Let me start by saying that I am not opposed to the proposed healthcare reform, since I don't know enough about it to have any opinion, and I suspect that if I

Let me start by saying that I am not opposed to the proposed healthcare reform, since I don't know enough about it to have any opinion, and I suspect that if I did invest the time and learned the facts I would be in favor of the reform. With this out of the way, your argument seems completely wrong to me. In reality nobody can consistently get 1000% returns, or anywhere near it, from the startups they invest in. (If that was possible, everyone would want to invest in startups and the valuations would go up until the returns got more in line with other investment vehicles with the same risk profile.) In reality, for every startup where you invested $100k and walked away with $1M, there are many where you invested $100k and walked away with zero. On average the returns can't be much different from what you get elsewhere, I'm guessing I won't be off by much if I say 10% before tax and before inflation. And 4% difference in tax burden will also mean about the same it means for other investments, which is to say it's not insignificant. Think of the lenghts people go to in order to put a little more money in a tax sheltered part of their portfolios. Or, think of the risks many people with stock options grants took to convert their short term capital gains into long term (and many of them got burnt very badly when the dot com bubble burst).