Live data from Hacker News

U.S. Tech Funding – What’s Going On?

a16z.com

191–196 of 196 posts

Re: U.S. Tech Funding – What’s Going On?

#191

Earlier quoted context omitted.

There's no logical reason not to tax investors. They aren't unique butterflies that make the economy flourish. Investment is just one component of a functioning economy. So is education, saving, consumption, etc. Too much focus on one is not a good thing. This is one of the reasons we have so many investor bubbles. Also, the wealthy have no other options than to invest their money. What else would they do with it, pu…

On the contrary, there is no logical reason to tax investors/savers. I strongly recommend this article by Scott Sumner, who works through the details carefully. http://www.themoneyillusion.com/?p=28842 The key point is that taxes on investments create distortions while taxes on consumption don't. It's even worse if you tax different investments differently (e.g., interest vs cap gains, short term vs long term cap gai…

I read it and I don't get it! Here, take a look:

> Suppose we want to raise revenue with a present value of $20,000...We could have a wage tax of 20%, and raise $20,000 right now.

OK, sure.

> In contrast, an income tax doubles taxes the money saved, once as wages, and again as capital income . So now it’s $40,000 consumption this year, and only $72,000 in 20 years ($80,000 minus 20% tax on the $40,000 in investment income), an effective tax rate of 28% on future consumption

So the line of reasoning is:

1. The government wishes to raise $20k NPV in taxes

2. A 20% wage tax or VAT will accomplish this exactly, but a 20% income tax will raise $24k NPV, which means it is an effectively higher tax

3. Therefore income taxes are worse than wage taxes or VAT.

But that doesn't follow at all. The correct conclusion is that an income tax raises the same revenue with a lower nominal rate. That doesn't by itself make an income tax better or worse.

Re: U.S. Tech Funding – What’s Going On?

#192

Earlier quoted context omitted.

On the contrary, there is no logical reason to tax investors/savers. I strongly recommend this article by Scott Sumner, who works through the details carefully. http://www.themoneyillusion.com/?p=28842 The key point is that taxes on investments create distortions while taxes on consumption don't. It's even worse if you tax different investments differently (e.g., interest vs cap gains, short term vs long term cap gai…

I read it and I don't get it! Here, take a look: > Suppose we want to raise revenue with a present value of $20,000...We could have a wage tax of 20%, and raise $20,000 right now. OK, sure. > In contrast, an income tax doubles taxes the money saved, once as wages, and again as capital income . So now it’s $40,000 consumption this year, and only $72,000 in 20 years ($80,000 minus 20% tax on the $40,000 in investment i…

The issue is that an income tax (which applies to both capital and wage income) taxes savers at a higher rate than spendthrifts.

I.e., if Steve blows all his money on hookers, he pays a 20% tax. However, if Sally judiciously saves her money for a rainy day or unexpected expense, she will be paying a 28% tax rate.

Re: U.S. Tech Funding – What’s Going On?

#193

Earlier quoted context omitted.

Imagine you have a business; Would you rather have a customer or an investor?

Imagine you're on a lonely island. Would you rather eat all you can or conserve food to the extent possible? Earth is humanity's lonely island. (I realize it's more complicated than that because billions of men on Earth do not make decisions in the same way that a lonely man on an island does. All I'm saying is that it is still more desirable to invest than save when we can, at least past some point. The extent to wh…

We are clearly discussing two different things.

You are saying overconsumption by the super rich is ultimately environmentally damaging. (which i don't disagree with)

I am saying underconsumption by the middle/lowerclass is immediately economically damaging.

Prioritizing investment over consumption leads to inequality and poor economic outcomes.

Re: U.S. Tech Funding – What’s Going On?

#194
post #3

"And the tech IPO is basically dead. The tech IPO market is at early 1980's volumes. For most of the 90's the majority of tech funding was public. This has reversed. It used to be routine to hit $20 million in revenues and go public. Not anymore." It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley. Before an engineer might vest after four or five years, just as the company is…

"It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley." No, it's a consequence of low interest rates. "Private equity" is mostly borrowed money. Think "leveraged buyout", not "all-cash deal". Here's a list of the top 10 private equity lenders for 2011.[1] #1 is Bank of America. Back in 2000, 1-year Treasury bills were paying around 5.11%. Today they're around 0.26%. Debt financ…

And the oft quoted "inflation adjusted" valuation of companies proves to be misleading, which it does in the mentioned presentation. With the current climate of Feds still pumping money and keeping rates low, inflation hasn't taken off.

Re: U.S. Tech Funding – What’s Going On?

#195

Earlier quoted context omitted.

Imagine you're on a lonely island. Would you rather eat all you can or conserve food to the extent possible? Earth is humanity's lonely island. (I realize it's more complicated than that because billions of men on Earth do not make decisions in the same way that a lonely man on an island does. All I'm saying is that it is still more desirable to invest than save when we can, at least past some point. The extent to wh…

We are clearly discussing two different things. You are saying overconsumption by the super rich is ultimately environmentally damaging. (which i don't disagree with) I am saying underconsumption by the middle/lowerclass is immediately economically damaging. Prioritizing investment over consumption leads to inequality and poor economic outcomes.

I dont distinguish between billionaires and middle class folks in this respect. Overconsumption by the middle class us likely much more environmentally damaging. Does it drive the economy? Perhaps; if so, it's a problem. And certainly the Russian middle class consumes more of what it makes than European or American because lacking reliable property rights they do not trust investments to pay off.

Re: U.S. Tech Funding – What’s Going On?

#196

Earlier quoted context omitted.

We are clearly discussing two different things. You are saying overconsumption by the super rich is ultimately environmentally damaging. (which i don't disagree with) I am saying underconsumption by the middle/lowerclass is immediately economically damaging. Prioritizing investment over consumption leads to inequality and poor economic outcomes.

I dont distinguish between billionaires and middle class folks in this respect. Overconsumption by the middle class us likely much more environmentally damaging. Does it drive the economy? Perhaps; if so, it's a problem. And certainly the Russian middle class consumes more of what it makes than European or American because lacking reliable property rights they do not trust investments to pay off.

Seems to me like an argument for sustainable manufacturing, rather than anti-consumption

Curbing consumption is immediately damaging to the economy. The better solution would be to heavily tax unsustainable business practices, rather than try to curb consumption. If you go after consumption you give more power to the super rich, while simultaneously doing nothing to discourage environmentally unsound business practices.

Why is it better to continue producing products in an environmentally unfriendly way with lower consumption of goods, rather than lowering the production of environmentally damaging products, while raising consumption rates of sustainable products?

Go after the supply not the demand.

Post reply on HN