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Amid Fiscal Uncertainty, Venture Capital Is Way Down In Silicon Valley
Hugh Pickens writes "With the 'fiscal cliff' just weeks away, Chris O'Brien writes that venture capital fundraising in silicon valley is down, the amount invested is down, the number of folks investing in venture capital is down, and the number of VC firms and partners are down. 'The people I talked to in the industry sounded grim even as they tried to make the case for optimism,' writes O'Brien. 'Still, it remains difficult to identify a clear path for turning things around for the battered venture capitalists who make Silicon Valley hum.' So what's wrong with the VC industry? The problems are many and complex but they can be boiled down to one thing: Not enough exits. For the size of venture capital being raised and invested, there simply aren't enough initial public offerings of stock or mergers and acquisitions to generate the returns that funds need. Venture insiders blame the global economic uncertainty. They believe that is part of the reason that giant corporations, which have amassed huge piles of cash, are just sitting on it, rather then using it to acquire startups. 'The numbers are way down,' said Ray Rothrock, a partner at Venrock. 'All these companies with these fantastic balance sheets, and nobody is really buying anything. With all the uncertainty they're facing with the economy and taxes, buying little companies is way down on their list.'"
Investors may have to make their returns by the companies they invest in making successful products that people want to buy. Disaster.
Remarkably verbose article. Somebody's getting paid by the word... The TLDR is: "much like the rest of the economy, the velocity of money is on the decline in the VC/startup field".
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
Much of the VC activity(and startup acquisition by larger outfits) in the valley has been based on absurd speculative bullshit only slightly less risible than pets.com. Now, with the supply of bigger suckers on which to unload your worthless stock in some 'disruptive' Web2.0/mobile/social/bullshit apparently drying up a bit, non-idiots are staying away.
Good heavens, whatever shall we do?
Starwars was a merger long over due.
Netflix looks weak.
AMD is in the wings.
Just because google, apple, and microsoft aren't buying every month on doesnt mean a whole lot of fiscal uncertainty.
It just means there isn't a real motivation to swoop in before your competitors beat you to the punch.
It's good to take a break and take a breath in between spending 100 mil.
Seriously if you need a idea to throw your money at.. how about flying cars that drive themselves with solar energy that let me connect with my friends and tweet our international pub crawls while giving us discounts on our next bar in queue.
BTW how's groupons stock doing. Oh right it's only down 85% for the year.
I can not blame them. I would not consider investing until this economic shitstorm is sorted out. If you have money and you truly think things are going to get real crappy soon you would wait also.
You have better odds in vegas than with a random startup right now....
Only if all your money is invested in gold. I'm moving my money in my 401K to the government securities fund so I wont make any return but at least I may not lose all of it.
WW3? Iran? Heh, Whatever. War is good for investment, lots of money to be made. Unfortunately it's got to be paid for by the tax payers.
Not trolling. Just expressing the opinion that vulture capital money does more harm than good in Silicon Valley.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
you voted for it.
With all the uncertainty they're facing with the economy and taxes?? ;)
I don't get it. I was told there are two thing in life that are certain. Economy and taxes.
Or at least something like that
Privacy is terrorism.
Really? Someone told me that was all being paid back.
It's a great sign. VC money distorts reality in Silicon Valley. I've lived here for 20-odd years, and VC money is at the root of nearly every problem Silicon Valley has.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
Those piles of cash the corps are sitting on is the bailout money that was handed out by the government. We wouldn't want it to get in the wrong hands now, would we? We gotta keep the squeeze on to reduce expectations. You can't justify all the coming austerity measures if the economy is all flush with cash. Abundance is poison...
Where are the '-1 outright lie' or '-1 willful ignorance' mods when you need them?
Fine. We're certain that your tax rate will be going to 39.6% come January first and Greece won't be paying your bonds back.
Feel better? Now get to work.
Have gnu, will travel.
Citation needed. Provide one or shut the fuck up.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
Too little innovation, too many apps like "Mobile photo sharing - FOR CATS!"
The funding game is dying, slowly. The future is in the 37 Signals and GitHubs of the world. (Both took funding I believe, but only after they were profitable : if the VC is how you keep the lights on, you're doing it wrong) Even more significant are the bootstrapped startups, the 1-4 person operations, that make great products that actually solve problems. (In other words, the anti-Instagram)
The best thing about a boolean is even if you are wrong, you are only off by a bit.
Rather THAN. Seriously.
We Apprentice Developers and Designers
Cleary they have to be wrong. GOP says that people with money will always invest their cash thus creating more jobs.
Our government (President and most of Congress) are not willing to implement austerity. The debt increases by over a trillion per year, and that's the plan! That's what the actual Obama administration numbers say the future holds, an extra trillion in debt per year. (Based on their assumptions, that trillion will decline down slowly starting in three or four years, but it would take a tiny uptick in the interest rates to wipe out that assumed decline and make it go up.) The unfunded mandates in the Affordable Care Act (a/k/a "Obamacare") fall squarely on business, so lots of businesses are laying off people... the unfunded mandates are a step function, and lots of businesses are firing until they drop down a step or two, and they plan to freeze their headcount forever to avoid the additional financial burden. Dodd/Frank is causing havoc, Sarbanes/Oxley isn't helping any either. There hasn't been a budget in four years, the credit rating of the USA has been downgraded and the credit agencies are broadly hinting that they are about to do it again. Obama has signaled clearly that tax rates are going up soon, and he has the political power to make that stick. Obama is floating a "carbon tax" to make all energy use more expensive as well.
In this environment, who could have foreseen a reluctance to take financial risks?
There is a startup hiring near me, and they look interesting. Instead I am clinging to my less-exciting but stable job. It isn't just investors who are worried.
The going over the fiscal cliff and the hitting the debt ceiling are two separate things. We won't hit the debt ceiling until at least mid January...
He said Asia/canada not EU. It is true that taxes are higher than in the US. But the overal cost is lower. Before coming back to Academia, I was part of a startup. With the health care support we have in Canada, as well as other benefits, the lower loaded cost of an employee about makes up for the taxes. He also said undertainty. A higher tax rate isn't what kills it, as Warren Buffet has pointed out time and again. Its the endless bickering and inability to settle on a solution that kills it. If the GOP in the house is willing to meet Obama part way, then the situation will improve.
Atlas stands on the earth and carries the celestial sphere on his shoulders.
