

Silicon Valley's Fiscal Sacrifice - jacoblyles
http://jacobexmachina.blogspot.com/2013/01/the-fiscal-cliff-silicon-valleys.html

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cjkarr
I'd be a bit more sympathetic to Silicon Valley companies if they didn't send
so much of their profits overseas to avoid paying the same taxes meatspace
companies have a harder time avoiding:
<http://en.wikipedia.org/wiki/Double_Irish_arrangement>

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bicknergseng
I read the "no one can say that Silicon Valley is not doing its part" and was
strongly reminded of Google's 2.4% overseas rate
[http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-
sho...](http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-
how-60-billion-u-s-revenue-lost-to-tax-loopholes.html). Or Twitter's massive
breaks to locate in SF. I'm not blaming them or anything, I just think
portraying them as victims of high taxes and then lamenting about state and
federal budget issues is so wildly hypocritical and misguided.

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rayiner
Two big problems with the article:

1) It looks at the capital gains taxation issue in isolation, instead of in
the context of the whole tax code. All taxation reduces the activity being
taxes. However, taxing one kind of activity (investing) less than another
(labor) simply distorts the relative proportion of each activity, which is
arguably worse.

2) It portrays the exceptional case, albeit common in the specific case of
Silicon Valley, as the general case. Yes, if you pull the profits out of a
successful venture into your personal bank account, then decide to reinvest
it, you will lose some in capital gains taxes. But, e.g. when Apple takes iPod
profits and reinvests them into inventing the iPhone, they do not pay taxes on
it at the intermediate stage, because R&D expenditures are tax deductible.

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jdavis703
Part of a permanent tax fix will hopefully be making re-invested capital gains
not subject to any tax.

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HistoryInAction
Startup Act contains provisions to that effect.

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mbetter
If Silicon Valley can't absorb the additional capital gains tax, why is it
located in California?

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error54
Agree. There's a plenty of other places in the US with much lower tax rates
and the standard of living is just as high. I know Silicon Valley is a great
place to network with like-minded people, but I've never understood the need
to move and start a business in one of the most expensive places in the
country.

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phamilton
It's January and we eat lunch on the picnic benches outside our office.
There's an ocean right here and good skiing less than 5 hours away.

People who can afford to live here will never leave. Those are the people the
rest of us need to be around.

