Washington, DC – House Majority Leader Kevin McCarthy released the following statement on how the Tax Cuts and Jobs Act helps startups and small businesses attract the human talent needed for innovation and competition:
“As a former small business owner I understand the hard work small businesses do. One of my top priorities in Congress has been to jumpstart new business creation. New businesses account for virtually all new job creation in the U.S. and nearly 20% of gross job creation. Perhaps most importantly – they drive competition that leads to more innovations and higher standards of living.
“To encourage new businesses and innovative ideas to thrive, the Tax Cuts and Jobs Act gives employers greater ability to attract and hire top talent.
“As part of the tax-reform plan — startup employees now have the option to defer the tax on private stock gains until they can realize those gains by selling the stock — or at least give them a reasonable amount of time (5 years) to pay the tax bill.
“In an increasingly mission-driven marketplace, working at — and owning a part of — a promising company offers employees a greater stake in a project they truly believe in. But before the Tax Cuts and Jobs Act — the tax code put start-ups at a disadvantage by limiting employee ownership through the tax code. When employees with stock options choose to exercise the options — they are often met with an immediate and oftentimes exorbitant tax bill on the gains — even if they cannot yet sell some of their stock to cover the costs.
“This important reform will make private work options more attractive for employees and give upstarts the equal footing they need to turn an innovative idea into the next revolutionary product or service.”