The Cure to our Economic Problems

I originally wrote this almost 4 years ago. It’s amazing how it still fits.

Oct 23rd 2008 7:16PM

I would hate to be the winning Presidential candidate. Both candidates are delusional  in thinking  their economic policies will drag us out of a recession or even improve the economy.  The reality is that the solutions offered by both are the equivalent of shuffling the deck chairs on the Titanic. They are meaningless.

You can cut taxes for 95pct of Americans and raise taxes for the rest. You can cut taxes for businesses and retain the Bush Tax Cuts. You can increase or decrease the capital gains tax 5 or 10pct either way.  Under both programs the deficit for the country will increase,  we will borrow and print more money.  5 or 10pct variance either way, given the big hole  our economy is it wont matter.

The cure for what ails us is the Entrepreneurial Spirit of this country.  We are a nation of people who encourage , support and invest in those of any and all age, race and gender who will use their ingenuity and come up with a new idea.

Its always the new idea that re energizes this country.  Industry, manufacturing, transportation, technology, digital communications, etc, each changed how we lived and ignited our economy and standard of living. Tax policy has never done that.  The American People have.

Entrepreneurs who create something out of nothing don’t care what tax rates are. Bill Gates didn’t monitor the marginal tax rate when he dropped out of Harvard and started MicroSoft (btw, it was a ton higher than it is today). Michael Dell didn’t wonder what the capital gains tax was when he started PC’s Limited, and then grew it into Dell Computer.  I doubt that any great business or invention started with a discussion or even a consideration of what the current or projected income or capital gains tax was or would be.

The impact of tax rates on productivity and development is something economists masturbate about,  enterpreneurs don’t waste their time thinking about it. We have business to do.

Entrepreneurs live to be entrepreneurs. I have never had a discussion with anyone about starting a business that included tax rates. Ever. If anyone that wanted an investment from me made a point of discussing tax rates as an impact on their business, I wouldnt invest in them. Ever.

Entrepreneurs live for the juice of making their dreams come true. Of having a vision and fighting to see it come true. The joy of mission accomplished and the scoreboard of the financial rewards.

We are in an economic mess right now. It doesn’t matter who caused it. It’s here. It doesn’t matter what our Presidential candidates and their economic advisors come up with. Its meaningless.

The cure to our economic problems is the Entrepreneurial  Spirit of All Americans. Instead of bitching at each other, could one Presidential  candidate please show even the least bit of leadership and character and stand up for and encourage the entrepreneurs in this country ?

i dont care who is friends with whom, who preached when you went to church, whether you know the actual role of the Vice President, whether you voted with President Bush. I dont care about any of the mudslinging going back and forth. All it does is waste the time of every potential voter.  All of that is meaningless.

What we need is our candidates to stop yelling at each other and starting looking at the American people and encouraging the best of who we are.  That is who I want to get behind. That is what I would like to see for our country. That is what will energize and motivate people to create companies and invent products that will  turn the economy.

The best time for little guys to start a business  is when the big guys are worrying about surviving in theirs. You dont need to raise money. You need to be smart and be focused.  I had no idea until this current financial crisis that when I started MicroSolutions, my first company, it was in the middle of a very bad recession. I had no idea whatsoever. I didnt know what the tax rates were, and I didnt care. I had an idea, a floor to sleep on and a lot of motivation.

Now is the time for Entrepreneurs to step up and do our part for our country. Its up to us to start businesses and create jobs. That is the cure to this country’s economic problems.

 

 

69 thoughts on “The Cure to our Economic Problems

  1. Well said, Mark! Same holds true for venture capital. I have never heard a tier one VC say they would stop making investments if their carried interest was taxed as ordinary income.

    I tried to tackle this in a recent Op-Ed on tax policy and job creation.

    http://www.newsobserver.com/2012/10/25/2438325/creating-jobs-with-greater-efficiency.html

    Comment by Jason Massey (@JasonM) -

  2. I have lived this phillosphy for the last 15 years. I have been trying to find investors for a new kind of shopping mall, that will change the way America shops for weddings. I will never give up- and with contracted partnerships with major retailors–it will happen. They laughed at Sam Walton–and the city council told Bill Gates No at his first request for a permit to build his first warehouse. All I am looking for is a building/ or land, along with the construction needed to finish. A 3% market share- in a 100 mile radius- is $20 million NET first year.

