Yep, sorry. I thought it was obviously facetious. Probably not in the spirit of HN, but with all the victory lapping by the liberal wing of HN tonight, I guess the libertarian in me got a bit carried away.
I really hope the STEM immigration reform happens, independent of "comprehensive immigration reform". The main people blocking "just do the STEM part now" immigration reform are congressional Democrats, and I'm not sure if the election changes anything there. Maybe the President getting re-elected pretty solidly gives him more moral power in arguing with the Congress?
There are other immigration reforms issues that have had wide bipartisan support, but congress doesn't seem to like to package legislature that way. There's a strong historically tendency towards bundling.
> Maybe the President getting re-elected pretty solidly ...
Electorally, yes, but it's a squeaker by popular vote. As of this writing, the victory margin is less than half of a percent.
I live in Texas, and I voted for Johnson. If I lived in Ohio I would have voted for Obama. It's hard to find numbers at the moment, but it looks like Johnsons's pulling 5%.
Nationally as a popular vote thing, plenty of people who voted Johnson might have voted for either Romney or Obama in their "safe" state otherwise. I live in Obamaland, support Johnson, but would not have voted for Obama if I hadn't voted for Johnson. So you can't just add 100% of Johnson to Obama.
Are you confused because you believe that libertarians are on the right, maybe? If you examine libertarian positions, you might be surprised to find many of them "left" of Obama.
There are some issues which aren't fiscal (directly) but aren't really social policy (directly), where Libertarians are the farthest "left" (or right, or whatever) of the two big parties, and where people may vote based on morality.
GTFO Afghanistan ASAP (and their overall isolationist position) is one of the big ones. I could see someone who was pro-state intervention in domestic life, pro big taxes, etc. still voting Libertarian if he thought GTFO Afghanistan ASAP was the most important issue.
It's basically impossible to put US politics (or anywhere, really) on a strict left/right linear chart.
And the only state he came close to costing Romney was Florida. But even so, he would have lost it by over 3000 votes if all Johnson supporters voted for Romney.
It doesn't help because the Congress itself is the roadblock, and they do need to get re-elected.
Obama himself has been pushing for STEM in the first term, and there's every reason to believe Romney would have as well -- they agreed on it. It's Congress on this one issue that's preventing STEM-only from going forward.
Maybe I'm showing my hn colours, but I'm surprised by no mention of SOPA/PIPA.
I would have thought broad policies which have already been introduced as bills during the last term in office would be more significant to technology than potential immigration reforms.
I note that I'm not from the USA, so my perspective might not be as well-informed as it could be.
It's not that it will discourage founders, it will discourage investors since they'll need a higher return to achieve the same after tax profits. What's more likely is investors will require a larger percentage reducing the founding teams ownership stake.
I don't buy this, investors will still take as much ownership stake as they can get in the market to maximize profit regardless of how much they are taxed. Since interest rates are so low, the only real way to grow money in through investment and capital gains anyway.
Sorry, but this is how I was taught and how I've seen a lot of VC's do it. They take their assumptions which include revenue projections, required rate of return, risk premium, future dilution, and of course the tax rate. They then plug those into a model to tell them what percentage / valuation they need. Of course this doesn't work well for seed stage since there's not enough information.
Don't be sorry, but think about it. Your goal as a VC is always to maximize profit. If the US capital gains tax rate goes up, that doesn't change your outlook on US based investment on a per-case basis, it just makes all of US investment look "worse" compared to other countries with lower tax rates.
And honestly, that would probably not even be that bad. One of the major reasons techies talk so much about immigration reform is that people with ideas want to go to the US because that is where all the money is because nobody wants to invest outside the borders due to a combination of many factors, but tax rate is always one of them. A higher capital gains tax rate makes other markets more appealing, and I don't have the exact numbers on what other markets would be most appealing at what % hikes, but I can't imagine taking the tax rate up to even 40% would drive investors out of US markets just on the basis of how convenient America is for tech entrepreneurialism already, it reduces a ton of the risk factors involved you described.
Investors in startups are looking for a potential 10x-30x return on their investment. We aren't talking about razor thin margins in this equation. While it is of course true that they will have to make more pre-tax to come out with the same amount post-tax, I don't think it drastically changes investors motivation to invest. Also, where else will they invest their money. The capital gains tax applies to lots of types of investments, so the risk/reward balance versus other types of investments is still the same.
double that and u get what a german founder would have to pay when selling the company he built. You guys dont realize that you still pay very little taxes compared to most!
