Re:Tech elites leaving San Francisco threaten Silicon Valley...
by tempsy on Tuesday December 08, 2020 @02:17AM
(#25342751)
Ok but tech elite here aka VC investors aren’t getting options when they invest.
So this tax question doesn’t apply to them. Rabois can move to Miami now and if he sells his IPO shares next year he owes California nothing.
Re:Tech elites leaving San Francisco threaten Silicon Valley...
by solidsnack9000 on Tuesday December 08, 2020 @12:40PM
(#25348639)
Well, VCs do sometimes get options -- that's what convertible debt is. Usually options are not treated as compensation, though.
It is likely that Rabois has a mix of compensation from his firm, as a practical matter, and some of it is likely to be options -- but even if not, Rabois and people like him have paid a lot of taxes in California. A lot more than they would have paid in most states. When you consider how much they paid relative to how well the state government has provided services -- taking other states into consideration -- it's hard to see how the people moving are betraying anyone. They paid and paid and paid.
It is not really correct to cast this in terms of owing taxes on income in the state that you earned it because options are not income. There is a non-symmetry here with financial options generally: if you lived in California and bought some options, then left the state, and then, as a non-resident, exercised the options and sold shares, you would not be taxed in California because there was no income in California. Income on a stock transaction is generally recognized at the time a security is sold. Obtaining options and stocks both represent an outflow of money, not an inflow. It's a regressive policy to treat options purchased in-kind with labor in an unfavorable way, with regards to taxation, relative to those purchased with cash.