4 ms·

As an entrepreneur and investor, I think Obama's proposal solves a "problem" that doesn't really exist. First, long term cap gains tax rates are already quite

by payne92 18y ago

As an entrepreneur and investor, I think Obama's proposal solves a "problem" that doesn't really exist. First, long term cap gains tax rates are already quite low (relative to regular income), and I can't think of a single entrepreneurial or investor scenario where I've seen: "gee, if tax rates were lower I'd {invest,start this company}" Second, it will be tough to implement in a loop-hole proof way. Every private equity and hedge fund will be organizing "startup" projects, so they can make take profits tax free. My guess is it will be capped, making it even less of any sort of meaningful incentive. My take: there are other tax areas that need work first, like code simplification and AMT.

timr 18y ago
Another suggestion: raise the tax, and use it to fund universal health insurance -- something that will encourage entrepreneurs by making their lives easier.
- astine 18y ago
  It will certainly give them less incentive to look for a job that provide health-care, but it won't give people any more incentive to engage in startups in particular. You are giving people less incentive to get rich (one big reason to begin a startup) and you are making it more difficult, by taxing them directly. So I don't think universal health coverage will do much for startups. It will mostly help low income and freelance laborers at the expense of the rich and the steadily employed. This might be a good thing, but it won't really help startups all that much.
  - timr 18y ago
    That's utter nonsense. People don't avoid starting companies because they're afraid of the capital gains tax on their anticipated profits (At least, people with a healthy dose of perspective don't do this). If you're going to pick from the list of reasons that people avoid starting companies, at the top of the list has to be the fact that most are afraid that they'll be unable to take care of themselves and their family during the lean times. Universal health coverage is an obvious step toward alleviating this fear. The abstract, vague notion of someday paying a (rather low) tax on the eventual, theoretical profits from the venture doesn't even come close.
    - astine 18y ago
      I can't speak on behalf of 'people,' but I can speak on behalf of myself. Universal health coverage would be very expensive, and if a large portion of it were paid with capital gain's taxes, you can bet that it would effect my decision making process of whether it was worth going through the effort to begin a startup. It would certainly effect my strategy and golas in starting one.
      - timr 18y ago
        "Universal health coverage would be very expensive" You're focusing on the trees. Who do you think pays the private health care premiums for your hypothetical startup? The insurance fairy? That money comes out of your pocket, today -- not out of (speculative) future capital gains dollars. And since it's nearly always more expensive (per head) to insure smaller groups, you're very likely going to pay more by insuring your own small company, versus participating in a national program. That said, I don't necessarily think that capital gains are the best place to find money for health care. But if it came down to a choice between raising capital gains taxes (which are quite low in this country) to fund universal coverage, and eliminating our already meager capital gains taxes to "promote" small business, I'd take the health care in a minute. And I'd still start a company, because my expected upside will massively exceed any loss due to taxes -- again, it's all about perspective. At the end of the day, the "taxes discourage business" canard only works for the ultra-rich, who already have significant capital gains to protect. For the rest of us, it's a much better deal to get guaranteed health coverage.
        delackner 18y ago
        Given the overwhelming evidence that nationalized health care is more efficient and humane (by definition, covering everyone), I really don't think you will get far arguing with the holdouts that have their fingers in their ears.
        viggity 18y ago
        more efficient? what planet are you from? Canada: 8 weeks for heart surgery America: Next Week. Nova Scotia: 25 weeks for a specialty consult Iowa: 1 week for a specialty consult http://www.cbc.ca/health/story/2007/10/15/waittimes-fraser.html http://www.cbc.ca/health/story/2007/10/15/waittimes-fraser.h...
- known 18y ago
  aka http://en.wikipedia.org/wiki/Flexicurity http://en.wikipedia.org/wiki/Flexicurity
steveplace 18y ago
Last time I heard about this, he mentioned small businesses with revenue under XXX,XXX dollars would have this tax benefit. Although I think Exxon would somehow become 5,000 oil and gas exploring startups.
- chriskelley 18y ago
  With a projected $550 Billion revenue, they would actually need to break into 550,000 startups to keep them all under $1 Million. Wow, that's amazing. Source: http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/28/get-ready-for-exxon-s-truly-gaudy-numbers.aspx http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/...
  - fallentimes 18y ago
    What's also amazing is wide spread accusations of price gouging when the oil industry has some of the lowest margins out there. Sources: http://money.cnn.com/2008/07/31/news/companies/exxon_profits/index.htm?cnn=yes http://money.cnn.com/2008/07/31/news/companies/exxon_profits... http://www.pardontheinformation.com/2008/06/why-are-oil-companies-so-profitable.html http://www.pardontheinformation.com/2008/06/why-are-oil-comp... http://is.gd/1e4D http://is.gd/1e4D
    - mattmaroon 18y ago
      People look at total profits and get confused.
      - fallentimes 18y ago
        Most people also have yet to accept evolution and read Us Weekly more than US News.
      - delackner 18y ago
        It isn't necessarily confusion. Public utilities sell electricity basically at cost, and that reduces the cost of goods and services for the entire economy. What people get confused about is that (to my knowledge) no public-run oil firm has managed to match the efficiency of private oil firms. Even heads of state seem to get confused (or prefer to be confused, to win popularity points).
Retric 18y ago
I think the best way to use taxes to stimulate investing is to have an AMT that taxes total net assets. A flat 1% AMT on assets over 1 million would let someone liquidate ~4% of their holdings a year without negative tax consequences and "Safe" investments are going to look less attractive. Note: I am suggesting an AMT so if you have 10 million in assets you will pay at least (10M - 1M) * .01 = 100k in taxes, but if you would pay 101k in income + capital gains taxes nothing changes. PS: People trying to avoid capital gains on highly appreciated assets distorts the market. This would be a "cheep" way to increase flexibility without dramatically impacting tax revenue. It most heavily impacts passive / safe investors while having little impact on those with strong 12+% returns.
- fallentimes 18y ago
  I don't like the idea of recurring taxes (even though many of them exist). Why should you be penalized each year for what you own? I could understand taxes on net worth "additions" but even then... Also, how does one properly assess their net worth let alone thousands (millions?) of people? It sounds like more government TPS, red tape and paper work will be involved. And I say all this as a minimalist - all my possessions could fit in a 12x12 room. I have a fix: Reduce spending & lower taxes. (Not libertarian style but in a true fiscal conservative sense) The government is so bloated with worthless employees, pork and shit kicking programs it's sickening.
known 18y ago
Sometime back I read Americans prefer Mobility and Opportunities.