If you sell a company for $100 million, that's almost $9 million more down the drain. Yes, countries XYZ and have it worse, but that does not necessarily make this a good thing.
In general, tax hikes are bad, because the government caries little responsibility (look how reckless they have been with our budget/deficit to date). Giving more tax money to the govt. is like giving a loan to someone with a horrible credit score.
Also, this technology agenda is horrible. It is not the government's job gamble tax-payer money on business ventures (even ones as appealing as "green tech") - leave that to VCs and free markets.
That's not $9M down the drain - it's $9M used to pay the US Government as your startup requires all the infrastructure, legal framework and military protection provided to get where it is (feel free to move your startup to Somalia, where I hear the taxes are close to zero).
That the investor/owner portion of the tax burden will go up slightly from historically low levels doesn't belie the fact that the average American and small business owner pays even more in %.
Remember - during the roaring 90s we had a much higher rate - did that stop the Googles, Yahoos, Akamais, etc?
it's $9M used to pay the US Government as your startup requires all the infrastructure, legal framework and military protection provided to get where it is (feel free to move your startup to Somalia, where I hear the taxes are close to zero).
I think a few here would feel free to move their startups to -- Germany, with less than 1/3rd of the US' military expenses per capita [0] -- or Hong Kong, where mass transit is privatized [1] -- or Canada, where the number of lawyers per capita is 1/15th that of the US [2]. I dare say some have a positive view of all three of these statistics, despite them being technically "more Somalia-like". Not to say (not at all!) that militaries, infrastructure, and legal systems are useless and shouldn't be funded; but perhaps that they can be less funded (by taxpayers) with a net social benefit.
And that the statement "we should pay more to government agencies for the benefit of startups" is not immediately obvious.
I'm not against any of those things - but we were doing just fine with a lower tax rate. Are these tax hikes going to build roads, buy bombs, or maybe just bail out some Wallstreet friends? Like I said, the government is the best place to invest our hard-earned salaries. Make them figure out how to properly budget money, then maybe allow them more. I'm not arguing to demolish our government, just keep it small. Would you rather give your money to someone who was motivated to do well, like a small business owner, or a lethargic beast like the government, who does not care what it's burn rate is?
There's also no capital gains tax in Hong Kong or Singapore and yet those places are not crime-ridden dysptopias. If you believe a higher level of taxation is necessary to support the services that you believe the government should offer then it would be much more constructive to provide some evidence of that rather than just being snarky.
Both are city states, they are hardly countries and much of their success is by proximity to countries where taxes aren't low (PRC, Malaysia).
Also, neither HK or Singapore are very cheap. You don't pay taxes, you just pay more. A car in Singapore, for example, is around $100K every 5 or 6 years.
I'm very tired of Americans complaining about taxes when they have one of the lowest tax burdens in the world along with the lowest cost of living based on value.
But the gist is that when you plot the capital gains rate and stock market curves on the same graph, there's no dependency, which is counter-intuitive. However,
1) Endowments, pension funds and 401k's don't care about capital gains tax rate as they're shieleded at 0%
2) Foreign buyers are exempt from US rates as long as they pay their home country rates and there's a double-taxation agreement in place
3) People don't choose to buy less, people just choose to sell less. Combined with fairly stable demand generated from (1) and (2) the price of quality assets actually tends to grow faster in high-capital-gains-tax years than in low-capital-gains-tax years.
What's correlated with higher capital gains taxes is brokerage profits - sellers don't sell as frivolously.
Your entire premise is flawed since they all apply to companies in the stock market not a company sale. It's unrelated to my original statement but....
Investment vehicles, such as a 401k, do pay capital gains taxes just not on the sale they pay when the individual pulls the money out of the account.
You're arguing for less liquidity in the market? Liquidity is a good thing because it allows the market to more efficiently deploy capital.
PS... correlation does not equal causation otherwise the amount Chocolate eaten per capita has direct effect on the number of Nobel Prize winners.
> all apply to companies in the stock market not a company sale
Nope. First off, companies in the stock markets sell, too. Second off, tax-free vehicles are used for investments in private equity, venture capital, real estate, etc.
> Investment vehicles, such as a 401k, do pay capital gains taxes just not on the sale they pay when the individual pulls the money out of the account.
Nope. It's all treated as regular income at the time of withdrawal, so former and current capital gains rates have no effect.