Yah, Canada is a good investment, n'est pas?
rewriting history since 2109
The reason why startups can't grow big.
I buy silver. I've actually accumulated enough now where it's hard to lug around. It's cheaper, and works on werewolves.
The going over the fiscal cliff and the hitting the debt ceiling are two separate things. We won't hit the debt ceiling until at least mid January...
But both are manufactured financial crisis designed to panic the public into accepting policies that are not in their best interests.
and is building a 12th. The are also a very long list of unneeded military weapon systems that are still funded and rampant corporate welfare. When conservatives want to talk about real fiscal responsibility and not just making the really rich richer than they might be able to say the words "financial cliff" without me laughing at their pure greed.
Amid Fiscal Uncertainty Venture Capital Is Way Down In Silicon Valley
Ummm, is this a good time to invest in Slashdot? :)
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
so you would support an end to corporate welfare. The US cannot afford it, especially giving it to companies having record profits each year.
Maybe since the hoard-cash-and-don't-make-jobs-so-Obama-loses plan didn't work out, they should just buy big TVs and a couple of kegs and just live it up.
Sorry, but gray text on gray background is making my eyes bleed.
and you are correct...
You seem confused, bro. Vulture capitalism is a derogatory term for the private equity industry, not the venture capital industry.
This is nothing but FUD.
"Fiscal uncertainty" isn't going to dissuade anyone from making a buck if it can be made.
And in real terms, in real, honest-to-god terms of providing good lives and good jobs for people right here in this country, I'm not all that sure that "venture capital" really means all that much. Oh, it means a lot to those who have it, and for a few minutes it means something to a handful of their pals, but if there is going to be a resurgence of innovation and growth in this country, it's not going to come from "venture capital". Because, as I said, if there's a buck to be made, even if taxes are high, people will line up to get it, regardless of the tax rates. Remember, this whole thing is over whether or not we're going to go back to the tax rates we had during the Clinton administration when everybody was making money.
There was venture capital in every hot and cold tap during the 90s, and all we got was this lousy popped bubble.
Real federal tax rates have never been lower for "venture capital". Is paying 14% really so onerous?
The whole "John Galt" story shows just how incapable of self-examination our economic elite have become. The notion that if the captains of industry are so important - such unique snowflakes - that if they were to disappear there wouldn't be a line of people ready and able to jump into that spot is such an example of ego run amok. But we already knew the egos of our financial elite have reached escape velocity that they believe they are worth yearly incomes of over 1000 times what the average worker is worth. What kind of self-regard does it take for someone to believe that?
Let's see how well their little tantrum works out for them.
Their money has already been on the sidelines. I'm guessing that we're in better shape to do without them than they are to do without us. Fuck 'em.
You are welcome on my lawn.
The more I read the article and follow the links, the more I think that having the Silicon Valley venture capital boys clutching their pearls and running to the fainting couches might be a really good thing for our country.
You are welcome on my lawn.
Yeah, because taxes are SOOOOOooo much lower in Canada and the EU than in the U.S.
Well...actually, yeah in parts of Canada they are. And if the $7b in taxes goes through at the start of next year happen, I'm sure those of us up in Canada will see American companies flocking to Canada.
Om, nomnomnom...
Looks like you still do not get it. The cuts will not be "for a reason". Simply, there will be no money. I know, it's hard to imagine US government being out of money but this happened to many "great countries" of the past. Just ask Germans, or Russians, or Brits.
I have lived through one of those moments. You apparently did not. There is no "reason", or "cause", or "justice". At that point it's only about "surviving". It's not pretty. Until then enjoy your ivory tower.
Obama is willing to compromise, as long as he gets everything he wants.
Do you realize this is the exact opposite of compromise?
"First they came for the slanderers and i said nothing."
As I wrote above: it's not pretty. Especially sucks to be one of those whose lifeline is cut. Falling from the window is not pretty either. Try legislate law of gravity away.
It causes devaluation of cash. The only way to avoid it is to invest in something. And with the fed printing money (see QE, QE2, and QE3) we should be seeing it sometime in 2013. I'm hoping late 2013 or early 2014 but that doesn't seem realistic. Now with the type of QE they did, there is supposedly the option of undoing it somehow, but I'm a bit sceptical.
;-(
Why isn't it happening yet? My suspicion is that most of the money went nearly directly to the people who are hoarding it. If it's not circulating it ain't going to cause actual inflation. If this is correct, the Fed truely fucked up. A regulatory and tax climate that allows their last ditch effort to go straight into someones pot of gold would not only eliminate their ability to influence the economy, it would hand it over to someone else
It's been said that US multinationals are holding over a trillion dollars in offshore cash. So if we do get some signs of inflation they may just go on a buying spree to the tune of a trillion dollars. Watch for inflation to start small and then spike - at least for prices of things huge companies like to buy.
Yeah, because taxes are SOOOOOooo much lower in Canada and the EU than in the U.S.
Well...actually, yeah in parts of Canada they are. And if the $7b in taxes goes through at the start of next year happen, I'm sure those of us up in Canada will see American companies flocking to Canada.
You know, 7 billion in taxes is only about 200 bucks to each Californian. How much do you think it costs a company to move out of a state even? My guess is that for a small company it'd be on the order of tens-of thousands, without factoring in training costs and lost profits during the transition.
> Simply, there will be no money.
Getting people to believe that is the trick. It's not Republicans vs. Democrats, either. Both parties have spent more than incoming revenue (albeit on different things at times, and in different amounts).
Case in point: I work in Jefferson County, Alabama. It's bankrupt. (Literally. As in the largest municipal bankruptcy. Ever.) In spite of that, a few months back, the County Commission notes that there are condemned homes from the tornadoes of April 27, 2011. They declare it an emergency and SPEND MONEY THAT THEY DON'T HAVE on the "problem."
There is a fundamental disconnect here. No one wants to believe that the great, the powerful OZ^H^H United States could run out of money, but it could. And as someone else pointed out above, the WORST case would be for the government to just start printing money to cover the shortfall. That will be completely and utterly disastrous.
Trying to explain that to the average guy on the street is the trick. He or she just doesn't -- and WILL not -- get it.
Shoot, the average Guy On The Street has no idea what a sweetheart deal we have a present by having the world's reserve currency. If that should change to the Yen or some other currency, prices are going to skyrocket as well.
Cogito, igitur comedam pizza.
I'm actually responding to the two anonymous trolls that tried to say that welfare was more than the military budget.
