Senate GOP tax tweak removes stock plan hated by Silicon Valley

President Donald Trump (2nd L) welcomes members of his American Technology Council, including (L-R) Apple CEO Tim Cook, Microsoft CEO Satya Nadella in addition to Amazon CEO Jeff Bezos inside State Dining Room of the White House June 19, 2017 in Washington, DC.

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President Donald Trump (2nd L) welcomes members of his American Technology Council, including (L-R) Apple CEO Tim Cook, Microsoft CEO Satya Nadella in addition to Amazon CEO Jeff Bezos inside State Dining Room of the White House June 19, 2017 in Washington, DC.

A revised tax plan released by the Senate drops a provision that will would certainly have taxed company stock options when they vest, letting Silicon Valley breath a sigh of relief.

The measure would certainly have potentially made the idea harder for some companies inside Valley to compete, according to executives inside industry. They typically compensate employees with the promise of being able to cash out on the company’s stock inside future.

The Senate GOP’s previous tax bill would certainly have been “the end of equity compensation in startups as we know the idea,” Fred Wilson, managing partner at venture capital firm Union Square Ventures, wrote in a blog post Monday.

Currently, company stock options are taxed when employees exercise them. The Senate’s plan would certainly have taxed those shares before they realized their potential gain. As a result, employees may owe taxes on something they only possess the rights to in addition to don’t actually own.

—CNBC’s Evelyn Cheng contributed to This particular report.

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