What if your model takes into account the fact that if income taxes are high enough, startups stop happening? These economists tried it, and found the optimal tax rate is 29%. https://www8.gsb.columbia.edu/faculty-research/sites/faculty-research/files/finance/Macro%20Workshop/toptax.pdf …
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Top income isn’t the only or even the best motivator. You know more founders than anybody. How many tell you they did it “for the money”?
Their motivations change. For nearly all, at the beginning, the money is really important. The successful ones, once they start to feel they have enough (usually by selling their own stock in funding rounds), gradually stop caring about it so much.
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Ok. Opposite for me and a sample of two other founders I know. Original ideas, creative personalities unsuited to dull work, promise of upside but $10M as satisfying $1B. Anecdotal.
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Right and if we're comparing a 40% and a 70% rate this is only 2X income required for the same cash in hand.
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You can't make an equation between "starting a startup for the money" and "lower taxes"... Money is an important factor, but I'm 100% sure 99% of the startup founders don't think about paying taxes when they start a new venture. 2 different things.
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That may be true, but if you're just using money to keep score, then if taxes make it harder to get to $100M then $100M can just become the new $200M. It's just a scaling factor at that point.
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Is "the money" that you're talking about a few million dollars, or a few hundred million dollars? Big difference. Are we talking about tax system that would make it no harder for a founder to make a few million dollars, but might take a significant chunk of a few hundred million?
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I certainly can't think of all that many founders who tell me they're in it for the money. Nice side effect, of course... But I think as a percentage of motivations it's pretty small.
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That’s literally the definition of diminishing returns and why it’s in society’s best interest to inflict decently graduated tax rates on people who have moved beyond money as motivation.
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I started my company in an incubator. None of the people focused on money made it. The successful ones were just passionate about their ideas and are happy to make a living. This paper is so skewed and plain wrong. It doesn’t even take personal holdings into account.
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That's what we all suspected: the hackneyed statement of "I don't do it for the money" of the founders and the "If the motivation of the founders is the money, I don't invest" of the investors, is bullshit. I see it everyday.
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