Bill Overview
Title: Eliminating Paperwork for Startups Act
Description: This bill requires the Internal Revenue Service to allow the election relating to property transferred in connection with services (i.e., to include in gross income the amount of such property in the year of transfer) to be made in electronic form.
Sponsors: Rep. McHenry, Patrick T. [R-NC-10]
Target Audience
Population: Entrepreneurs and employees in startups dealing with equity compensation
Estimated Size: 750000
- The legislation targets startups, particularly those offering equity compensation to employees.
- The simplification of paperwork and the ability to file electronically will primarily affect entrepreneurs and employees receiving stock options or other property as part of their compensation.
- Globally, the number of startups and small enterprises that potentially offer equity compensation is substantial.
Reasoning
- The target population is primarily startups and employees receiving equity compensation; therefore, our interviews will focus on people in small businesses or entrepreneurs.
- The policy's simplification impact is significant for those involved in frequent use of equity compensation.
- We will include various experiences, including unaffected individuals and those working in related environments.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I usually dread paperwork, especially when it comes to stock options.
- Electronic filing would definitely simplify the process for me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Startup Founder (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Managing stock options and paperwork is a headache.
- This policy will remove a layer of stress from my operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Marketing Specialist (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 18/20
Statement of Opinion:
- The complexity of my tax returns due to stock options is overwhelming.
- Anything that makes the process simpler is welcome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Freelance Developer (Miami, FL)
Age: 31 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- I haven't dealt with equity compensation yet, but it's a potential avenue.
- Easier processes might encourage me to accept offers involving equity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Investor Relations Manager (Chicago, IL)
Age: 39 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- Simplification of stock-related paperwork is beneficial for convincing potential employees.
- This is a good step towards normalizing equity compensation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Accountant (Raleigh, NC)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 14/20
Statement of Opinion:
- Electronic filings would cut down on errors and improve efficiency.
- It's a move in the right direction for my clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Product Manager (Silicon Valley, CA)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 16/20
Statement of Opinion:
- The paperwork is daunting and time-consuming.
- I'm thrilled about the potential for electronic handling of stock options.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Business Consultant (Denver, CO)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 11/20
Statement of Opinion:
- The policy is bound to increase the attractiveness of equity compensation.
- I'm looking forward to sharing this with my clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
HR Manager (Seattle, WA)
Age: 36 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- Streamlining the equity process is a big plus for HR management.
- I believe it will help us attract and retain talent more efficiently.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Professor of Economics (Boston, MA)
Age: 58 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- While personally unaffected, I believe this is a crucial step for economic growth within startups.
- This policy will have substantial indirect benefits to startup growth dynamics.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $15000000 (Low: $12000000, High: $20000000)
Year 2: $10000000 (Low: $8000000, High: $13000000)
Year 3: $5000000 (Low: $4000000, High: $6000000)
Year 5: $3000000 (Low: $2000000, High: $4000000)
Year 10: $1500000 (Low: $1000000, High: $2000000)
Year 100: $1000000 (Low: $500000, High: $1500000)
Key Considerations
- The effectiveness of the electronic filing system in handling anticipated volumes is critical to realize anticipated savings and efficiency gains.
- Startups' readiness and acceptance to adapt to electronic filings will influence the speed and extent of benefits experienced.
- There may be initial resistance due to change but is expected to diminish as users familiarize themselves with the process.