I agree with your argument on liquidity - I don't argue for it, I'm just saying that net effects from increased capital gains are far more subdued than apocalyptic scenarios people usually attach to them. Excess liquidity also generates bubbles, so there's a fine line you have to walk where even though you can get a no-documents loan to buy up dozen of new real estate properties, you probably shouldn't.
You'll be able to get in through funding. Believe me, Startup Act 2.0 isn't Startup Visa Act isn't IDEA Act. There's a whole spectrum of potential implementations of the solution.
I've put together a coalition that's building the next bill. Note that acquisitions aren't taken into account in the current bills. It'll be fixed.
We've been going through some iterations within political space. No more press releases, starting today, game on for startup visa.
I remember seeing that the UK gave visa preferences to people with MBAs from certain top american schools. I wish there was something equivalent in the US for technical people (e.g. people with a masters/PhD from a top 20 non-us school). There are current solutions but none support someone doing a startup.
Too many Congresscritters scared of something like that being used to hack the system. It's going to be American schools-only, if we can pass anything at all.
More and more founders are looking to O-1, especially if they can raise a round, putting them in the top few % of all 'startups,' including mom and pop shops, but damned if I'm explaining Steve Blank's segementation of the new business market to USCIS.
Open data is the big thing for me. There's a lot of buried gems in the gov data and doing the ETL and make it available to the public in a usable format is a good way to build skills.
I seriously doubt Obama is now completely unconcerned with his future in politics. He's much to young to hail mary his second term like this and there's no precedent that would indicate anything of to sort. Also, he's going to be focused on winning back the house in 2014. As it stands, he's in for more gridlock over the next 2 years given the split in congress.
Remember, this is the same guy that supported the NDAA, has increased drone usage both locally and abroad, and didn't take to well to the whole Bradley Manning/wikileaks deal (also, what was his stance on sopa/pipa). Obama is only for "open government" to the extent that it furthers his party's agenda.
Does any ex-president have a political career? Where would they go from the top? He's never going to have as much power and ability to make difference as 2nd term US President. It's now or never.
Ex-presidents do a lot of work that goes unreported once they leave the white house. They typically work directly with the president who's currently in charge on foreign affairs by meeting with dignitaries, they assist with humanitarian efforts, they work as part of the national convention (John Kerry and Jimmy Carter assisted Obama with his speeches and debates), and so on. Just because they aren't in the white house, doesn't mean they aren't active in politics. These guys have experience that is extremely valuable to anyone who's currently in or is trying to get to the white house. Also, remember that it takes a certain type of person to be president. Most of these guys would go insane if they just went back to their ranch once they left.
The President's Club is a great book that covers some of the ways ex-presidents stay involved in the politics of the day, even if you don't hear or read about it in the news.
My argument is that if it's something he things is good for the public, but could damage his status within his party or his party's opinion in the eyes of the public, he sill won't do it.
So you're telling me risky investments in possibly revolutionary startups can fail? If we go back to writing by PG, failures like this are proof we are making risky a enough investments to actually make a big difference.
Strategic conduct on the part of businesses isn't the same thing as smart (or ethical, or legal) conduct when it's done by governments. Everything has a context.
I agree. Which is why government making the risky investments that more conservative businesses won't in order to create the empowering innovations that will save our environment and improve our economy is a major positive for me.
And if it just happens to benefit major contributors and bundlers to the party of the President that is in power, well, that is entirely a coincidence!
I understand that. But not everything the government funds fails. I am instead disproving the case presented to me—the failure of Solyndra is not evidence of a failing government effort.
I worked for a DARPA contractor for years. Nerds all wank over how awesome DARPA is, and how great they are for putting money into all these blue-sky projects that may not pan out, etc. Yet the administration puts some money into technology that doesn't have an immediate benefit in killing people, and people flip their shit.
For context: DARPA has a budget of almost $3 billion. The risk-weighted investment into Solyndra was probably on the order of the low tens of millions.
You have to compare apples to apples. DARPA gives out grants. Solyndra was a loan guarantee. The subsidy represented by a loan guarantee is the value of the loan multiplied by the probability of default.
Reality is a sad place right now. People are so scared of it, they're willing to believe anything just to not have to think about what's going to happen when the music stops.
So, you write a vague and make large claims without substantiation. You get called out for not substantiating the points you're making.
And your reply to that is a post that's entirely devoid of any content whatsoever, and is literally 100% scare-mongering without even a single argument or claim (false or otherwise)?