    Comment by Frank Kessler -

  3. This has been such an inspiring and insightful blog to read as I am about to graduate this coming Spring. My dad is the new president and CEO of the Enterprise Development Corporation (EDC) of South Florida and their primary goal is creating successful enterprises which ultimately will result in the creation of high value jobs. He believes that any successful efforts by the EDC are more important than ever especially with the current economic climate.
    Start-ups and entrepreneurs are the key to giving this economy the economic jolt it needs. A definition of an entrepreneur that my dad often shares with me is that an entrepreneur is someone who jumps out of a plane and, on the way down, tries to figure out how to construct a parachute. I think this economy has instilled allot of fear in everyone, especially my generation, and it has taken a toll on the willingness and eagerness of entrepreneurs to take this initial leap. It’s the difficulties and hard lessons learned that creates the most capable entrepreneurs, but in our society we are so focused on success alone and don’t value or see opportunity in times such as these.
    I am extremely worried about the future economy but I believe if we have more people with the mind set such as yours, who value and see the importance of nurturing and placing a stronger emphasis on entrepreneurs and start-up successes – we will start to climb out of this recession.

    Comment by kstrandberg -

  4. Reblogged this on Valuation App and commented:
    Best.Blog.Ever!

    Comment by Sohin Shah -

  5. Great article 4 years ago and probably applies even more today. As an owner of a staffing company, a startup company that is online based and I’m looking to get two other companies off the ground in the next 12mnths, I see the fantasy and obstacles the gov’t has created regularly.

    There is no turnaround UNTIL there is job creation. There is no job creation until entrepreneurs create companies and that will not come from any tax code change from the gov’t.

    The dot.com boom came from men and women willing to take a chance even if no one funded them. When there is an idea that is great, there will always be people willing to fund it. Tax code or no tax code. Ideas are market driven. Good ones succeed and bad ones fail. All you have to do is watch 1 episode of Shark Tank and you see that concept pretty quickly. All the tax code does is create more jobs for people in the gov’t.

    Entrepreneurship and starting a business is not about participation metals you get in grade school. It’s about long hours and sticking with something when no one else will… Tax code won’t change that, only the idea’s and the belief in those ideas will change the economy… and that will bring more jobs….

    Comment by StaffingIndustryJobs (@gistaffing) -

  6. “To man can become rich without himself enriching others.” — Andrew Carnegie

    Mark, it seems you and Andrew share that same ideological framework. The fact is too many entrepreneurs complain about not finding capital. Money follows good business ideas–doesn’t even have to be a great idea. If the business model is sound, the market is primed, and the product is feasible, then it is a matter of selecting the RIGHT money.

    My social gaming company, The Drink Exchange, has gone a step farther by creating the win-win-win-win business model thus affording 90+% margins.

    Mark, you will be able to appreciate this one. Imagine not having to pay a celebrity like Diddy $100 million dollars to move a product into mass market consumption. This is accomplished with The Drink Exchange through that entrepreneurial spirit that enriches others first!

    Love the blogs Mark, keep them coming.

    Comment by Cole Patterson -

  7. I was reading Forbes and an article stated the top wealthiest Forbes 400 had a net worth of $1.6 Trillion dollars. So if the U.S. government confiscated 100% of the net worth of the Forbes 400, that would pay off — get this — 10% of our current $16 Trillion in debt.

    Mark I love reading and following you as you’ve always been a straight-up guy, but the average American can’t work at Facebook, Oracle or Google either.

    Comment by Frank Risalvato -

  8. That problem is pervasive across borders. It seems as if all politicians were carved out of the same stone. Like in Armaggedon, the movie:

    “Russian, American, all made in Taiwan.”

    Europe suffers from the same kind of dumb political disputes.

    Comment by Cyryl Kwasniewski -

  9. Bill Gates & Michael Dell didn’t care about taxes to stop them from building their companies the way they did.

    What about the entrepreneurs that never were? What about the names you don’t know of and the major developments that didn’t happen because of the those would-be entrepreneurs who actually did care about taxes and financial slavery?

    What about all of the solutions we DON’T have because of taxes.

    What about the projects that Bill Gates & Michael Dell had to scrap because their “taxes” were taken away from them?

    Smart economists do like the masturbate over the things that DIDN’T happen as a result of stealing capital, energy, and incentives away from their natural, free market flow.

    And you like to masturbate over the successful entrepreneurs who did it despite taxes and government regulations.

    Why doesn’t everyone stop masturbating and listen to each other?

