Will Tax Increases Kill Entrepreneurship? One Entrepreneur Says No Way

As with almost all issues in the current Congress, the debate over extending the Bush-era tax cuts for the rich has become extremely polarized and partisan. Republican supporters of extending the tax breaks are arguing that failure to do so will destroy motivation for new entrepreneurial ventures.

Not so, says one successful entrepreneur. Paul Abrams, founder of BreakUpTheBigBanks.com claims "tax rates have never played a role, positively or negatively, in the ability to raise capital or decisions to invest it." He argues that the benefits gained from higher tax revenue (better health care, infrastructure, retirement security, etc.) far outweigh any alleged drain on capital insofar as they raise confidence in the future, a key motivator for investors.

He explains that fluctuation in tax rates have little to do with business investment because true entrepreneurs

Entrepreneurs invest in (what they hope are) exciting new enterprises, or those in early-stages of growth. Once companies become profitable, their needs for risky investments recede.

An entrepreneur wants to start these new businesses because he/she has an awesome, amazing, neat, cool, nifty, revolutionary, game-changing idea, concept, invention or approach to a market. These people do not care about tax rates, they want to see their ideas flower.

Abrams does not claim that tax policies are totally neutral in their effect on entrepreneurship. There are some progressive tax policies that he says could actually act as positive stimulants for business investment.

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