ETA Applauds Retention of Tax Treatment for Stock Options In Chairman’s Mark

Washington, D.C. – November 15, 2017 – Electronic Transactions Association (ETA) Senior Vice President Scott Talbott issued the following statement today after the Senate Finance Committee removed changes to the taxation of non-qualified deferred compensation plans originally proposed in Section III(H)(1) of the Tax Cuts and Jobs Act.

“We are pleased that the Senate Finance Committee, under the leadership of Chairman Hatch, removed provisions from the bill that would have altered the tax treatment of equity-based compensation. Equity compensation is an important tool for companies to use to reward and attract high-demand employees.

The proposed language would have negatively affected FinTech start-ups by imposing immediate taxation when employees vest in stock options and other stock-based compensation. Our tax code recognizes a taxable event only when a gain is realized – whether that’s wages earned, an appreciated asset is sold, or dividends are paid. The proposal as originally drafted violated those principles and we applaud its removal.

As the bill moves its way through the Chamber, we will continue to monitor the process and champion provisions that strengthen the economy and help our member companies remain competitive.”