Tax reasons and complications with having >500 shareholders (and shareholder information, etc. rights in general), plus administrative costs.
Early on, you issue founder grants if you want, at common stock price, paid in cash. A company is worth $100 in total, so you can buy 10% of it for $10.
Common and preferred can run separately in terms of price (although there's some relationship between the two; more enforced now than in the past.)
After Series A, 1% of the company would be a real amount of money -- maybe a $10mm valuation, so 1% would cost your engineer $100k at hiring. That's a lot of cash for an employee to invest.
To expand on this, if you give an employee stock rather than options, then they'd have to pay taxes on the stock value. It would suck to pay thousands in taxes for stock that ends up being worth nothing when the startup fails. With stock options, the tax issues are deferred and only come into play if the company succeeds and you want to exercise+sell.
I think parent is addressing the situation where the company is giving the employee the stock for free, trying to avoid there being an out-of-pocket cost for the employee. In that case, the value paid is 0 and the entire value of the stock is taxable income to the employee. An 83(b) doesn't solve the problem here because it just makes the IRS calculate the spread on the day of the purchase, rather than at the time of each vesting event, but there is still a taxable spread on the day of purchase.
Even with the 83b, you'd still have to pay taxes on the current value. This is practical if the stock still has negligible value (i.e. you joined pre-funding), but otherwise you face being taxed on monopoly money.
My understanding is that you pay taxes not on the current value, but on the difference between the value of the stock and the price you paid for it. It's essentially treated as income.
That's correct. But if you're buying shares at non-negligible value then you're basically an investor at that point. No employee is going to do that.
More likely, the company might give away shares to an employee in lieu of salary, but then the employee has to pay taxes on the value.
In other words, there's no way to obtain stock in a private company without facing some kind of expense. You're either paying money directly for shares, or paying taxes on the gift of shares.
The only way to avoid any of this is:
1) Be there at the very beginning, when shares have negligible value and can be bought easily.
OR
2) Be granted stock options instead of real stock.
That's not how an 83b election works. Your grant price is the current value, so your taxable gain is 0 upon election. You only have to come up with the money for the stock. Also, you can make a partial election if you don't have enough to buy all of your stock. Many people mess this up.
I love the carbon credits system, traded on the stock exchange. It's the most lightweight and capitalistic incentive we can build around polluting externalities.
Ah the irony: and the US government (the US being the pinnacle of capitalist society) is refusing them at every chance. Isn't this what Kyoto was proposing? Has not the US (effectively) killed Kyoto? Whatever carbon trading is taking place in the US, is probably not internationally sanctioned.
The US practices this international tactic of dragging its feet as long as possible, giving time to its companies to catch up with international standards (and to hell with everything else if need be, environment be damned!). At the same time, it will very willingly impose international standards wherever they feel their local companies are at an advantage. This is why lots of European population are skeptical of the TTIP: the US is probably sending us a Trojan horse.
its natural that players will attempt to modify the game (or keep it skewed in their favor) . The externalities have always been there, but some industries have never had to pay for them. I wouldnt be surprised if some industries are not even profitable once you account for their externalities.
But macroenconomic principles mean nothing if you have greed. If one is greedy, then its just a matter of maximizing what's on your plate, with no regard of how much you're taking from others (potentially future generations)
I've read bad things about carbon credits. Specifically that it's inefficient—you now have the overhead of a new market and middlemen making their cut. Whereas revenue neutral carbon tax is a far simpler method that still changes behaviour.
A revenue-neutral carbon tax requires impossible knowledge to implement. Without a market price system, you cannot determine such a tax.
Further, tax changes move at a glacially slow pace compared to the process changes and technological progress that would be natural reactions to increased costs of producing carbon.
I'd love to hear how you rationalize a tax requiring "impossible knowledge to implement". Taxes are a pretty universal way to disincentive economic behavior, the only question seems to be what tax rate to add. But, that seems easily solved.
For example, a carbon tax obviates the need for market pricing, simply set your target, e.g. 20% reduction in carbon use in 10 years, and fix carbon tax increases/decreases tied to that target, so that if you fall behind reaching that target a tax rate increase automatically kicks in for the next year.
I don't say a tax requires impossible knowledge. A revenue neutral tax would be though. The intent there is to achieve economic efficiency, which cannot be determined in the absence of prices. This link provides a pretty good overview of the issues and the extra reading/criticisms are worthwhile[0].
>For example, a carbon tax obviates the need for market pricing, simply set your target, e.g. 20% reduction in carbon use in 10 years, and fix carbon tax increases/decreases tied to that target, so that if you fall behind reaching that target a tax rate increase automatically kicks in for the next year.
This is neither a strategy for implementing a properly revenue neutral tax, nor to drive toward any sort of efficient allocation. It is completely viable, though, if your goal is not revenue neutrality or efficiency.
I do not here make the argument that revenue neutrality or efficiency must be the aim of such governmental action, only that these two specific aims cannot be accomplished by a government imposing taxes.
I see the point made by the economic calculation problem for state planning, but don't see how it applies to a carbon tax as a scheme to incentivize behavior.
Eg. Governments do a lot already to (dis)incentivize behavior through tax policy. Are you saying this doesn't work?
I'll do some further reading on cap and trade, most of my knowledge on this matter is from the book Storms of my Grandchildren, which speaks to the issues against cap and trade at length.
Rich guys. I live next to people who literally ran out of ways to spend money. You can't give it all to your kids--the Rich Kid syndrome sounds horrid. The company/nonprofit needs to do what it claims though.
possibly, governement/orgs trying to balance out CO2 emissions? I.e. you can trade CO2 within the kyoto protocol, it makes sense there would be a market.
But there's no need to wrap every function, just the ones that can be top-level entry points. It's a very small list, if your application is well-designed.
Patch setTimeout and setInterval. Register a jQuery ajax prefilter that wraps all your ajax callbacks. Patch jQuery's low-level UI event binding function.
And you're done. I've done this in a rather large application. It works fine.
Fair enough. I guess that's the pure js/jquery version of hooking into Angular/Ember's onerror. Makes sense. At least we won't need to do this for much longer though.
I didn't say you did. I don't think the size of the app is a factor, either.
This came from a fairly large library which runs on all manner of third-party sites, many billions of times each month. In that situation trapping and logging all exceptions is very important, and this method has worked reliably for years.
