[skybrian]

One thing that might help is closing loopholes around unrealized capital gains. Suppose that, as an alternative to taxing capital gains on its stock, a startup could deposit 20% of issued stock into a sovereign wealth fund? For a company with all its growth ahead of it, this is roughly equivalent and can’t be avoided later (not even with buy, borrow, die) because it’s already been paid. And yet, shareholders would probably find it attractive because they don’t pay the tax themselves.

[Aurornis]

Taking 1/5 of every startup from the beginning is a great way to get every entrepreneur to found their company in another country.

[jfengel]

If other countries were that friendly to startups, people would already be doing it.

Startups get done in the US because of the network effect: this is where the other startups are, and where the people who fund startups are. It's hard for them all to de-camp at once to a different country, especially since most of the countries they'd want to go to already have higher taxes than the US.

There's probably some limit beyond which people would leave anyway -- presumably, lower than 100%. I don't know if they'd leave over 20%. But I bet you could demand a 5-10% stake, and get many threats but few actual departures.

[skybrian]

Let’s say it’s voluntary and it only applies to whichever class of stock you designate, which can be non-voting. You use it for employee stock or to sell stock to investors who want a tax-free investment.

I think investors would pay more for the shares.