5 ms·

If this program is so good it should probably take equity or be structured as a loan so that society can get more out of it with its funding.

iscrewyou 8y ago
Society will as the resulting company will pay taxes.
- Retric 8y ago
  These companies are still benefiting from the same government services which is what the normal corporate taxes are paying for. Saying the taxes paying for those services are also somehow pay back this free loan is very much double dipping. On top of that, this is early stage funding and most of these companies will fail paying back little to nothing. PS: Corporate taxes are down to 9% of the federal budget. They really don’t pay much in the way of taxes vs the services they benifit from.
- peterwwillis 8y ago
  ...in theory. In reality, corporations use loopholes to defer taxes as much as possible while taking more state and federal subsidies.
orthecreedence 8y ago
You should not be getting downvoted. There is nothing wrong with the government taking equity (or at least dividends) in the companies it invests in that nobody else wants to. It's taking a risk. It should get a reward.
- chris_va 8y ago
  Successful companies pay a lot in taxes (through employment if nothing else), so technically the government does see dividends (albeit in a non-traditional form). However, given the nature of government, it should technically be enough if society benefits more than the expected investment amount, regardless of the government payback.
  - reitzensteinm 8y ago
    It's not that simple; every company pays a lot in taxes, so the government doesn't benefit more than if a random VC had put the money in instead. There's also the opportunity cost of the investment; the yield has to be compared to things like food stamps, education, basic research etc. There's a lot of low hanging fruit a well run government could be picking. I would also tend towards the view that if the government invests like a VC it should take equity. If these companies genuinely have no other option, I don't see why this would be a deal killer. If they have VC they could take instead, the government shouldn't be offering free money.
    - symlock 8y ago
      The more companies though, the more times the same dollar can be taxed.
- DSingularity 8y ago
  We shouldn’t set profit expectations because of their future consequences on how the program will be judged. The financial goals of this program shouldn’t be profit — or even break even. Any profit expectations will undermine the the way this program is evaluated.
  - arcticfox 8y ago
    Right, but it also seems irresponsible to completely ignore an obvious revenue opportunity where it exists. IMO with proper branding as some type of "Give back" tax on successful graduates, it wouldn't need to be close to break even, and could help the program grow.
  - orthecreedence 8y ago
    Screw the profit, give the money back to US citizens via a general social dividend.
    - zymhan 8y ago
      We're talking about a tiny investment fund. It would be good if it just managed to break even.
- zymhan 8y ago
  Yeah but then you have to have that same agency deciding when it wants to sell shares, how it wants to use any voting power, etc. It adds overhead to the program that will negate some of the returns from equity.
ttul 8y ago
I imagine that equity would involve complexities the government is not set up to handle. The overhead of maintaining hundreds of equity stakes in startups kind of boggles the mind. If government wants an equity stake, they’d be better off investing in a fund of VC funds - like what the BC Renaissance fund does in British Columbia. They stuffed $100M (pocket change, I know) into a fund of funds and let the VC manage all of it.
- tomnipotent 8y ago
  > complexities the government is not set up to handle Compared to the IRS? National security & intelligence? Social services? Monetary policy? It's just not setup for making a profit.

iscrewyou 8y ago

Society will as the resulting company will pay taxes.

Retric 8y ago
These companies are still benefiting from the same government services which is what the normal corporate taxes are paying for. Saying the taxes paying for those services are also somehow pay back this free loan is very much double dipping. On top of that, this is early stage funding and most of these companies will fail paying back little to nothing. PS: Corporate taxes are down to 9% of the federal budget. They really don’t pay much in the way of taxes vs the services they benifit from.
peterwwillis 8y ago
...in theory. In reality, corporations use loopholes to defer taxes as much as possible while taking more state and federal subsidies.

orthecreedence 8y ago

You should not be getting downvoted. There is nothing wrong with the government taking equity (or at least dividends) in the companies it invests in that nobody else wants to. It's taking a risk. It should get a reward.

chris_va 8y ago
Successful companies pay a lot in taxes (through employment if nothing else), so technically the government does see dividends (albeit in a non-traditional form). However, given the nature of government, it should technically be enough if society benefits more than the expected investment amount, regardless of the government payback.
- reitzensteinm 8y ago
  It's not that simple; every company pays a lot in taxes, so the government doesn't benefit more than if a random VC had put the money in instead. There's also the opportunity cost of the investment; the yield has to be compared to things like food stamps, education, basic research etc. There's a lot of low hanging fruit a well run government could be picking. I would also tend towards the view that if the government invests like a VC it should take equity. If these companies genuinely have no other option, I don't see why this would be a deal killer. If they have VC they could take instead, the government shouldn't be offering free money.
  - symlock 8y ago
    The more companies though, the more times the same dollar can be taxed.
DSingularity 8y ago
We shouldn’t set profit expectations because of their future consequences on how the program will be judged. The financial goals of this program shouldn’t be profit — or even break even. Any profit expectations will undermine the the way this program is evaluated.
- arcticfox 8y ago
  Right, but it also seems irresponsible to completely ignore an obvious revenue opportunity where it exists. IMO with proper branding as some type of "Give back" tax on successful graduates, it wouldn't need to be close to break even, and could help the program grow.
- orthecreedence 8y ago
  Screw the profit, give the money back to US citizens via a general social dividend.
  - zymhan 8y ago
    We're talking about a tiny investment fund. It would be good if it just managed to break even.
zymhan 8y ago
Yeah but then you have to have that same agency deciding when it wants to sell shares, how it wants to use any voting power, etc. It adds overhead to the program that will negate some of the returns from equity.

ttul 8y ago

I imagine that equity would involve complexities the government is not set up to handle. The overhead of maintaining hundreds of equity stakes in startups kind of boggles the mind. If government wants an equity stake, they’d be better off investing in a fund of VC funds - like what the BC Renaissance fund does in British Columbia. They stuffed $100M (pocket change, I know) into a fund of funds and let the VC manage all of it.

tomnipotent 8y ago
> complexities the government is not set up to handle Compared to the IRS? National security & intelligence? Social services? Monetary policy? It's just not setup for making a profit.