Ahem... Military budget for 2010. 683.7 billion. http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Or, here's a chart.
http://www.usfederalbudget.us/welfare_budget_2012_4.html
Looks like Defense is twice as big as the welfare budget.
It took me 2 minutes to actually look at the data. I guess the two trolls never bothered to look into their own positions. Shame.
While I'm at it... From Wikipedia
CBO's preliminary estimates indicate the federal government spent $3.54 trillion on a budget or cash basis during fiscal year (FY) 2012 or 22.6% GDP, down 1.6% vs. FY2011 spending of $3.60 trillion. Spending fell across all major categories except Social Security and Medicare.[20]
Yup, Obama is out of control! Face it, Republicans blow up the deficit, democrats fix it. Republicans whining about fiscal responsibility are lying. They're the ones that have blown up the federal deficit with stupid unneeded tax cuts and huge military expenditures. Look at a fancy graph of federal deficits against presidencies.... It's freak'in obvious. Conservatives hate facts...
As much as they're trying to terrify us about this cliff, about the best thing that could happen to this country is if gridlock takes us right over the edge of the cliff. Taxes would go up... Spending would go down... the public would lose even more faith in our 2 political parties and maybe the military cuts would help us decide to pull troops out of at least a few of the hundreds of countries we have them stationed in.
The banks paid back their bailouts, for the most part, but the other industries have not. For example, GM still owes around half of their debt to the government (around $25 billion), and parts that they paid back were paid back in rather shady manners.
This is the time for compromise.
Obama is willing to compromise, as long as he gets everything he wants.
Ah, projection... What Republicans do to others, they imagine is being done to them.
The Republicans should have taken the offer they got out of Obama last year, now they'll have to settle for something they like less.
Do what thou wilt shall be the whole of the Law
The decline in VC spending did not start on November 7, and is not due to feverish fears of Obama. It dates to earlier this year at the latest, and is more related to spectacular flops in Bubble 2.0, stuff like Zynga's IPO going down in flames. It's not really Obama's fault that a lot of the tech bubble companies have no business plan.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Kickstarter projects are making up for it, most certainly.
You can lead a man with reason but you can't make him think.
Sarcasm detector calibration required.
Do what thou wilt shall be the whole of the Law
You seem confused, bro. Vulture capitalism is a derogatory term for the private equity industry, not the venture capital industry.
You must not live in Silicon Valley.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
Maybe the problem is "money".... what if we ignore money, does the US produce enough food for everyone to eat? Do we build enough homes for everyone to live? Do we have enough water for everyone to drink? Do we have enough electricity for everyone to stay warm/cool? Do we have enough natural resources for everyone to have a basic, yet livable, livestyle? If the answer is Yes to all those questions then the real question becomes why do we have the problems we are having?
Money was created as a way to exchange goods and services easily by a group of people that accept the money is worth some "quantity" of a real product (e.g., food, water, mineral), nothing more. The simple fact is that everyone could easily have the basics to life (shelter, water, food) in the US without problems and those who want to work (or can work) could have a lot more. But instead we have created a monster called "money" (that doesn't even exist, it's just bits in a computer for 99% of it) that denies a lot of people even a basic living condition (or gives just enough to survive semi-comfortably on). Now, don't get me wrong, this isn't some communist or socialist ideal, I don't buy into that model any more than capitalism; I'm just trying to point out that we have the resources to manage all this as a country, so why doesn't the "money" reflect that?
Tough question. We had market crashes during both, so depends on what you were invested in.
Turn off Fox. They're poisoning your mind, and stripping you of your ability to reason.
Corporations want the recession to continue. They make record profits during recession. They can use it as an excuse to lay off your coworkers, make you do the work of two people, and pay you less to boot. As if that's not enough, they tell you over and over that you must destroy your safety net and using the saving to cut their taxes, making things even better for them and even worse for you. They are conning you.
I'd like to refute your claims in greater detail, but the fact is that you haven't provided any details to refute. You're just insisting that Obamacare is somehow destroying the economy, but have you given any thought into how that could even be possible? No, of course not. The nice man on TV said so, and he said a bunch of other words that sounded smart, and he said them so confidently! It must be true!
vulture capital money does more harm than good in Silicon Valley.
Without VCs, Silicon Valley would not even exist. If you drive down Hwy 101 and look at the signs on the buildings, you would have difficulty finding any that got where they are without VC funding.
A good idea isn't enough to be successful in tech. You need the VC money to "get big fast". If you try to grow organically, you will get crushed by those with better judgement.
If the VCs aren't investing today, then there will be no new signs along 101 in five or ten years.
Beh. I'm a fiscal conservative, and to be honest unless you guys get your house in order there won't be much left. It's pretty interesting to watch from up here in Canada. Though never mind that the democrats idea of "cutting to balance" in that case was raising spending by 8%. Sorry the GOP had the right idea of blackballing the democrats on that one.
But hey, you've got all of a month and a half until the largest tax hike in history comes to fruition and kills the poorest economic recovery since the great depression comes into play. Personally from a currency traders pov, you guys have been in a depression since '08ish and all Obama has done has prolong any type of recovery by tinkering like hell with the markets. Using QE only does one thing though, make me more money.
Om, nomnomnom...
Vulture capitalism is a subtype of private equity.
Private equity(PE) tend to be limited partnerships with a fixed horizon of 10 to 20 years. They tend to specialize.
Venture Capital are PEs that specialize in funding firms that are in start up mode. i.e., are young and not profitable. The idea is provided money and management experience and hit a home run.
Then there are the “distressed” and/or “turn-around” PEs. They will either 1. Come in and turn around the firm or 2. Dismantle the firm and sell it off for parts.
Bain Capital runs both types of funds. Warren Buffett does too. When he invested in Berkshire Hathaway is was in the declining cloth industry. For the next 50 years – well.
Just since the election, the Republicans (or at least John Boehner) have offered, as a supposed compromise, that if the government gets more income from better economic circumstances, tax reforms, and cutting waste, the republicans will allow the government to some of that money. Since he has absolutely no pwere to stop the government from recieveing any income that comes from such sources, this is like me offereing to allow gravity to work normally, and then claiming I've made a good offer of compromise and now the other side needs to give me something.
Really, that's a compromise only in Boenerspeak - cut the programs the Republicans say we can't afford, implement all the methods suposedly part of Mitt Romney's tax plan instead of the President's, fund every single defense and homeland security program the Republicans want, and then if revenues go up, he's willing to allow some of those revenues to be kept by the government, and maybe even spent on something besides the Republican priorities.
