Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Richard Luck
But the man knew on which side his bread was buttered. And he knew fromwhere the money for that “butter” came.
The people at the top of the tax bracket who are in the cross-hairs of theseinitiatives are the same people whom we go to—hat in hand—asking that theywrite us a large check based upon little more than our good name and thepromise of our company’s vision. When this group of people is forced to send alarger portion of their cash on hand to the government, they simply have less topersonally invest in my business and yours. So when I hear entrepreneurs saythat they’re quite comfortable taxing the hell out of the very people that help fundour companies I can’t help but think that we are, in a very real sense, biting thehand that feeds us.
New York state has seen a steady stream of well-heeled individuals and familiespack up their bags and move. In an eerily prescient move, George Soros’ long-time partner, Jim Rogers, famously liquidated all of his real-estate holdingsand moved his entire family to Singapore just before the economy took a nose-dive. Maryland’s populist millionaire tax scheme has backfired in a stunningand significant way, with nearly a third of all the state’s millionaires moving out ofstate before the tax bill comes due.
If even one of these people decided to pack up their bags and move to amore “favorable” climate the potential negative impact on our company’sfinancing options would be significant.
As a business owner I’m constantly balancing the checkbook. I make decisionsabout where we spend our money and where we don’t based upon how muchcash we’re projected to have at the end of the period. This includes trying todivine how much we’ll have to spend on taxes and what impact that will have onour cash-flow. In some cases I can directly lower our tax bill by instead spendingthe money on people and/or assets. Giving a developer a cash bonus becausehe spent his vacation developing a widget that increased conversions by 15%has a direct and positive impact on our company. He’s more incented to spendeven more of his time building features. When we buy an espresso machinefor the office we increase productivity (no more skipping out to Gypsy’s for alatte). When we increase productivity, we get more done. Which means weearn more. Which means we have more money to spend on people and assets.We create a feedback loop. And when we hire an outside design firm to do themockups for our new site, we’re further spurring the economy by supporting alocal business that has employees and assets and a feedback loop of their own.Every dollar we invest in our own business creates momentum and keeps theflywheel spinning.
Lastly, I fully plan on being in this newly defined tax bracket. And I sure as helldon’t want to pay up to 9% of my income to the state when I am. I think this isthe mental leap that many entrepreneurs are unable to make. They look at theinitiative, read the numbers, they see the cut-off, and they think hmmmm—thatdoesn’t affect me. But they never finish the sentence and admit to themselvesbut someday soon it will.
I’ll be the first to admit it: I love what I do for a living. I have done it for next tonothing when cash-flow demanded it. But I have bills to pay. I have kids to putthrough school. And I have other things I would love to do if I had the money todo them.
Richard Luck is the Founder and CEO of Loudlever, a company which buildstools for writers and publishers.
When he isn’t preoccupied with railing against punitive tax measures, he likes tospend time with his wife and 3 sons. He’s also been known to write about theintersection of publishing and technology for Pif Magazine, as well as post anoccasional rant on his blog: AGuyWithAnIdea.com