Will Obama's "Buffett Tax" discourage Entrepreneurs?
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Fremont: U.S. president Barack Obama has proposed Buffett Tax on people making more than $1 million a year to compensate his deficit economy. Is this a part of initiative of the president's plans to curb deficits by $3 trillion to rile up voter emotions by accusing the rich of not paying their fair part in taxes? Is it all for the upcoming U.S. presidential election the next year? Whatever may be the reason behind proposing this tax, everyone is eyeing to know how it is going to affect the entrepreneurs. If the tax is levied upon the people earning more than a million dollar a year, it is going to confine the huge investment made by them, as huge earning means huge tax payment. This tax will even discourage the country's most productive entrepreneurs from creating jobs for millions. A few percentage increase in the tax rate might not affect the availability of VC funding, human talent and the competitive landscape, but will discourage the initial goal of the entrepreneurs of earning million of dollars. The tax rate for the job creators in the U.S., i.e., the entrepreneurs, are less on capital gains, but this rise in the tax might discourage them. The Buffett Tax can be another blow to the foreign entrepreneurs dwelling in the U.S. after the startup visa that they require to sustain there. With three conditions attached to gaining the visa, their possibility of survival with the increased tax has hardened. With business owners accounting to 40 percent of American capital and firms with less than 500 employees employ half the private sector workforce, the growing firms will face a slowdown in their augmentation. Along with it, a matter of concern is about the small number of economically important firms that collect sizable revenue, employ others and have the potential to grow and hire more workers. These chunk of entrepreneurs are going to be hit by tax increases on higher incomes or on capital gains. U.S. is currently undergoing on a brain drain situation. With this two added ingredients, the cake might get spoilt. But, when it comes to entrepreneurs, they create a business because they enjoy it, they love the challenges and they think that they will be able to make a lot of money and bring a lot of difference by creating a number of jobs. With the current financial situation going in deficit, it is required by the government to put an extra burden of on the rich. But, this is based on two false premises. The first being that the tax increases on the rich are a solution to current financial deficits and the second, the argument often put forward that increased tax burden on the rich will not affect the economy. This is not true. So what can the U.S. government do to decrease the financial deficit? They can instead of raising tax rates, close the tax loopholes and broaden the tax base so as to raise revenue to its historic average along with controlling federal spending. This can be of certain help for the U.S. government to entice foreign entrepreneurs and increase the flow of entrepreneurship in the country.

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