What will be the impact if QSBS is eliminated through the Build Back Better plan?

A lot of people want to know: given the proposed changes to QSBS are intended to increase tax dollars, how much more money will be raised?

In 2019, the Joint Committee on Taxation estimated that the tax revenue lost from Section 1202 ranged between $1.1B and $1.3B per year. Meanwhile, Columbia Law Review’s estimate (found here) was even higher, at $4.5B a year. 

Even if the $4.5B estimate from Columbia is correct, the proposed Infrastructure Bill will cost $3.5 trillion over a decade, or ~$350B per year. The potential additional tax from the QSBS changes will represent barely 1% of the total cost of the infrastructure bill per year.

But what about a) damage to economic growth, and b) a reduced incentive to invest in new ventures?  We think the economic impact should be studied further before enacting such changes.

CapGains Inc. is following this legislation closely and is forming a coalition to stay abreast of developments – keep up to date here.

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

About QSBS Expert

QSBS Expert was founded by a group of entrepreneurs, investors, accountants and lawyers who came together when trying to navigate a QSBS situation of their own. We quickly realized that the regulations left a lot of open questions and the publicly available information was confusing to sift through…so we thought that others may also benefit from having a “go to” resource for all things QSBS.