What is the outlook of QSBS going forward and what factors can influence its future, given the current political climate in Washington?

For those of you who have been following the news, at least when I read it, Congress seems to be in flux right now. They delayed the vote on the infrastructure bill because the Democrats didn't have enough votes. On top of that, they're all working on something called the debt ceiling right now, which is a whole other topic. Where do we stand right now? No one really knows. I don't think things are trending the right way for Democrats on these proposed tax changes.

I imagine they're going to shift their focus to this now that they shifted the focus back to the infrastructure bill and the tax changes to pay for the infrastructure bill. But for now, it seems like there hasn't been a lot of news in regard to this lately. That's where things stand right now.

I do want to talk about what these changes mean to us as startup employees, founders, execs, investors. I think it's really good to address, because these changes are a little bit of a direct attack on us. Us meaning the startup ecosystem. Candidly, I'm a little biased. I help startup employees; this is my world, and this is our world.

First and foremost, these proposed changes do not lead to a lot of revenue in taxes. The studies from the congressional committee on taxation have shown this. The idea is that these QSBS changes will generate an extra $500 million per year. Now, that may seem like a big number. But the proposed bill is $3 trillion. This is not a way to generate more revenue to pay for the bill. No one on Capitol Hill is saying, “Oh yeah, we're going to change QSBS, and that's going to pay for these infrastructure changes we want to go through.”

What is it then, if it's not needed to generate revenue? Well, it's purely a political move to go after the wealthy. I'll use “wealthy” in air quotes here.

I'm going to read you all a quote. House Ways and Means Chairman Richard Neal, who's one of the individuals who proposed the bill, one of his aides sent a quote in to Bloomberg: "House Ways and Means Chairman Richard Neal ‘wholeheartedly rejects the notion that stock sales taxed at this rate would have any effect on innovation and investment. He believes that Silicon Valley millionaires making these disingenuous arguments are among the extremely wealthy people who should be contributing more, not less, to support investments in the critical infrastructure services that make success in this country possible.’"

When you take a look at this, it's pretty obvious what the agenda here is on this QSBS. It's not to generate revenue, and it's not to pay for the infrastructure bill. It's a political statement to go after the wealthy and a win to go after the wealthy.

I guess I'm biased again. Number one, I'm generally pro startup, pro companies, pro investments, pro VC. And I'm generally pro increasing taxes. That sounds kind of weird, as an individual who tries to help people pay less in taxes. I do think there're a lot of holes in our tax code. But I have a few issues with the statement. First and foremost: Silicon Valley millionaires. Again, if you want to go after Silicon Valley millionaires, go after them.

But the reality is I’m not a millionaire. I own QSBS stock. Conor, I barely know you. I'm assuming you're not a multimillionaire either, and you own QSBS stock. I suspect a lot of people here on this call are in the same boat. We are not millionaires. We are just growing startups. We are investing in startups with the hope for a big break. My issue is: he's blanketing everyone who works in Silicon Valley to be a millionaire.

Now, a few major things I have issues with as well. Mechanically it's just silly. Any time you have a cliff like $400k, what you're going to do is have clever tax people getting around that. It's only about a 50% exclusion for people who make $400k or more. I would just game that and try to find a way to stay under $400k if I was over that limit.

Then, if you want to go after millionaires, go after millionaires. Don't ruin this provision for everyone. There're a few things you can do. Get rid of stacking. If you don't want the multimillionaires getting the exclusion multiple times -- saying you're taking a $10 million exclusion and turning it into a $100 million exclusion -- just get rid of that provision. It is a little bit of a loophole. Don't ruin it for everyone else.

Or another way to do it mechanically is to limit it to a one-time lifetime exemption. Once you make your first $10 million, you get your first $10 million tax break, and that's it. That's fine. I'd like a benefit for taking a shot at a small startup called Secfi and going in here and giving up a higher salary at a bigger firm to try to build a company that'll hopefully create jobs and build a better society. We should be rewarding innovation; we should be rewarding the founders and investors who take risks in these companies. That said, I do understand this provision has been abused. If you want to go after the people who abused it, fine. I get it. I completely get it.

But by and large, I think the way this proposal is written, I think it's silly, like most of the tax changes Congress is proposing. And I actually don't think much is going to happen in regard to this. I think it's a small fish in the grand scheme of things. Like I mentioned, $500 million per year and a $3 trillion bill. It's not going to move the needle. I don't think Congress is focused on it. We'll see. Anything could happen with this Congress, but my gut feeling is that this won't change or, if it will change, there's going to be a method for those of us who have QSBS to at least sell it before this provision goes into play.