    Comment by Jeff Nabers -

  10. Pingback: The Cure to our Economic Problems « blog maverick | Amer's Blog

  11. As an entrepreneur I can relate to this a thousand times over! I started my own grilled cheese restaurant called Cheesie’s Pub & Grub in May of 2011. I dont give a shit what is going on with the economy. People telling me it is not the right time to start a business blah blah blah. The government could do nothing to help or hurt my success. It all depended on how motivated I was to create my own dream. 9 month after I opended I shut down in order to take over the restaurant next door and double in size and now I am opening my Second location next week. I have created almost 50 jobs in 16 months and with my dreams in front of me I will be looking open a new location every 4 months creating 20 new jobs per location. The best part of what I am doing is knowing how many lives I can impact by creating jobs and helping to stimulate the economy. Im still as broke as I have ever been but I am building towards the future by continuing to invest in myself and others. When are they going to understand that we have to do the same by working together! Cuban you are the man! Still wish Selig would have let you buy the Cubs but their are shitty politics everywhere you look! Thanks for being you and keep paving the way for others like us!

    Comment by Chris Johnston -

  12. Government needs to GET OUT OF THE WAY so this can happen.

    Comment by Mark Harkay -

  13. Saw you on the Tony Robbins interview, where you suggested that the rich should pay more in taxes. Simple question: do you pay more than you are required to? Obama who says that you (and other one-percenters) aren’t paying your “fair share.” If you agree, then you’re obviously taking strides to do just that, right? Ironically, Obama, who is a one percenter himself) did not take advantage of the opportunity to kick in additional money to the federal government; some might say that hypocritical. I’d also say it’s failing to lead by example. And so, are you leading by example?

    Comment by David Spaulding -

  14. Very much spot on, except for one part…if one were to look at the current president’s behavior, in a vacuum, their past history does show character and long term beliefs, as well as intent. I do care if he went to church at a place which preached the belief in hating white people and hating our country. Unfortunately, this is how deeply things have sunk. You’re right though, we do need leadership and there’s not much of that around…but people seem to be trying.
    I believe that the following quote is appropriate and very profound for today’s world, particularly given your assertions above:
    “Economies can be rebuilt, armies can be repopulated, but once a nation’s pride is gone it can almost never be restored. The loss of a nation’s honor is something not even centuries can repair.”
    - Michael Savage

    Comment by Tony Lee -

  15. If you’re an orthopedic surgeon and you make $350k a year and new Federal medical programs mean you might make only $300k next year, I would bet 99% will stick with it. An NBA player isn’t going to switch to some other profession because of taxes. He does what he knows. In many cases it is all he knows. But more importantly – what he knows and what he does makes him a lot of money…even if taxes might impact it here and there (hello Vancouver).

    A successful investor is going to invest. Period. It’s what he or she does to make money. Taxes are going to encourage him to stop investing? Really? For any investor who says, “I’m going to not invest right now because taxes are too high” there is another (smarter) investor snickering and toasting another win.

    Companies started during the Great Depression when the economy sucked and the marginal tax rate was as high as 63%? Fisher Price, KFC, HP, Disney, Allstate, Revlon, Rubbermaid, United Air, Tyson Foods, Sarah Lee, Geico, Westin Hotels, Macy’s, Duracell, etc. blah, blah, blah.

    Comment by Tommy Galloway (@tommygtwo) -

  16. It’s time for entrepreneurs to step up, but the incentives have to be in place for them to want to step up. Romney is better for entrepreneurs than Obama because Romney believes less in big government and central planning, where Obama is all about the government. Great entrepreneurship comes from decentralization and that is where the tax code and regulation come in. More government means less freedom.

    Comment by Jeffrey Carter (@pointsnfigures) -

  17. As a follow-up to my previous post: I’d choose a candidate who wanted to leave tax code alone for now and focus on the real problem that stifles everything. Debating/changing tax code changes waste’s billions of dollars of labor in both the public (congress) and private industry time, because the net result as mentioned in the previous post… is the status quo…. when our efforts could be much better focused on the real “business” at hand: value added governance in the public sector, and innovating, creating, and florishing in the private sector. Spend what we’re willing give ya… and don’t spend more than that, and be happy we pay your wage…..

    Problem is… there is no such candidate in the running, that has the influence & money to win a presidential campaign anyway….
    http://fix-fiscal-america.us

    Comment by mydogbruno -

  18. I find it interesting that there are posters to this article, those who claim to have the education to know in fact, who interpret a statement like the following by Cuban as his failure to endorse a candidate as his motive.

