Obama Vows To Crush The Top Internet Entrepreneurs?
I don’t want to turn this into a political debate. That’s not my intent. If anything, this is me, an economics fanboy, wondering if I’m the only one that thinks this is terrible fiscal policy. This is the second time Obama has scared the everliving sh*t out of me with his Economic Plan.
Now, let me just say that I think McCain is pretty much a disaster. As a lifelong Republican, I really wish the Bush Administration didn’t pull out their gas can and torch the Party which has historically been more kind to small businesses. I really wish we had a more innovative G.O.P. candidate. Like a guy that isn’t terrified by his computer. But with marginal tax rate numbers potentially ballooning like this under Obama, the audacity of his hope is really going to take a big chunk out of many of our earnings.
$250,000 isn’t wealthy. Not here in Texas and definitely not in NYC, Boston, Chicago, L.A, S.F., or Seattle. It’s definitely enough to be comfortable, but this is a country that was founded on the pursuit of happiness (err, property) and a free market economy that rewards risk. When you factor in the hours many of us put in to these startups, the wage rate certainly isn’t what gets you out of bed in the morning.
Do you have a really successful business or startup and plan to cash out in the next 4-8 years? Do you rely on dividends from “the last one” to fund “this one”. Please bend over and enjoy that cap gains hike.
Anyone that knows me knows that I work a lot. I really love this sh*t. Nothing good happens when you have your economy’s tip-of-the-spear new industry small businesses are put in a position where those entrepreneurs are better off not working after August. That kind of economy is called “Europe”.
So, I guess the questions to those of you that this affects, as entrepreneurs do you vote for hope at this cost? Or do you think that the cost of hope might have swung a little too far into your business’s and/or family’s finances? We live in the most charitable, giving country in the world with a very inefficient goverment. Wouldn’t you at least like the option of catalyzing hope at your own discretion?
Anyways, I guess I’m just curious as to how entrepreneurs (who are all seemingly fueled by caffeine and hope) plan on rationalizing this and how it would affect your respective businesses.
I can’t rationalize it - it’s not rational. I plan to leave the country within the next 2 years.
This is a great straight-forward illustration of the real dollar costs of letting Obama set the course on tax policy that the Dem Congress will undoubtedly follow. If you can do the simple math and see the out-of-pocket costs that an Obama victory will cost you, you have no one to blame but yourself when the tax man takes nearly two-thirds of every dollar you make at the marginal rate.
So… How do we pay down the debt? The money needs to come from somewhere. Where would that kind of money come from in a way that would be the least painful for people who earn over 250K but not crush the poor at the same time?
For example: We can tax the hell out of stuff like Food, Gas, Car registrations, and other necessities that both the rich and poor need to survive, but the % of total income poor people spend on that sort of thing a LOT higher than people like us. So… Taxing necessities for basic survival seems to place an unfair burden on the poor who can barely afford the necessities.
Rich people sometimes seem to prefer taxing the necessities because it seems like it might be fairer for everyone (Rich & poor) to pay the exact same sort of taxes for the exact same kinds of goods. However… those kinds of expenses become miniscule overall, when you are in the top income bracket.
I Mean… Come on… What % of your total income do you spend on Gas? I know some people who put 1/3 of every dollar they earn into the gas tank so raising taxes on Gas would place a larger burden on him than it would be on us. Same with other necessities.
So… If we don’t raise taxes on basic necessities, what do we raise taxes on?
Or we can cut things. What would you like to cut?
The one hike that really gets to me up there: 12.4% *additional* Social Security? For a program that has a great chance of being insolvent by the time I’m old? WTF.
@HawaiiSEO. Dave, I don’t want to get into specific political debates here. Like I said, this is more of an economic exchange that I’m trying to frame.
The debt is a bit of a PR # for me. It’s percentage of GDP isn’t out of historical trading ranges. Actually, what concerns me most there is who we owe it to. Obviously, the government is bloated and fundamentally I think they are the least likely to manage their way out of that. I’d rather catalyze their revenue stream by motivating the most efficient users of capital rather than taxing them more. The really wealthly (think Shaq vs the Guy That Signs His Check bit from Chris Rock) can hedge a bunch of this via asset class shifts, so again, the burden falls back square on one of the most exciting parts of our economy.
Getting into how people spend their money is an exercise in futility. For one, most people lie about it. Secondly, most people…rich or poor…are terrible at it. As entrepreneurs, many of us bootstrap…creating jobs, building great companies that aren’t hinged to antiquated industries, etc.
Again, the questions I want to focus on are not the petty political exchanges. As business owners, how do we continue to compete globally and manage capital in the Obama-proposed fiscal climate?
