Re:Washington state approves capital gains tax
by seattle_spring on Friday April 30, 2021 @02:08PM
(#26997097)
> Not sure how you arrived at 60% - aren't federal capital gains topped off at 20%, and this bill only 7% for gains over $250,000?
They are this year, but the Biden proposal wants to raise tax for any income over $1m (LTCG included) to the top marginal rate of 39.6%. Add that to the proposals to increase SS to 12% for income over $400k, ~3% medicare tax, etc.
> why is the employee selling all of their stock in one year?
Because having all of your net worth in one company is a huge risk, and anyone wanting to mitigate risk would want to diversify as soon as possible.
Re:Washington state approves capital gains tax
by vineyardmike on Friday April 30, 2021 @02:45PM
(#26997597)
Risk mitigation isn’t free. It’s 7% now.
Re:Washington state approves capital gains tax
by seattle_spring on Friday April 30, 2021 @04:43PM
(#26999044)
... or, in this case, free if you just work for a FAANG or other public company and realize your income yearly rather than in a lump sum. If your end goal is to further dissuade engineers from joining startups, then "mission accomplished" I guess.
Even if it is 60%, I think that's reasonable. In your case, why is the employee selling all of their stock in one year? If they sell over multiple years, they could get gains of up to $250,000 without paying any state tax, which is plenty.
I'd also be in favor of a state income tax, since the sales tax regime in Washington is very regressive.