THAT's his first new 'compromise' offer since the election - give him and his party 100% control over existing funds and IF somehow the economy does better than he expects, he will let the government have the extra taxes this produces, and just maybe even let his opposition restart SOME of the programs for which he's demanding complete shutdowns. How does he propose to stop the government from accepting new tax revenues if they don't give him everything he demands? Does John Boehner actually have the power to unilaterally refuse new revenues and send them back to to the donors or spend them somewhere else? No? Then offering to give up that power is absolutely meaningless.
Who is John Cabal?
We don't owe these VCs certain profits. You take the risk. If your bets come off, great, enjoy your fortune after paying the capital gains taxes. If the bet goes bad, cry me a river.
The sense of entitlement these businesses have is astounding. It is your money. Keep it under the mattress if you want. Fund startups at your own risk. Or enjoy it on a beach in Cayman islands. We live in a democracy. We change our House every two years. We change the White House every four years. We change the Senate every six years, 33% every two years. The winner makes new rules. Wanna play? Fine. Wanna take your ball and go home? Good riddance.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Increase the taxes to 35% to 45% and Silicon Valley will be humming with $Billions of dollars. Yeah, increase taxes and Corporations gets tax credits. Billionaires and Millionaires also get tax credits when they pay their fair share of taxes.
Increasing taxes is called Public & Private Investments.
Obama is willing to compromise, as long as he gets everything he wants.
A Slashdotter with some mod points read this phrase, paused for a second in deep thought, nodded his head approvingly, and modded this glaringly sarcastic post "Insightful".
We're all fucking doomed.
The origin of most of the cash glut recently isn't direct governent bail outs, most of it is due to the massive liquidity injections (a.k.a money printing) being done by the Fed, ECB and various other central banks. They are in a massive race to the bottom to see who can debase their currency faster, juice their exports, and print money to finance massive sovereign debts.
This money printing is mostly propping up the stock market and corporate profitability. It makes it look like all is well, though in reality the value of the dollars those things are measured in is plunging more than the stock market or corporate balance sheets are actually improving. It is a creating an economy based largely on fantasy, and is creating a global Wiemar Republic.
What the Fed is doing is also referred to as Financial repression. It is artificially suppressing interest rates, punishing savers, especially seniors who shun the stock market, and giving debtors, including the U.S. government a giant finance your debt for free card. China has been using massive financial repression for over a decade to juice their economy too.
When central banks start printing money to finance sovereign debt, it is nearly impossible for it to end well. The only question is when will the house of cards they are building collapse.
@de_machina
The alternative to austerity is that you keep borrowing money. But people only let you borrow money if they expect you to pay it back with interest. That means you need to invest the money into something that has a return on investment. High pensions and high-end medical care don't have a return on investment, they are luxuries, and nobody is going to give you money for that.
As for the US economy, it has always been healthier than Europe's, due to lower taxes, more economic freedoms, and less regulation. Obama's limp "stimulus" did nothing other than waste a lot of tax dollars and make our debt worse.
I hope where you live is invaded first; you deserve it.
Contribute to civilization: ari.aynrand.org/donate
You think corporate profits are going through the roof? Great! Buy some stock.
I did! I made a killing! The markets have done great under Obama. But unemployment stays high because our corporate masters like the fact that they can pressure people into working longer hours for less money. Why would they want to start hiring again when they're getting along just fine as is? And meanwhile the millionaires on Wall Street bitch and moan about how awful it is that they might soon have to pay 20% taxes instead of just 15%, and how we should get that money by taking food and medicine away from poor people instead.
Every time Ron Paul started talking about this stuff on the campaign trail he got booed and everyone promptly stuck their hands over their ears and went "lalalalalalalalala............." I hope it holds together 3 more years so I can cash my 401K out before it's gone. A lifetime of savings and those fuckers are going to cheat me out of it. The sad thing is it's all the fault of the American people who only listen to what they want to hear. This two party shell game is going to end soon and the public will discover that no matter which shell you flip there is nothing under any of them.
First, Silicon Valley sent the silicon (fabs) to Asia. Then, they outsourced labor to Asia. Then most start-ups needed an "Asian talent connection" (H1-B visa, India/China engineering, etc.) to get funding. Then,the VC set up offices in Asia. Now, those offices fund Asian start-ups. Asia is where the action is, and that is where the money is, too.
VC's are trending down, Kickstarter is trending up. Isn't this how it should be?
Need Mercedes parts ?
This has little to do with the recession.
I go to occasional VC conferences in Silicon Valley, and get to hear what the VCs are doing. It's not looking good. The VC industry as a whole hasn't made money since 2001 or so. During the dot-com boom, many new venture funds were created, resulting in an influx of dumb money. Most of them haven't been profitable.
The problem is this. Before the dot-com boom, venture capitalists usually funded a startup which was going to make something. So they'd fund a few engineers for a few years, and about 1 time in 10, something good would come out that paid for the unsuccessful tries. This was a good business model and it drove Silicon Valley.
Dot-com startups weren't about technology. They were about marketing and market share. So they had to be funded beyond the R&D phase, well into the growth phase, before the winners and losers became clear. The loss per failure was much higher than when VCs were involved in technology startups.
This model has persisted in the post dot-com era and into the "Web 2.0" era. Most of the ideas one sees at VC meetings are minor variations on popular ideas. I've seen a presentation for a social network for cats. Some innovative technologies are proposed, but often they're not big wins.
About 1 in 10 VC-funded companies makes it big. 2 to 3 in 10 go bust. The rest end up in "zombie mode" - they generate enough cash to pay their expenses, but can't pay back their investors. A big headache in the VC industry is dealing with the growing army of zombies. They're more profitable alive than dead, so they're not killed off, but they're a net loss. There are a lot of half-dead "social" startups around. Tech startups tended to be sold off for the technology or shut down. That's what VCs mean by "lack of an exit".
US has the highest corporate tax rate in the world.
Canada top tax rate is 29%, vs 35% in the US (as of 2011). In California, home to a lot of VC-funded companies, high state taxes make this considerably worse. Also, Canadians get health care with their tax payments. In the US, we don't. The Canadian government and the governments in the provinces are more efficient, less corrupt, and much less anti-business than in the US. Your stereotypes about Canada and the US are out of date.