    “You can cut taxes for 95pct of Americans and raise taxes for the rest. You can cut taxes for businesses and retain the Bush Tax Cuts. You can increase or decrease the capital gains tax 5 or 10pct either way. Under both programs the deficit for the country will increase, we will borrow and print more money. 5 or 10pct variance either way, given the big hole our economy is it wont matter.”

    The statement has “clinically” been proven correct throughout more recent tax history in America. No matter what the tax policy the effective tax rate on Americans as a whole tends to hover around 29%. You can find numerous articles that show this and explain why (the why is obvious. it’s our money, and we have our range- what we’re willing to pay, and what is tolerable).

    The problem of the day is deficit spending, which forces American’s (one way or another. sooner or later) to pay for spending we in fact never approved with taxes.

    http://fix-fiscal-america.us

    Comment by mydogbruno -

  19. Well Jason, thank-you so much for your stopping by to tell us how it is. You are missing my point. EVEN IF MC is right that tax policy or the economic situation doesn’t matter to a start-up in terms of the “do it or don’t do it” decision, (I think for some it does, for some it doesn’t) You CANNOT say that the economy does not affect business, growth, and lead to businesses success or failure.

    You CAN claim that tax policy shouldn’t affect people’s *decision* to start a business and follow their entrepreneurial dreams, but you cannot claim that tax policy does not affect the reality that for businesses to survive (start-ups and established business alike) the state of the economy comes into play.

    I’ll agree with Mark that whomever wins in November, we must keep the entrepreneurial spirit alive in this country, but if Mark or anyone else is going to try to claim that tax policy will not have an effect on economic growth and the survival of businesses. I reject that assertion.

    I think there is a clear choice of which candidate will have policies (tax policies and other) that are MORE efficacious for growth. And a 5% difference in tax policy can be the difference between economic growth and prosperity, and economic stagnation.

    Just my humble educated opinion. Not a CFO, not going to come in here and claim anyone else is ignorant.. Just a small small time young businessman compared to Mark, but I do pay attention, I do have an economics education and a massive penchant for following fiscal policy and economic cycles, free markets, and cause and effect.

    I also believe that we have a choice to make and I think its the “middle ground” to just criticize both sides but NOT ultimately make an executive decision. I find it hard to believe that Mark Cuban, of all people, can’t make an executive decision and pick a presidential candidate who would be better for our economy. I suspect as a businessman, Mark Cuban knows who is the better choice for our economy, but I wonder if as a celebrity, Mark is afraid to publicize his choice because we are a 50-50 country and he doesn’t want to alienate anyone.

    I’m a libertarian, and I voted for Ron Paul in the primary. In the general election, I’m torn between voting for Gary Johnson or Mitt Romney. I think Gary Johnson would be the best for our economy AND entrepreneurs, but he won’t win. With that said, there is no doubt in my mind Mitt Romney will be exponentially better for free markets and business than Obama and his socialist redistribution philosophy.

    Comment by wisconsincarry (@wisconsincarry) -

  20. Haha I love it. These comments are such an accurate portrayal of what is wrong with this flawed government and economic system in the first place. You “brilliant” people take a sound article written by an incredibly successful businessman who is giving his proposed piece of a solution to an overly apparent ongoing economic problem, and then begin to dissect and debate over such insignificant details to try and “swing a bigger stick” in the argument, consequently avoiding the entire general subject in discussion. MC’s right, taxes are of no concern in a start-up. Sure you’ll always have those people that leverage everything, and the metaphorical “business stars” align and they become hugely successful entrepreneurs to be praised by all for their fearless commitment. You don’t hear too much about the other side of that spectrum though. The bold fact of the matter is that there will always be unforeseen circumstances in any business venture, whether it be a tax hike, a natural disaster, manufacturing costs, legalities, or even a personal health or family issue. Things happen. If all bulletproof business plans with sufficient startup capital had a hundred percent success rate, this article, along with our current economic state, would have never existed. Thank you for the article Mr. Cuban. Your success is a true testament to the fact that nourishing the entrepreneurial spirit should be of high priority in our effort to restore this country’s financial stability. Sorry you have so many “Mr. Wonderful’s” in here just trying to find something to pick apart to massage their own egos. Thank you for all of the comments also fellow readers; some were intelligent, some ignorant, all entertaining.