You’re not that far from the Cayman’s… are you?
I second John’s comment in that I’m already thinking about my exit plan. Like he said; it’s not rational and it certainly isn’t the only issue that’s irrational.
One of the beauties of being an online entrepreneur is that we can literally setup shop anywhere in the world, should we choose to do so.
IMO, living in the US is not worth working 7-8 months of the year for free.
The question of who is “rich” today is one that is sure to elicit different responses, depending upon your geographic location - sufficed to say 250 in Califoria (at least the parts that matter) is not rich by any stretch of the imagination. But that doesn’t mean that I want to see the “rich” guy pulling 2.5 million a year get dinged, either. I know that the averge 2.5 million earner is doing a heck of a lot more to increase value and support the economy than the government could possibly do with his increased marginal tax dollars. Who do you think the angel investor is today?
That is the point - I, and most entrepreneurs, are not in favor of wealth redistribution. Once you severely limit the incentive to work harder and earn more not only for yourself, but the economy as a whole, you end up with France. Or Canada. The only thing that matches their productivity mediocrity is the poor actual level of performance of their vaunted public health system - the same one Obama wants to spend those increased tax revenues on.
History has shown time and again that you cannot tax your way into prosperity. Unfortunately, it will likely take another “malaise” to illustrate this point - either that, or we just admit we are in a socialist society.
I would probably trust those numbers more if there weren’t so many typo’s in them and if you cited where they came from.
Hugh, the table is from this Wall Street Journal article.
http://online.wsj.com/article/SB121728762442091427.html?mod=opinion_main_commentaries
Maybe I’m missing something here, but shouldn’t taxes be higher?
Believe me, I don’t like taxes more than the next guy, but we’re fighting a war on two fronts. The government’s shelling out an inordinate amount of cast to fight that war, so shouldn’t more money be going into the government to cover those costs?
Yes, there is still frivolous spending and yes too much government waste, but if we really wanted lower taxes, maybe we should have not re-elected the guy who decided to invade Iraq.
I’d start by getting to know a good corporate tax attorney to minimize the capital gains. Lots of ways to play that game. I have trouble with the big picture though. You already cited the fact that we owe a lot of coin to some overseas economies that are already major competitors. Add in two wars and the continued necessity for the Treasury Secretary to keep throwing Hail Marys and we look structurally imbalanced. Time to pare down the debt. I think a tax increase is a viable option worth discussing, but should not be the only card we play. I think Obama’s version is steep and may target the wrong sectors, but I don’t think continuing on the same path is viable.
I couldn’t have said it better Brian and I’m surprised this hasn’t been talked about more.
I’m a life long Republican but not a big fan of McCain. Very early in the process I thought maybe I should take a look at Obama, right up to the point that I ran across this. I bitch about taxes enough already, but these changes in addition to phasing out long term capital gains would literally cripple entrepreneurs and small business.
Hello Brian. I just found your site through Google, landing on http://www.scoreboard-media.com/seo-consulting-2/
I’ve read through some of your articles and they are very interesting. I’ve subscribed to your RSS feed. Keep up the good work!
Chadwyck
Brian … you seem to dodge the best response in these comments:
“How do we pay down the debt? The money needs to come from somewhere. Where would that kind of money come from in a way that would be the least painful for people who earn over 250K but not crush the poor at the same time?”
The country is in a deep, deep financial hole. How do you propose we dig our way out without requiring more from those most able to pay?
I don’t think I dodged it. I’m maybe not overreacting to the debt number. Like I said, its percentage of GDP isn’t as worrisome as the strategic weakness we’ve created by owing it to the people we owe it to.
Fiscally, a great way lower the debt is to stop feeding it with the size of government we have now.
“requiring more from those most able to pay”…now that scares me. The tax burden of the top 5% is already most of the tax revenue. At some point, you’re trying to squeeze blood from a turnip and disincentivizing those who are driving the economy and most efficient with capital.
This country is as successful as it is and the biggest economy the world has ever known because of our productivity and return on capital. Taxing the everliving shit out of the top performers to cover for the growing base of inefficient producers is just retarded economics. It’s a feelgood politics. Bad economics. See the WSJ.com article I linked that was the source of the table.
Hi Brian
Thanks for the detailed reply. I’d say that you need to be more worried about the deficit for a few reasons:
1) Your figures underestimate the size of the U.S. deficit because they don’t include $80 billion in war costs (and even that number may be low)
2) The figures from the WSJ overestimate the impact of Obama’s tax increases. Aaron has a couple of links on his blog post about this topic.