Every EU country and every Asian country has lower corporate taxes than the US. Around the world, the trend has been toward lower taxes except in countries that have enacted austerity plans and in countries with hardening socialist governments, like France and the US.
It's no secret which places are the best ones to invest.
I'm sorry, you seem to have mistaken Obama for Mitch McConnell, Eric Cantor and the rest of the Tea Party Republicans. They refused to compromise on anything right up until the last minute and I suspect they'll do it again. Now they have nothing to lose because they failed to make Obama a one-term President.
Sorry, but it's not Obama being a worthless piece of shit.
true, I missed it.
"First they came for the slanderers and i said nothing."
Every time Ron Paul started talking about this stuff on the campaign trail he got booed and everyone promptly stuck their hands over their ears and went "lalalalalalalalala............." I hope it holds together 3 more years so I can cash my 401K out before it's gone. A lifetime of savings and those fuckers are going to cheat me out of it. The sad thing is it's all the fault of the American people who only listen to what they want to hear. This two party shell game is going to end soon and the public will discover that no matter which shell you flip there is nothing under any of them.
Is it too late for you to move your 401k to dollar independent funds? More into commodities and hard metals?
I was raised on the command line, bitch
"Nemo me impune lacesset"
What's so disgusting about this is that the republicans lost the popular vote in the house elections, yet the gerrymandering especially in Ohio and Pennsylvania but also in smaller states such as Wisonsin gave them a huge majority in the house. Still Boehner thinks entitled to demand that Romney's program (succinctly summarized as "more for the rich") be implemented. I think they can get away with this because understanding the implications of the gerrymander takes a few seconds of thought.
To preempt the obvious replies: yes, Democrats state governments also gerrymander, and yes, Florida actually enacted laws against it. Neither means that the republicans won this house election.
If you're intending to cash in your 401k and it is currently in stocks, can't you move your 401k into safer instruments gradually before retirement? If so you should be moving it gradually to cash starting right now, before you are subject to massive volatility. With all the money printing going on, related boom and busts in stocks and other assets, and various wars about to start, the safest place to be is (paradoxically) cash, at least in the short term. Over just a few years, the money lost to inflation will not be as significant as the risk due to volatility in stocks, bonds or anything else.
Obama said "elections have consequences, I won" after the 2008 elections while explaining to the House Republicans why he wasn't going to compromise with them nor consider any of their ideas.
The Democrats had control of the House and the Presidency and enough control of the Senate to pass any budget they wanted. (Only a majority vote needed for budget related matters.)
In 2010, the Democrats lost the House in a landslide and then forgot all about that "elections have consequences" idea while essentially refusing to do anything about the budget in the Senate anymore. The House at least passed budget bills, etc... The Democrats in the Senate didn't even want to attempt to negotiate and didn't want to even consider passing a budget, not even anything modeled on Obama's suggestions.
The Democrats have shown a zero willingness for "REAL compromise". They don't even want to have a discussion in the Senate at all about the budget, let alone actually pass a budget and then go into a conference debate with the House to reconcile the two competing budgets. Instead, they just ignore the law about being required to pass a budget every year.
At least the House Republicans have been willing to put their ideas on the table and send them to the Senate as bills. Can you show us any concrete proposal from the Senate Democrats in return? Any start at all to negotiating to fix the record deficit spending?
The 2012 voters decided to leave the House in the control of the Republicans and the Senate and Presidency in control of the Democrats. The House was put in the position of originating budgets and tax bills by the Constitution. They've done that many times and the Senate and the President have just ignored them.
At what point do you stop blaming the only branch of government actually actively sending the other folks proposals and notice that the other folks are completely unwilling to even come to the table to suggest or debate anything?
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
Let's do a simple test to see if tax cuts are primarily responsible for the deficit. If they are, then the deficits must be a result of revenue decreasing over the years while spending stays the same, right?
Compare US Federal Revenue over time, which has gone from 22% of GDP to 34% of GDP with US Federal Spending over time which has gone steadily upward.
Hmmm, seems pretty obvious that the issue is that spending has gone way up over time. While revenue hasn't quite kept up with the massive spending increases, it's also gone way up over time. So how can you blame tax cuts with a straight face? The fact is that federal government revenue went up after Reagan and Bush's "tax cuts". Congress just managed to spend even more money than they had before.
The people in D.C. think that if you plan to spend way more and then change your plan to increase spending not quite as much, that's a drastic cut.
Here's a modest proposal, how about we cut spending levels to what it was 10 or 20 years ago in the bad old days and then watch as the deficit magically turns into a massive surplus?
One problem with letting D.C. take more of our money is that they just spend it. They have an essentially unlimited list of things people would like them to spend our money on. At some point we have to put our foot down and say they're going to have to prioritize some of it.
Sadly, that doesn't seem to be going to happen anytime soon, since people are just arguing about how much of a spending increase we're going to have and where the extra money's going to be especially increased this year.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
Lower corporate taxes maybe but higher salesTax and personal taxes. Simply lowering tax on companies doesn't make money magically appear.
Read your first link all the way through. PArticularly the part where it talks about effective vs. statutory tax rate.
Likewise, consider the humongous loophole known as capital gains in the U.S.
The Goverment never asked for it's money back. They only asked that the auto industry carry Ohio for Obama.
Sanity is the trademark of a weak mind. -- Mark Harrold
WW3? Not likely. World wars require entangled alliances of opposed powers. Those don't exist anymore. Even the mutual defense alliances (like NATO) wouldn't go in for that shit. You've got 3 major nuclear powers with orthogonal interests (US, China, Russia), and a smattering of regional powers/lesser nuclear powers with a general lack of alignment (and a near total lack of military cooperation agreements between them). None of that adds up to a world war. Even a nuclear exchange, so long as it wasn't between two of the big 3, wouldn't be a global problem.
Another costly, pointless regional war with $1 trillion in gold and blood down the sand? Yeah, that might happen.
Unfortunately it's got to be paid for by the tax payers.
But fortunately is doesnt have to be paid for by current tax payers. We can kick this can down a few more generations. Its just a number on a balance sheet.
"His name was James Damore."
"the Fed is [...] supressing interest rates and [...] punishing savers [...] who shun the stock markets"
Could that be because they want to motivate banks, companies and individuals to invest in stock markets instead of putting their money in term accounts, to create "more exits" that TFA is talking about?
