Sanders proposal to raise these taxes could hit start-up workers

A bill introduced by Sen. Bernie Sanders, I-Vt., that would raise taxes on executive retirement plans could hit an unintended target: employees at start-ups.

The presidential candidate, along with Sen. Chris Van Hollen, D-Md., proposed the CEO and Worker Pension Act on Thursday.

While the bill likely won’t go too far amid a divided Congress, it offers a clue into Sanders’ thinking as he campaigns for office.

The legislation takes aim at so-called nonqualified deferred compensation plans, which allow executives to sock away a portion of their pay — above and beyond what they would otherwise save in a 401(k) plan — and defer taxes for years until the money is distributed.

The Sanders bill would curb this deferral, levying taxes on executives’ savings earlier.

Further, equity-based compensation would also be subject to this new treatment, accelerating taxes on nonqualified stock options paid to high-earning employees.

Restricted stock units, which employers also use to grant shares to workers, would also be subject to the bill.

Article source: https://www.cnbc.com/2020/02/28/sanders-proposal-to-raise-these-taxes-could-hit-start-up-workers.html