by payne92 18y ago

timr 18y ago

Another suggestion: raise the tax, and use it to fund universal health insurance -- something that will encourage entrepreneurs by making their lives easier.

astine 18y ago
It will certainly give them less incentive to look for a job that provide health-care, but it won't give people any more incentive to engage in startups in particular. You are giving people less incentive to get rich (one big reason to begin a startup) and you are making it more difficult, by taxing them directly. So I don't think universal health coverage will do much for startups. It will mostly help low income and freelance laborers at the expense of the rich and the steadily employed. This might be a good thing, but it won't really help startups all that much.
- timr 18y ago
  That's utter nonsense. People don't avoid starting companies because they're afraid of the capital gains tax on their anticipated profits (At least, people with a healthy dose of perspective don't do this). If you're going to pick from the list of reasons that people avoid starting companies, at the top of the list has to be the fact that most are afraid that they'll be unable to take care of themselves and their family during the lean times. Universal health coverage is an obvious step toward alleviating this fear. The abstract, vague notion of someday paying a (rather low) tax on the eventual, theoretical profits from the venture doesn't even come close.
  - astine 18y ago
    I can't speak on behalf of 'people,' but I can speak on behalf of myself. Universal health coverage would be very expensive, and if a large portion of it were paid with capital gain's taxes, you can bet that it would effect my decision making process of whether it was worth going through the effort to begin a startup. It would certainly effect my strategy and golas in starting one.
    - timr 18y ago
      "Universal health coverage would be very expensive" You're focusing on the trees. Who do you think pays the private health care premiums for your hypothetical startup? The insurance fairy? That money comes out of your pocket, today -- not out of (speculative) future capital gains dollars. And since it's nearly always more expensive (per head) to insure smaller groups, you're very likely going to pay more by insuring your own small company, versus participating in a national program. That said, I don't necessarily think that capital gains are the best place to find money for health care. But if it came down to a choice between raising capital gains taxes (which are quite low in this country) to fund universal coverage, and eliminating our already meager capital gains taxes to "promote" small business, I'd take the health care in a minute. And I'd still start a company, because my expected upside will massively exceed any loss due to taxes -- again, it's all about perspective. At the end of the day, the "taxes discourage business" canard only works for the ultra-rich, who already have significant capital gains to protect. For the rest of us, it's a much better deal to get guaranteed health coverage.
      - delackner 18y ago
        Given the overwhelming evidence that nationalized health care is more efficient and humane (by definition, covering everyone), I really don't think you will get far arguing with the holdouts that have their fingers in their ears.
        viggity 18y ago
        more efficient? what planet are you from? Canada: 8 weeks for heart surgery America: Next Week. Nova Scotia: 25 weeks for a specialty consult Iowa: 1 week for a specialty consult http://www.cbc.ca/health/story/2007/10/15/waittimes-fraser.html http://www.cbc.ca/health/story/2007/10/15/waittimes-fraser.h...
known 18y ago
aka http://en.wikipedia.org/wiki/Flexicurity http://en.wikipedia.org/wiki/Flexicurity

