First let me say how much we'll miss you over at RFMD. I'm glad you're
taking the plunge and continuing this site because it really has a lot of great stuff
to offer.... but it won't be the same place without you.
As far as the tax system
goes. I agree that the regular tax system is pretty bad, but it gets even worse. How
could it get worse you ask? ':shock:'
There are a few cases in which a taxpayer can
get completely screwed by the government. Specifically I'm talking about the AMT system.
In the pre-2000 tech bubble, many people were caught in the same trap but it doesn't
make it any easier to take. Basically, if you exercise options and hold them for more
than 1 year, you run the risk of having to pay Alternative Minimum Tax.... which is
basically a tax on an unrealized capital gain in the case of Incentive stock options.
Unfortunately, I was a victim of this snare. Long story short: the federal government
has an interest free loan of my money... way more than I'd care to admit. For me it
was mostly inexperience with stock options and some really bad advice from an accountant
who was the "supposed" expert, but I think more and more Americans are getting pulled
into this heinous trap.
The good news is that in December of 2006, Congress passed
a bill to phase out the AMT on ISO shares, but in my opinion the damage has already
been done. Hundreds of families had to take out loans to pay their taxes back in 2000
as a result of this mess. It just goes to show how convoluted and unfair the tax code
can really be.