[hedora]

I’d guess they’d be worse off if they look at net worth or five year rolling income of the people paying this.

A $250K gain because your startup got acquired or IPO’ed doesn’t exactly translate into a high average salary over the many years it took to gain the windfall. (versus, say, working at Microsoft or Amazon, and getting an extra $50-100K per year.)

[seanmcdirmid]

Not alot of poor people are realizing $250k non-real estate or retirement capital gains in a single year.

[whateveracct]

You think this tax is mostly going to affect startup employee windfalls? Seriously?

It's 7%. So if you make a 1.25M (remember how tax brackets work - it's after the threshold) - you pay WA $70k. I think there's literally no way to argue that's regressive.

[hedora]

So, you make $150K in salary for 10 years, and $1.25M in one year, for an average of $162K a year.

That’s below starting salary at Microsoft. You pay an average of $7K per year, and the Microsoft employees pay zero.

It is certainly not a progressive tax. If they time averaged it over ~ five years, it would be.

Another way to look at it is that they say it will affect 7000 households statewide.

It will affect pretty much all startup windfalls, so either there are only 7000 startup employees in the whole state, or they know this is going to be a windfall tax on people that have low average income.

[whateveracct]

You also make way more money than that MS employee over those 10 years. So I think paying a little ($7k is not much) more tax is fine.

Where are you getting that it only affects startup exits? Is there a source? Guessing?

[HWR_14]

Those people probably qualify for the QSBS exemption of up to $10 million.