alt Hacker NewsWhen I sold some shares in my company, it sure was nice to not pay any taxes thanks to QSBS. But it’s sort of an absurd handout to rich people — I have a hard time believing investment money would flee the US if early stage investors/founders had to pay long term cap gains on their first $10M of gains (after all, we’d still have carried interest to keep the VCs happy).
It’s also already really easy to multiply the limit, by gifting stock to your spouse, kids, or a trust — all of which can be done just before you sell and keep the benefit. So raising that limit just makes it more absurd.
Though, if you’re an employee at an early stage startup and you can afford it/stomach the risk, QSBS is a good reason to exercise your options early.
It is certainly a handout to rich people, but it does serve a purpose. If you have a choice to invest in a startup vs a more stable investment, the $10M (or now $15M) in tax free gains is a strong incentive to choose the startup investment over something else.
And at the end of the day, small businesses usually drive the most innovation, so getting rich people to direct their money into startups instead of big companies is good for the country as a whole.