConnell, Senate Finance chairman Orrin Hatch, Treasury secretary Steven Mnuchin, and Trump's economic adviser Gary Cohn, make statements to reporters. Photo: J. Scott Applewhite / AP

The Senate GOP tax plan unveiled last week includes a provision that would tax stock options and restricted stock units at vesting, rather than when they are exercised (as under current law) or when there actually is a liquid market (as under the amended House proposal).

Why it matters, per Greg Grogan, a compensation and employee benefits attorney with Simpson Thacher & Bartlett: "Employees will owe taxes on 'potential' value on the vesting date of their options before they know whether the option will ever really be worth anything and before there is any cash available to pay taxes."

  • Not only is such a plan nonsensical in terms of encouraging new company creation, but it's also fiscally dumb.
  • For example, imagine if all early Facebook employees had been taxed at the time of vesting (at relatively low valuations) as opposed to the time of exercise or sale. Pretty sure that would result in lower tax revenue (while, again, the entire plan might have discouraged people from working to build Facebook in the first place).
  • If it passes: Startups would need to flip their compensation structure to favoring cash over equity.

Go deeper

Updated 3 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: WHO: AstraZeneca vaccine must be evaluated on "more than a press release."
  2. Politics: McConnell temporarily halts in-person lunches for GOP caucus.
  3. Economy: Safety nets to disappear in DecemberAmazon hires 1,400 workers a day throughout pandemic.
  4. Education: U.S. public school enrollment drops as pandemic persists.
  5. Cities: Surge in cases forces San Francisco to impose curfew — Los Angeles County issues stay-at-home order, limits gatherings.
  6. Sports: NFL bans in-person team activities Monday, Tuesday due to COVID-19 surge — NBA announces new coronavirus protocols.
  7. World: London police arrest more than 150 during anti-lockdown protests — Thailand, Philippines sign deal with AstraZeneca for vaccine.

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
15 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.