That is not to say I disagree with most of what you say, but it's just to point out to some reasons that drive these decisions (although we may think they're dysfunctional).
Does a startup get financed because the investors hope that they will get a share of the startups profits from sales of their product in the future OR from said startup being bought up without ever generating a profit?
First = good.
Second = bad.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Question: what's the first thing that happens when the government gets more money?
Answer: they save it, getting rid of ruinous debt and only spending as much as is necessary to prudently invest for the future.
Nah, just messing with you. They spend it (I would say like a drunken sailor, but the drunken sailor has no credit and gets thrown out the minute his cash comes to an end) and they not only do that but borrow against future revenues so as to spend as much as possible, right NOW. After all, what sort of voter supports politicians who restrict spending and act rationally?
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
You'll bitch and moan too, because your retirement benefits are taxed with the same tax: higher capital gains taxes means less money for you, whether you have a defined benefit plan or a 401k.
Who cares? What kind of twisted view of our society do you have in which everybody is a corporate slave and in which lower productivity should be the goal? If corporations manage to produce the same stuff with less labor, that's a good thing. The labor that they don't hire is labor that can go off and do something new and useful. As far as I can tell, many US corporations still have far too many employees who do nothing productive.
Nothing good about VC's not wanting to spend money, that's a bad sign. VC's spend money where banks won't for startups that may be shaky, but still have a chance of launching a good and reliable product. About 10% of the money I had pre-election went into VC holdings. I pulled all my money out of the US market and changed it to asian/canadian fully the day after Obama won. I was actually rather surprised when I got a call from my brokerage who had gotten a call from the two US VC's that I had invested in begging me not to pull my money.
And that's exactly why he's saying VC is a bad thing. Because it means that the success or failure of a business is tied directly to the whim of idiots who do things like pull the plug because they're pissed off about who got elected president.
So taxes will go back to levels that prevailed during the most robust economy of modern times - sounds like a nightmare.
You'll bitch and moan too, because your retirement benefits are taxed with the same tax: higher capital gains taxes means less money for you, whether you have a defined benefit plan or a 401k.
See, you need to get a financial education. Neither defined benefit, nor defined contribution plan distributions are taxed via capital gains. It's all ordinary income. That's one of the trade-offs for tax free growth pre-distribution phase.
Also, in case the abstract thinking is too much, A society in which one day you have 100% employment and X production, is no more productive the day after 20% of the workers are laid off. Sure, an individual company may be, but the society... no. Not unless those workers actual get another job. Idle workers are not productive, whether they are on someone's payroll, receiving unemployment, or begging in the streets.
Meanwhile, based upon my interactions with actual companies, I'd say that their 'products' (physical or non-physical) have lower quality due to their lack of employees, so their production value has probably gone down in real terms.
Dude, he compromised so much on health-care that he literally passed the Republican health-care plan: it was almost identically the Heritage Foundation / Romneycare plan. As far as I can tell, it included virtually nothing of a Hillarycare-style, Democratic plan. So he basically compromised all the way to their side.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Not really.
Companies are holding an inordinate amount of money because they don't want to spend it. If the Fed was really threatening the US with high inflation, why the heck would anyone hold cash reserves? You describe it in the next paragraph: Why would savers be punished while companies that are, in essence, saving, are not?
Also, if you really think that the government will debase the currency Weimar style, then you must expect very high inflation, at which point, you can happily purchase inflation indexed securities straight from the treasury. Why then, does the TIPS market project inflation under the Fed target for the forseeable future? Really, you could make a mint.
Go read some Sumner or something.
What happens January 1st?, Bubba?
Why, nothing happens, Lunch Meat. Just keep spending those welfare checks and smiling.
First, Silicon Valley sent the silicon (fabs) to Asia.
Nice sound bite except it isn't actually true. Yes a lot of chips are made in Asia but a lot are made in the US. Intel, Cypress, Freescale,IBM and more all have large scale and very competitive chip fab in the US.
Then, they outsourced labor to Asia.
Yes, the labor intensive assembly work. Would you rather pay $15/hour in the US or $1/hour in Asia? If you can find a way to get the work done in the US for similar cost, fame and fortune await you. For more automated work (like chip fabrication), much of the production is in the US. The US has a nearly $4 trillion manufacturing sector.
Then most start-ups needed an "Asian talent connection" (H1-B visa, India/China engineering, etc.) to get funding.
Citation needed. I have worked with a lot of tech startups and they do NOT need Indian or Chinese talent to get funding.
Sorry, I was spacing out and didn't put that right. What I was trying to say was that a lot of people's retirement funds are bound up in investments that are taxed by capital gains (since 401k's are so limited anyway). Furthermore, the benefits of other retirement plans are effectively determined by this rate; i.e., defined benefit plans only have to give you as much return as you would get from investing the money yourself and paying capital gains. Furthermore, increasing capital gains taxes will increase the dependency of individuals on employer benefits, which is the wrong direction to go in if you follow how those have worked out in the past.
Not right away, but a year or two later, when those 20% of the workers have started new businesses, it is more productive: because 80% of the original workforce are doing the original work, and the 20% that were fired are now producing something else.
And you are welcome to buy from companies that have more service, more employees, and higher prices. Companies like Apple or AT&T seem to employ vast numbers of well-coiffed people in their stores that do nothing useful for me. That's why Chinese mail order Android phones and cut-rate web-only self-service mobile phone services are so much cheaper: they don't have the people or overhead. I prefer the latter and more and more people seem to be coming around to my kind of view. And as they do, corporate America fires employees.
VC's are trending down, Kickstarter is trending up. Isn't this how it should be?
Apples and oranges. Companies that need and can get VC funding aren't generally the sort that are going to get kickstarter funding. VC funding for the most part is for much bigger dollar amounts. Kickstarter is swell but it is more like a form of Angel investing and works on a smaller scale. (Not saying it's less important, just that it isn't how one is likely to get funding for a company like a biotech venture) Furthermore a lot of what VCs do isn't just providing funding. VCs provide a lot of management resources and expertise to try to grow the company. VC funding is expensive but it makes sense for certain types of businesses.
Isn't the VC craze most an irrational exuberance? I think a lot of VCs were investing in companies that had no hope of ever making money where the VCs were counting on an Apple, Google, or Microsoft to buy the startup to be their return on investment. Now that Apple, Google, and MS aren't shoveling their money to VCs, maybe they actually have to fund companies with business plans? Those startups seem to be a lot more rare.
