Monday, October 09, 2017

Lower tax rates for corporations?

Marcus Ryu, who in 2001 co-founded and now runs a very successful software company (Guidewire Software, revenue of a half-billion and market valuation in excess of 5 billion) says it makes no sense. 

Those thinking of starting a company are not doing it because taxes are now lower. They are doing so for a variety of reasons:  a compelling idea, ambition for fame and fortune, a desire to be one’s own boss, frustration with one’s employer. 

Those running a company don't invest more because of lower tax rates. In the words of  Warren Buffett, “I have yet to see” anyone “shy away from a sensible investment because of the tax rate on the potential gain.” 

Furthermore, the tax rates on capital gains (the primary way that founders of successful start-ups make money) are already far lower than rates on ordinary income.

There are plenty of opportunities to improve our economy, such as investing in our schools or bringing our infrastructure into the 21st century.

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