Although I think Exxon would somehow become 5,000 oil and gas exploring startups.
Wow, that's amazing.
Source: http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/...
Sources:
http://money.cnn.com/2008/07/31/news/companies/exxon_profits...
http://www.pardontheinformation.com/2008/06/why-are-oil-comp...
What people get confused about is that (to my knowledge) no public-run oil firm has managed to match the efficiency of private oil firms. Even heads of state seem to get confused (or prefer to be confused, to win popularity points).
It doesn't make it "right," however.
People don't avoid starting companies because they're afraid of the capital gains tax on their anticipated profits (At least, people with a healthy dose of perspective don't do this).
If you're going to pick from the list of reasons that people avoid starting companies, at the top of the list has to be the fact that most are afraid that they'll be unable to take care of themselves and their family during the lean times. Universal health coverage is an obvious step toward alleviating this fear. The abstract, vague notion of someday paying a (rather low) tax on the eventual, theoretical profits from the venture doesn't even come close.
You're focusing on the trees. Who do you think pays the private health care premiums for your hypothetical startup? The insurance fairy?
That money comes out of your pocket, today -- not out of (speculative) future capital gains dollars. And since it's nearly always more expensive (per head) to insure smaller groups, you're very likely going to pay more by insuring your own small company, versus participating in a national program.
That said, I don't necessarily think that capital gains are the best place to find money for health care. But if it came down to a choice between raising capital gains taxes (which are quite low in this country) to fund universal coverage, and eliminating our already meager capital gains taxes to "promote" small business, I'd take the health care in a minute. And I'd still start a company, because my expected upside will massively exceed any loss due to taxes -- again, it's all about perspective.
At the end of the day, the "taxes discourage business" canard only works for the ultra-rich, who already have significant capital gains to protect. For the rest of us, it's a much better deal to get guaranteed health coverage.
Canada: 8 weeks for heart surgery
America: Next Week.
Nova Scotia: 25 weeks for a specialty consult
Iowa: 1 week for a specialty consult
http://www.cbc.ca/health/story/2007/10/15/waittimes-fraser.h...
Note: I am suggesting an AMT so if you have 10 million in assets you will pay at least (10M - 1M) * .01 = 100k in taxes, but if you would pay 101k in income + capital gains taxes nothing changes.
PS: People trying to avoid capital gains on highly appreciated assets distorts the market. This would be a "cheep" way to increase flexibility without dramatically impacting tax revenue. It most heavily impacts passive / safe investors while having little impact on those with strong 12+% returns.
And I say all this as a minimalist - all my possessions could fit in a 12x12 room.
I have a fix: Reduce spending & lower taxes. (Not libertarian style but in a true fiscal conservative sense) The government is so bloated with worthless employees, pork and shit kicking programs it's sickening.
First, long term cap gains tax rates are already quite low (relative to regular income), and I can't think of a single entrepreneurial or investor scenario where I've seen: "gee, if tax rates were lower I'd {invest,start this company}"
Second, it will be tough to implement in a loop-hole proof way. Every private equity and hedge fund will be organizing "startup" projects, so they can make take profits tax free. My guess is it will be capped, making it even less of any sort of meaningful incentive.
My take: there are other tax areas that need work first, like code simplification and AMT.