The PATH Act: So…uh…Why aren’t we Paying our Taxes?
I just discovered the PATH Act, and although I haven’t had time to fully digest it or read the actual underlying tax code, if the headlines hold even a modicum of truth, then the implications are quite dramatic for tech startups.
At first glance, the PATH Act seems completely misguided, out of touch, and just flat out embarrassing for participants in the technology ecosystem.
As far as I understand, the PATH tax credit has two major implications:
Startups that generate less than $5M in revenue don’t have to pay payroll taxes for a total credit of up to $250k per year.
Startup founders and investors that make an investment in a company with less than $50M in revenue don’t have to pay any taxes (up to a $10M gain) if/when the company exits if they hold the stock for > 5 years.
The first credit seems innocuous enough, but the second one, if true…well…we’ve totally lost our way.
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