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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I've seldm had entrepreneurseven know whatthe tax rate is. Ofcourse investors do and more investment capital becomes available but if great entrepreneurs is the rate limiting step (my view) then within bounds tax rates don't matter
They don't know the tax *rate* (I don't myself), but they are highly aware of what happens to earlier cohorts of founders. When someone who was a few years ahead of them in school is rich from a startup, it's hugely influential.
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Disappointed in your train of thought Paul.
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I disagree Paul. I’m an entrepreneur. The amount of money that other entrepreneurs made has never been a driver. But seeing that they were able to invent and create new things that they could bring to the world and have millions use them surely did.
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But if the drive of your role models was watching former entrepreneurs becoming rich, you wouldn't be driven either.
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But they will still be rich even if the marginal tax rate is 10 points higher. That example is still there. Moreover, the higher tax hits their alternative career too. With uncertainty, it is likely a wash.
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And when founders "become rich", it's capital gain anyway so I don't think this income tax discussion is relevant
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Taxes never stopped anyone from inventing/innovating anything. It stops people from investing in arbitrage schemes for sure but that’s a feature not a bug.
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Not formation, but would it affect the other end? Selling a company that will net a founder $10M versus slogging for another 5 years to get 3x the exit value but $16M net might be a real choice given lower utility?
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IMO the industry is better off without those people
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