3) Given our weak economic state,a McCain presidency continuing to spend $80 billion annually on the war, we’d soon set deficit records for % of GDP. Previous percentages:
http://en.wikipedia.org/wiki/United_States_public_debt#History
I’m glad I live in Canada now, but unfortunately, one of my businesses is still located in the U.S. I’m never going “home” unless I am dragged, kicking and screaming and am looking to offshore my business or move it to Canada (hey, at least here, taxpayers see some benefits for all those high ass taxes).
>>>“How do we pay down the debt? The money needs to come from somewhere.
It is hard not to have this conversation “without getting into politics”. I didn’t decide to spend it irresponsibly. I didn’t create a generation of people who mooch off the government (of course, I exempt the helpless from this statement - the elderly, children and the truly disabled). Why the hell should I have to pay for other people’s mistakes because I’ve worked my ass off and have the money to do so?
Additional social security tax? What, they think they’re going to take my money to hopefully be able to pay out social security benefits for another few years before there is a revolt for what is essentially the theft of an entire generation+’s retirement fund due to irresponsible management by the government?
>>>How do you propose we dig our way out without requiring more from those most able to pay?
How bout we get all those able-bodied people off their asses and off government benefits (having four children with three different baby daddy’s should not be a career path).
I’m all for doing my share… but I’m not for cleaning up others messes or giving my money away because it is easier to take it from me, “since I have it” instead of making someone else work to contribute their share.
Brian, you are right!
Thanks for this great post to make people think and start talking about the issues.
I believe that penalizing entrepreneurs and business by raising taxes will only hurt the already slumping economy and reduce the number of jobs for individuals. I don’t know of any poor people creating jobs or putting people to work but successful businesses and entrepreneurs do.
Democrats and Republicans together recently passed the economic stimulus package with TAX REBATES of $600 to individuals, $1,200 for couples, plus an additional $300 REBATES per child, which were designed to slow down a recession by providing taxpayers extra money to spend.
You my friends are being double or triple taxed on products you purchase. If you buy a new laptop computer you pay taxes on materials and individual parts used to put the notebook together, then you pay a sales tax on top of that when you buy it online or from your local store.
Tax Freedom Day (http://en.wikipedia.org/wiki/Tax_Freedom_Day) was April 23, 2008 this year which is the first day of the year that a nation as a whole has theoretically earned enough income to fund its annual tax burden. Tax Freedom Day varies for each state due to state and local taxes. Connecticut had the heaviest tax burden with Tax Freedom Day landing on May 8.
I don’t trust politicians. They’re arrogant, self-serving, and they lie. Politicians think they are smarter than you and I and look at your money as their money and they believe that the government can spend your money better than you. I believe the American Dream comes from you and not from government.
I Believe in You! Believe in Yourself!
A few things to note:
1) Do those numbers include federal deductions on state income tax?
2) Does it point out that people making up to or just over 250k will pay nothing more? Only those making over 250k will pay more, and only on the portion of income above 250k. And it fails to point out that Obama’s website itself points out that the proposed increase is 2-4%, not the full 12.4%. 12.4% would be impossible to get through even a fully democratic congress. 2-3% is more reasonable, and you may expect the cap to go to 275-300k if the percent is 3-4%. This is a nice cushion that shields the VAST majority of families and small businesses.
Wall Street Journal is very widely accepted as being heavily slanted to the right.
>>>How bout we get all those able-bodied people off their asses and off government benefits (having four children with three different baby daddy’s should not be a career path).<<<
That’s a good start, but what about all of the corporations that get enormous tax breaks for sending our jobs overseas? Talk about sucking off the government (which is really just you and I and everyone else who plays by the rules and pays their taxes) - where is the outrage over that?
There are no easy answers to this one. $250k is not really a “rich” person’s income unless you are looking from the vantage point of someone who is making a lot less. I think most people who make that much are working VERY HARD for their money and should not have to donate more money to a wasteful government. If Obama proposed the same plan but said, $1 million instead, it might seem more reasonable. The other issue is that we no longer can average income - so those with inconsistent earnings take an extra hit.
We have dug a deep hole - thanks to poor decisions in the past eight years. The Bush administration grew the government by 40%! I thought Republicans were about smaller government? So now, we are in debt and the money needs to come from somewhere. First, how about reducing expenses starting with Iraq? Who is more likely to do that? Second, maybe give incentives to small businesses to help them grow and hire more people - ie more taxpayers.
Bottom line - Who is more likely to restore America’s self esteem? I don’t see how any of us are going to escape paying something to help get us out of the hole (unless we are ready to relocate offshore).