Hmm, in my case the 83(b) election would have cost me about a quarter year of salary, and the AMT I ended up owing was well over a year's worth of salary. My original grant was small relative to the pool because I was a mid-stage IC with essentially no prior experience. Perhaps for very early startups, or those growing quickly through valuation raises, the situation is different. My company only took on capital when we really ended it and it was cheap, but the C-levels were pretty consistently getting offers (so the valuation grew constantly, just not on paper).
Agree that the taxes on unrealized gains are insane, but they were intended to protect the government's income source from different problems. Tech compensation and VC has evolved dramatically since AMT was introduced.
It's not that tech compensation and VCs evolved - it is that AMT was not indexed to inflation (until 2013). When it was enacted, it applied to 155 families[0]. In 2008, it applied to nearly 4 million[0 again].
And I think sanity should not be judged by intention, but rather by action - especially when we've had more than 40 years to evaluate.
Agree that the taxes on unrealized gains are insane, but they were intended to protect the government's income source from different problems. Tech compensation and VC has evolved dramatically since AMT was introduced.