steveplace 18y ago

Last time I heard about this, he mentioned small businesses with revenue under XXX,XXX dollars would have this tax benefit. Although I think Exxon would somehow become 5,000 oil and gas exploring startups.

chriskelley 18y ago
With a projected $550 Billion revenue, they would actually need to break into 550,000 startups to keep them all under $1 Million. Wow, that's amazing. Source: http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/28/get-ready-for-exxon-s-truly-gaudy-numbers.aspx http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/...
- fallentimes 18y ago
  What's also amazing is wide spread accusations of price gouging when the oil industry has some of the lowest margins out there. Sources: http://money.cnn.com/2008/07/31/news/companies/exxon_profits/index.htm?cnn=yes http://money.cnn.com/2008/07/31/news/companies/exxon_profits... http://www.pardontheinformation.com/2008/06/why-are-oil-companies-so-profitable.html http://www.pardontheinformation.com/2008/06/why-are-oil-comp... http://is.gd/1e4D http://is.gd/1e4D
  - mattmaroon 18y ago
    People look at total profits and get confused.
    - fallentimes 18y ago
      Most people also have yet to accept evolution and read Us Weekly more than US News.
    - delackner 18y ago
      It isn't necessarily confusion. Public utilities sell electricity basically at cost, and that reduces the cost of goods and services for the entire economy. What people get confused about is that (to my knowledge) no public-run oil firm has managed to match the efficiency of private oil firms. Even heads of state seem to get confused (or prefer to be confused, to win popularity points).

Retric 18y ago

I think the best way to use taxes to stimulate investing is to have an AMT that taxes total net assets. A flat 1% AMT on assets over 1 million would let someone liquidate ~4% of their holdings a year without negative tax consequences and "Safe" investments are going to look less attractive. Note: I am suggesting an AMT so if you have 10 million in assets you will pay at least (10M - 1M) * .01 = 100k in taxes, but if you would pay 101k in income + capital gains taxes nothing changes. PS: People trying to avoid capital gains on highly appreciated assets distorts the market. This would be a "cheep" way to increase flexibility without dramatically impacting tax revenue. It most heavily impacts passive / safe investors while having little impact on those with strong 12+% returns.

fallentimes 18y ago
I don't like the idea of recurring taxes (even though many of them exist). Why should you be penalized each year for what you own? I could understand taxes on net worth "additions" but even then... Also, how does one properly assess their net worth let alone thousands (millions?) of people? It sounds like more government TPS, red tape and paper work will be involved. And I say all this as a minimalist - all my possessions could fit in a 12x12 room. I have a fix: Reduce spending & lower taxes. (Not libertarian style but in a true fiscal conservative sense) The government is so bloated with worthless employees, pork and shit kicking programs it's sickening.

known 18y ago

Sometime back I read Americans prefer Mobility and Opportunities.