Here is the thing with investments into Green Tech. The economically proper thing to do would be to have Pigovian taxes on pollution, and let the market sort out how to achieve the lowest pollution levels. I think > $1 trillion in new taxes, even if they were offset by reductions in income tax, etc, wouldn't really go over well. But that's the Right Solution (TM).
So we're stuck with things like subsidizing Green Tech.
Subsidizing never, ever created a good solution.
It always makes poor solutions, that cost more than they are worth.
Compare to subsidizing medicaments.
When they are subsidized then they cost more then when government lifts the subsidy.
If you want a good solution then make it fight for life in the current market, eventually it might win - in this case you will really get a good solution.
Gasoline prices are already subsidized. We spend megabucks on aid to the middle east, wars, etc there that isn't paid for by the users of the oil pumped from there.
Ideological handwaving never results in a good argument.
Here is the basic problem with the market for energy. Say I give you the choice of two candy bars: one costs you $1.00, the other costs you $0.75 and also costs some random third party $0.75. Which do you pick? The latter, of course. Everyone always picks the latter, and the end result is economically inefficient.
This is the same choice when it comes to energy. A Harvard study found that the externalized costs of coal range from $350-500 billion: http://www.reuters.com/article/2011/02/16/us-usa-coal-study-.... Fully half the true cost of coal power is externalized to people outside the transaction of power producers/power users. The market doesn't yield efficient results when costs can be externalized like this. That's Econ 101 level knowledge. There are only two ways to fix this market failure: either tax coal power to reflect the externalized costs, or subsidize green tech to compensate. In our political system new taxes are pretty much impossible, hence we adopt the latter solution.
Taxes are dodge-able, additionally, they have a long lead time (accountants have to establish that YUP THIS IS PERMANENT and make recommendations to the business departments) then and only then do prices definitely stay in the place that makes green tech cheaper.
Additionally, if no green tech change occurs, then you're stuck with the job losses by lower consumption of the good you're taking, but don't get the job gains of the good you're hopping will spring up to replace it.
So from a economics perspective, seems like it might be the pure way to go. From a policy perspective, it's iffy.
Why can't we just build new, safer nuclear power like India, China, Japan, and basically everyone else are building right now? Whoops, the left has demonized nuclear power so much in this country that people fear it more than coal!
It always sounds great to be "investing" in infrastructure or energy or whatever. But pols don't invest, they cater to voting blocks. Politics can't solve these problems.
The right has been just as much of an impediment. All the places it makes sense to store nuclear waste are red states who don't want it in their back yard. And their going apoplectic at any country trying to develop nuclear technology doesn't help the public perception.
The reality is that the market left alone won't solve these problems, and politics can't solve them perfectly. What you're left with is the state of human existance: muddling along.
> "Skilled immigration? They don't vote for Dems. Unskilled immigration is all he cares about."
Uh...
Democrats own the minority vote, which constitute a huge portion of the skilled immigration this country sees - the two largest contributors are China and India after all.
Okay, so excluding minority immigrants, lets look at skilled, white immigrants - the bulk of whom are coming from openly socialist countries - UK, France, Germany, etc.
So skilled immigration is pretty guaranteed to increase the base for left-leaning folks and minorities, both of which are traditional strongholds for Democrats. Why wouldn't they do this?
Not to mention Democrats have, in this election at least, demonstrated that they are able to rally a substantial base of educated, working professionals to their side. So even with non-immigrants, "skilled labor" is hardly synonymous with Republicans.
Doesn't say anything there about defending internet freedom or net neutrality.
Not that Romney would have, but it can never be pointed out enough that we're not given real choices with these elections. Given that 98.5% of the electorate voted for one of the two bozos, it's clearly not being said enough.
America has HUGE minority rule issues. I predict 2016 will have a major non R vs D theme of "Swing state vs everyone else".
Reforming states to something that doesn't cause third parties to be spoilers (by using a voting system such as IRV), probably in the NE to start, is likely the new wave that gets us out of this mess.
Please not IRV. If we're going to change voting systems, Approval Voting is better in every conceivable way. (It's simpler, closer to what we do now, produces the condorcet winner more reliably, and doesn't have the crazy non-monotonicities that IRV does.)
IMO the republican party has a lot of energy thrashing it about right now, and could be an agent for change if they think it will give them an advantage.
ESPECIALLY if it starts to fracture, I could see the pieces start to try to salvage the coalition out of it, a coalition which would require the survival of third and fourth parties.
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