Shhhhh, don't point out facts, that might ruin his poor little worldview that he's so highly taxed.
You need the VC money to "get big fast". If you try to grow organically, you will get crushed by those with better judgement.
Think so? I've worked with a lot of VCs and I assure you that most of them would disagree with you. Most companies are not actually venture backed. Venture capital is only useful for companies with particular funding needs. A typical VC investment will be between $2 million up to maybe $50 million, have a 3-5 year investment horizon, and will be VERY expensive with the VC demanding 25%-60% of the company if not more. Most companies do not fit into the model for VC funding and in fact if you can avoid it you really do not want VC funding because the cost of capital is so extraordinarily high.
Venture Capital funding is just one of many avenues to fund a business. It is a form of Private Equity but not the only one and certainly not the only way to build a successful tech company. VC money is extremely expensive and VC backed companies demonstrably do not succeed at a higher rate than non-VC backed companies.
You're arguing against reality. Taxes in Canada are comparable to the US. They're not significantly higher. They can be a little higher or a little lower.
Meanwhile, Canada has a business-friendly government that governs efficiently, a stable economy, and no looming sovereign debt/bankruptcy crisis.
US has the highest corporate tax rate in the world
The statutory rate is not the same thing as the effective rate which actually gets paid. The effective US corporate tax rate is just 12.1% of profits in 2011 which is the lowest number in 40 years. The 10 most profitable companies in the US last year paid, on average, approximately 9% tax.
While I think that our tax code is a mess and needs serious reform, the notion that taxes in the US are the highest in the world is demonstrably false political propaganda. The 35% number you cite is a meaningless number which is only useful for political soundbites.
Well, starting a company with the goal of being sold can make sense, even if it seems risky. It can even be a far more efficient strategy overall if the buyer has much better access to the market/customers.
The issue here is probably that it is a misnomer to say corporations are holding "cash". The big banks (a.k.a. primary dealers) are moving their cash hordes around constantly but I think most of it has been in the stock market and commodities. I imagine most corporations are doing the same. You would have been a complete chump to actually hold cash for the last three years because the value of dollars have been hammered.
The key distinction is between holding your assets in liquid investments or investing it in your business. Companies are NOT investing it in growing their businesses which is what TFA is referring too. Why should they. Over the last 3-4 years it was incredibly easy to get huge returns just buying in to the stock market as it rallied from 6600 to 13000. It was shooting fish in a barrel for them to just ride the wave as the Fed reinflated the stock market by printing money and handing it to the primary dealers. Contrast the ease with making money gambling in stocks and commodities over the last three years versus doing the hard way, investing in your business, doing R&D, making products. Its why unemployment stays high. Its a lot easier to gamble for money these days than it is to work for it.
As for when the inflation happens, as I said, no one knows. Maybe it won't. The problem is always that everyone has confidence in your currency until they don't. And when they lose it, it is usually sudden and ugly.
Another problem is that, since nearly all central banks are debasing their currency, its a complete crap shoot to figure out which currency is safer than all the others. The Swiss Franc has been the hands down choice for most of the last three years but so much money has fled in to such a small country that its severely imbalanced too.
Let's hope we get lucky and can muddle through. One plus to the Fed's money printing is they are replacing wealth wiped out when the housing bubble collapsed. Unfortunately they are replacing money lost by home owners and pension funds who bought mortgage backed securities, with money pouring in to Wall Street, and Wall Street is just using it to fund their gambling addiction, not to build companies or create jobs.
@de_machina
ok, 2005 dollars per capita.... federal government revenue has almost doubled. Has it ever been higher? Sure. Over time, has it been increasing, not decreasing? Yeah.
Here's 2005 dollars per capita in government spending, from $4 Trillion to now over $10 Trillion. It's still very obvious that while revenue has gone up over time, spending has just gone up even more.
Still clearly shows that the problem isn't less revenue, it's way, way too much spending. In 2000 we spent 30% less than in 2011 in per capita 2005 dollars. You can't explain that away by anything other than we're experiencing massive spending increases that have no relation to anything but that the feds just want to spend more money.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
countries with hardening socialist governments, like France and the US.
The best thing is, you actually believe that.
To have a right to do a thing is not at all the same as to be right in doing it
I'm moving out of stocks and into government securities. No real return but as safe as anything is nowadays. No gold option I'm afraid or I'd take that. Three years left before I can cash out and run.
Except in Quebec. Just want to point that out.
- YoGrark
Canadian Bred with American Buttering
I'm moving out of stocks and into government securities. No real return but as safe as anything is nowadays. No gold option I'm afraid or I'd take that. Three years left before I can cash out and run.
Good luck. I'm afraid we'll all need that.
I was raised on the command line, bitch
"Nemo me impune lacesset"
Not a lot. Exactly how many Social Networking and Gaming sites can these guys fund? Get a grip, it is supply and demand. The supply of good ideas is relatively small at the moment. Most ideas are limited by the available infrastructure. We need increased broadband speeds to enable new possibilities. It's the infrastructure stupid.
You're arguing against your own citations!
In California, home to a lot of VC-funded companies, high state taxes make this considerably worse.
By the way, CA just raised the top state income tax rate to 13.3%. Even those making $250k of more will now pay 10.3%. Also CA sales tax is now 7.25%.
Yes this has nothing to do with our current presidents war on profit and subsequent reelection. Let's make a reference that points and blames conservatives call for some fiscal sanity. The US doesn't have a monopoly on innovation and investors can take their resources elsewhere and unfortunately this is exactly what is happening. I saw this coming. Tuesday night, this was my biggest fear.
In California, home to a lot of VC-funded companies, high state taxes make this considerably worse.
By the way, CA just raised the top state income tax rate to 13.3%. Even those making $250k of more will now pay 10.3%. Also CA sales tax is now 7.25%.
And yet California has the most billionaires of any state. Many of them are in Los Angeles, a city that would not exist if the local government had not raised massive tax revenues to pay for its utilities (esp. water).
Aside from Hollywood, much of the wealth being created is the direct result of the state's incredible universities. Berkeley, UCLA, UCSD just to name a few public-funded schools. Cal Tech and Stanford on the other side of the house. I don't think it's any accident that California is able to attract or produce such great talent. And yes, these things need to be paid for. Since property taxes are so low, revenues have to come from sales and income taxes.
