http://blogs.wsj.com/wealth/2010/09/20/tax-me-more-says-wealthy-entrepreneur/?mod=rss_WSJBlog By Robert Frank As Congress and President Obama fight over the Bush tax cuts, a small number of left-leaning rich people have come out in support of paying higher taxes. The most famous are the members of the Responsible Wealth Project, who say they pay too little in taxes and want to address inequality. They may be an eccentric minority, or (in the view of conservatives) a lunatic fringe. But a Quinnipiac University poll this year showed nearly two-thirds of those with household incomes of more than $250,000 a year support raising their own taxes to reduce the federal deficit. So not all of the wealthy are angry about tax hikes. But that doesn’t mean they just want bigger government. What they want is better government – and investment in growth. An op-ed piece in the Los Angeles Times by Garrett Gruener, an entrepreneur and venture capitalist, makes two important points about taxing the rich. (Mr. Gruener founded Ask.com and is the CEO of Nanomix and is a co-founder of Alta Partners, so he’s got street cred.) First, he says tax rates don’t make or break the success of an entrepreneur – or the jobs he creates. He says he’s paying the lowest rates of his working life. But “if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn’t affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax,” Mr. Gruener writes. History, he says, shows that “modest changes in the tax rate for wealthy taxpayers don’t make much of a difference if the goal is to build new companies, drive technological development and stimulate new industries.” Second, an economy built only on the rich – who account for the lion’s share of income and spending – is unsustainable. “What American businesspeople know, and have known since Henry Ford insisted that his employees be able to afford to buy the cars they made, is that a thriving economy doesn’t just need investors; it needs people who can buy the goods and services businesses create.” He says the tax hikes for the rich should be invested by government in infrastructure and research. Preserving his tax rates won’t lead him to start new companies in the U.S. “What will change my investment decisions is if I see an economy doing better, one in which there is demand for the goods and services my investments produce. I am far more likely to invest if I see a country laying the foundation for future growth.” Do you think entrepreneurs make their start-up decisions based on tax rates?
There is a difference between someone worth $25 million and someone making $250,000 a year. Changes in tax rates directly affect lifestyle and reinvestment into their businesses in people not in the 'super' rich category. Also as a company founder and partner of an investment partnership, he gets the benefits of paying long-term capital gains rates as his income is taxed as carried interest. This is much different from the normal successful professional or restaurant owner making $250,000 - $300,000 whose taxes are going up $ 10-15,000 a year.
Why would anyone want to raise taxes on themselves? You could just willing give your money to whatever cause you wanted. You could go find a homeless person and give him some money or you could donate to the military. Just about anything the government entitlement programs do a person can do on their own. For some reason these people feel better if the government forces them to do this instead of them doing it on their own. Weirdos
I am curious about how many tax deductions and tax loopholes Mr. Gruener currently uses to lower his taxes.
Any good businessperson knows that this is absolutely 100% true. Except the article directly addresses this: But a Quinnipiac University poll this year showed nearly two-thirds of those with household incomes of more than $250,000 a year support raising their own taxes to reduce the federal deficit. Unless you think 2/3rd of these people make many millions, your numbers don't add up. Similarly, Obama did very well with this demographic - beating McCain - when he campaigned on this exact platform. So both polls and votes show a similar view. Can't speak for him, but he'd probably say that the net rate is pretty low and very competitive in the developed world. He'd probably also be for closing loopholes to broaden the base and lower the nominal rate, as most businesses seem to support. Because if I pay an extra $100,000, that doesn't nothing to solve any of our problems. If I support a tax rate change, I raise $700,000,000,000, which helps lower the deficit and reduce pressure on interest rates and future tax rates, both of which benefit me.
What, you mean the fact that we have the lowest effective corporate tax rate in the developed world? I thought you people were supposed to be in favor of that sort of thing.
Either your math is off or you are lying on purpose... I am assuming that the middle class rates get extended and the top two rates don't, per Obama's wishes. In that case, the person's income between $161,450 and $288,350 will be taxes at a 3% higher rate for a total of $3,807 in additional taxes. The income over $288,350 would be taxed at a 4.6% higher rate for a total of $535.90 more, or a total of $4342.90 in additional taxes for someone who makes $300,000. Someone making $250,000 per year would have a tax increase of $2,656.50.
That means you are over 600 facepalms behind the rest of us who have experienced the same phenomenon on just about every one of your posts.
Because some of us believe it is our sacred duty to pay our fair share to maintain the society we have built over the last 200 plus years. Some people aren't patriotic enough to believe the same, I suppose.
He probably uses all of them available to him, as any person would. People like Mr. Gruener generally use an accountant, and accountants rarely leave deductions or loopholes on the table.
I've never quite managed to muster the sympathy expected of me for $250k earning small business people who might have to pay more in personal taxes. Maybe it's my ignorance here, so someone help me out. Those taxes are for personal income. If it is unduly affecting your business, incorporate. As it stands now, small business people treat company money as personal income because there's a tax advantage to doing so. If the advantage goes away, they won't organize in that fashion anymore. What's the big deal?
That is what I suspect. I am not against Gruener's proposal but at the same time I can't help feeling that he himself could personally support the idea through action by passing up on so many things that lower his tax rate.
How does him voluntarily paying more help fix the system and create a sustainable source of revenues? That's like saying you can't support health care reform unless you actually personally go volunteer at a hospital.
there's nothing that prevents this guy from paying additional taxes now. no need to raise taxes on the rest of us just to assuage his guilt.
Easy solution. Just put a box on the 1040 that allows people to increase their personal income tax rate buy an amount specified (positive numbers only). Done.
You are correct that a handful of folks doing this won't fix the system, but if he isn't doing it himself then he comes across as hypocritical. If he feels he should be taxed more, then he should go ahead and pay extra and/or not take his deductibles. If I write an article saying that a segment of the community that I belong to should spend one day a month volunteering at a homeless shelter and don't do it myself, then I am a hypocrite.
Why? He doesn't think he should be taxed more for the hell of it. He thinks the rich should be taxed more to fix a specific problem - a problem that doesn't get fixed if he's the only one doing it. It would be symbolic and all, but it completely misses the point of why he supports the policy. As noted earlier, 2/3rds of the rich think taxes should be raised on them - they are not all hypocrites. They know that it only works at deficit reduction if it's a universal policy change. It's the same reason we have regulation instead of expecting people to just voluntarily make society cleaner/safer/etc.
