A Better Way for Startups

With our Better Way agenda, House Republicans are committed to helping everyone in this country, no matter their background or walk of life, be empowered to pursue their own unique version of the American Dream. That starts with unleashing their potential and making it easier for them to follow their passions and run their businesses free from unnecessary government burdens.

Take startups, for example.

Startup companies are the birthplaces of innovation and the next “big idea,” which is why my bipartisan Empowering Employees through Stock Ownership Act ensures this vital part of our present and future economy can attract and keep the best talent. By promoting employee ownership at these cutting-edge companies with a commonsense fix to our tax code, this initiative, which passed in the House last month, can keep America as the leader in innovation and entrepreneurship.

As anyone who has tried to start a business or turn an idea into a reality knows, the most difficult period to stay afloat is at the beginning. It can be particularly difficult to find and retain employees in the earliest stages, since startups don’t have the resources to compete with well-established companies and can’t always offer potential employees the same salary and benefits. However, startups can offer employees something potentially more valuable: partial ownership of the company. At many startups across the country, stock options make up a significant portion of employees’ compensation and offer employees a greater stake in a project they truly believe in.

However, if employees exercise these stock options, they are required to immediately pay taxes, often times before they may have the available cash to do so. This creates a situation where employees can’t afford to take advantage of a promising investment in a job they really like, and startups are left without the talent they need —all because of a bill from the IRS.

That’s where this legislation comes in. The Empowering Employees through Stock Ownership Act allows employees to defer the tax bill associated with exercising their stock options until their stock becomes tradable on an established market and they can sell some of the stock to pay the bill.

The innovation economy is the key to America’s economic future, and a growing economy is the foundation of a stronger and more confident America for everybody. Giving startups room to grow at their inception and attract creative talent – through initiatives such as the Empowering Employees through Stock Ownership Act – will keep America at the forefront of innovation, ensuring continued American leadership in the 21st century.

This is one of the many ways House Republicans have already acted on our Better Way agenda. For more, visit better.gop.