SWM seeks new sig for a brief fling
Every time Ron Paul started talking about this stuff on the campaign trail he got booed and everyone promptly stuck their hands over their ears and went "lalalalalalalalala............." I hope it holds together 3 more years so I can cash my 401K out before it's gone. A lifetime of savings and those fuckers are going to cheat me out of it. The sad thing is it's all the fault of the American people who only listen to what they want to hear. This two party shell game is going to end soon and the public will discover that no matter which shell you flip there is nothing under any of them.
Is it too late for you to move your 401k to dollar independent funds? More into commodities and hard metals?
Some 401k plans are very limited in what investment types are available. The good news is that if yours is one of these, you probably also work for a small company, which might be easy to persuade to add additional fund types.
I think you touched on the counterargument (that has been very well made): while state money is loose, bank money (the overwhelming majority of the economy) is very tight. Because banks are still recapitalizing, the money supply is very tight. I'm not a fan of CATO or Hanke, but I still have to credit him for making the case on this. He also did a good EconTalk podcast about hyperinflation where he explains this in detail.
I'm not prepared to say whether or not the fed fucked up yet. I think we're going to have to leave that one to the history books and just agree that we don't really have sufficient understanding of all the what-ifs at this time. My gut says they stopped things from getting far worse, but that these policies are simultaneously slowing a recovery and setting a path for a new bubble.
SWM seeks new sig for a brief fling
And yet Democrats received a majority of the votes for House members... not just a plurality, a majority... yet the Republicans used their control of Statehouses to gerrymander the shit out of Congressional districts.
The House Republicans have no mandate. The people of the US voted against them. Only chicanery has let them keep a majority in the House.
The American People did not choose to have Republicans control the House. It is fact that a majority of Americans voted for Democrats in the House this election cycle.
Your point does not stand.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
To be a little more complete, the "partners" of the feds who own private concerns doing contract business with the US government want the feds to spend more money. Government payrolls? Way down since 2000. Direct government assistance? Doesn't even come close to making up that increase.
The federal government wastes its money lining the pockets and coffers of private businesses. I believe that if it's worth it for government to spend money on something, then the government should operate it. Schools (local government), prisons, military, roads, etc. The only exception should be commodity procurement necessary for operations where there is a competitive marketplace.
I find it ludicrous that there are companies that contract with the US government whose executive compensation is in the tens or hundreds of millions per year. Civil servants should be doing their jobs.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Really? Which citation says taxes in Canada are always higher than in the US? Which citation definitively contradicts anything I've said?
Or are you just trolling?
California property taxes aren't particularly low. They rank 17th out of 50 states as a percentage of median income (in 2005).
Texas property taxes are lower. Texas also has no state income tax and much lower sales tax than California. Texas public schools rank higher in math and science education than California.
And yet California has the most billionaires of any state.
As the state with the largest population, California has the most of a lot of categories of people.
Read the first one all the way through.
Then, to back up my overall position that the 'raising corporate taxes' is just a facade for "OMG, not a Democrat!", read this.
Nope. I still have exactly zero idea what you're trying to say. What is a facade for what? Even Obama isn't proposing raising corporate taxes.
That cnn thing you linked to didn't mention Canada at all. It's just a bunch of "on the one hand, on the other hand" blathering about plans no one ever implemented or even formally proposed as bills. Who cares? Anyone can pretend to analyze any non-specific plans to mean anything. Aside from someone who was born yesterday, who cares about any politician's vague proposals?
You seem unable to make a concrete statement, factual or otherwise. I guess no one can claim you're wrong that way.
California property taxes aren't particularly low. They rank 17th out of 50 states as a percentage of median income (in 2005).
But, per your source, they ranked 45th as a percentage of home value (0.48%), whereas Texas ranked 2nd (1.82%). Median income may be low, and housing values were extremely inflated in 2005 (which your data comes from), but there's no denying that California takes a lower percentage of the home's value than most states. This is primarily due to Prop 13, which capped property taxes and shifted the state towards sales and income taxes.
Texas property taxes are lower. Texas also has no state income tax and much lower sales tax than California. Texas public schools rank higher in math and science education than California.
California's K-12 has been gutted by repeated budget cuts, but I would argue it has much better universities than Texas. As I showed earlier, Texas also has much higher property tax rates as a percentage of home value.
Texas has plenty of revenue sources. Feel free to review the Texas budget, specifically numbered pages 32-33. Their data doesn't provide an easy method of comparison, but it seems they take in some hefty federal "revenues". I don't know if this is from defense spending, assistance with medicaid and HHS, energy subsidies, or what. I can say that both states are reporting around $90B/year in revenue, which would place TX a bit ahead of CA in state revenue per capita.
Then again, it's all moot since those Patriotic Texans are going to secede soon anyways.
SWM seeks new sig for a brief fling
I guess you need to start at the 2nd post in the thread (upon which all of this is based) claiming that he is moving investments to Canada because Obama was re-elected and he fears taxes.
It DOESN'T make a lot of sense and I said so. At worst, U.S. corporate taxes are on par with Canada and the president is proposing we lower them. The CNN article I linked to supported the idea that Obama was proposing to LOWER corporate taxes, which you appear to accept.
Thus, my speculation that it's all a knee jerk reaction rather than anyuthing based in real numbers or credible expectations.
Spending can vary greatly by area. LAUSD spends $25,208 per student.
For CA Statewide K-12, "Total per-pupil expenditures from all sources are projected to be $10,610 in 2011-12 and $11,246 in 2012-13".
Spending can vary greatly by area. LAUSD spends $25,208 per student.
For CA Statewide K-12, "Total per-pupil expenditures from all sources are projected to be $10,610 in 2011-12 and $11,246 in 2012-13".
There are indeed huge variances by region. Districts with higher costs of living, high growth (necessitating new construction), and more special needs students will have higher per pupil costs.
But always be careful when citing CATO, they're not exactly...rigorous... in their methodology. See this EPIC review of CATO's per-pupil claims. And I quote: "The report presents large “real” costs per pupil. However, the spending numbers calculated for the report actually double count, adding in both capital construction and debt service. The use of flawed data renders the report to be of limited value in policymaking." (emphasis added).
I would provide my own analysis of the LAUSD claims, but the CATO report failed to properly cite its sources (it actually indicated an incorrect page number) and methodology. Per the review I am citing, another group was able to nearly replicate the CATO result by double-counting capital construction and debt services (which the author compares to adding the purchase price of a house plus the mortgage payments).
SWM seeks new sig for a brief fling