[Stanford, California] : Stanford Law School, 
Video — 1 videodisc (1 hr., 9 min.) : sound, color ; 4 3/4 in.
Founders of a start-up usually take common stock as a large portion of their compensation for current and future labor efforts. Getting paid in founders' stock allows entrepreneurs to defer paying tax and -- more importantly --allows them to pay tax at the long-term capital gains rate. Politicians, entrepreneurs, and many academics claim that the favorable tax treatment of founders' stock is an effective method of subsidizing entrepreneurship. Fleischer questions the prevailing view that we should tax founders at a low rate. The economic efficiency case for a tax preference for founders' stock is weak. And the case for reform, he argues, is compelling. Taxing founders at a low rate is a conspicuous loophole in the fabric of our progressive income tax system, uniquely undermining our shared commitment to equal opportunity and distributive justice. Founders' stock is often bequeathed to heirs who receive a step up in basis, allowing founders to avoid the income tax altogether, leaving a legacy of dynastic wealth subject only to the rather dodgy application of the estate tax.