    Comment by Jason Cline -

  21. So very true. Entrepreneurship will bring back the jobs. New jobs.

    Comment by Paramendra Bhagat (@paramendra) -

  22. Decision making aside (and I think its far more of a factor than is being acknowledged in these comments)

    No one can dispute that you can’t invest money you don’t have. If the government takes an extra 5% of an entrepreneurs money, it is not being invested by that entrepreneur. Its headed to the treasury.

    Knowing boom or bust is only a few percentage points difference, having ALL the entrepreneurs in the country able to invest 5% MORE than they otherwise could have because they didn’t have to send that money to the government. We would have more growth, more innovation.

    Sure money sent to the government in the form of tax will get redistributed. But only to chase fewer products and fewer innovations and less productive output.

    Money left in the hands of entrepreneurs will create innovation, productive output, tangible wealth.

    If I have an extra $20,000 next year because of a more favorable tax policy, you better believe I will spend more and invest more, and make better productive use of that money than if the government took an extra $20,000.

    Tax policy matters. If not in decision making, in the pool of available capital to be invested by private enterprise (not redistributed by government)

    Comment by wisconsincarry (@wisconsincarry) -

  23. Pingback: The Cure to our Economic Problems | {clearly} not astute

  24. “What we need is our candidates to stop yelling at each other and starting looking at the American people and encouraging the best of who we are.”

    So, entrepreneurs don’t need tax incentives (agreed) but do need politicians to tell them, “Go make something!”?

    I doubt that a person with a good idea gives a crap what a politician says or does.

    Comment by Chuck Gitles -

  25. Even if they didn’t start their business this way, entrepreneurs who start making business decisions such as hiring or capital investments based on tax planning are setting themselves up for failure*.

    As a CFO, I don’t accept the thinking of “employee X = Y additional cost”. If you feel compelled to look at hiring primarily in those terms, you have a more fundamental problem in your business. The financial decision points should be “How much revenue/savings/ROI does adding an employee generate in the short-term and/or long-term? Does that increase to the bottom line merit the risk in adding the employee? Do I have the capital on-hand for the additional employee to allow for full ROI?”

    * I would make an exception for choosing a manufacturing site that requiring heavy capital investments due to the widespread differences in Business Personal Property taxation & available exemptions in a local region. Even then, access to the appropriate labor force usually would prioritize over taxation costs.

    Comment by Lee Henderson (@LeeOHenderson) -

  26. In 2008 I would have agreed with you. I think gradually over the course of our countries history, government grow, regulations grew, but never at a pace that outran the ability of the private sector to outgrow the growth of government and regulation. I never worried about the ability of our economy to sustain. I never feared the government could do enough harm to cause a collapse. Now I do. I know why I’ve succeeded. The presidents comments have not changed what I know to be true. But I never thought our president would be mocking successful business people who know they succeeded because they WERE smarter and worked harder. I never thought a president would attribute my success to government, and mock the fact that I do believe I’m smarter and worked harder to succeed. That doesn’t keep me from doing what I’m doing, but I believe that we are seeing a huge percent of the population that our president has successfully convinced that I am part of the problem and that what I have, I didn’t earn. I DO believe if Obama gets elected we will see a tax policy and regulatory environment that even YOU will finally agree is worth worrying about. As great of a concern as satisfying our customers, as great of a concern as our competition. How about Ford? You think they should worry about their competition but not government? What happened when their competition BECAME government? I am delaying investment decisions until after the election… And I know I’m not alone. Anyway… In case I come off to the contrary, I have learned a ton from your e-book, your comments on Shark Tank, and even your comments in this blog today. Things that I’ve adopted into my practices and perspective. Things that I’ve used to succeed. So genuinely… thank-you!!

    Comment by wisconsincarry (@wisconsincarry) -

  27. Being a businessman requires being decisive. Sometimes, neither options in a dichotomous situation is ideal, but none-the-less a decision must be made.

    Being a libertarian, I’m often (almost always) disappointed in the choices we have in a 2 party system, but that is because these candidates market themselves to the DASV’s (dumb ass swing voters) not informed educated (in experience and formal schooling) individuals with economics knowledge. I am not the target audience.

    With that said, I’ll just be honest Mark, I think as a celebrity, you are afraid to make public your “decision” because a celebrity has to consider their image and its rarely in their best interest to alienate anyone. Certainly not in a country that is split 50-50 in terms of voting for R’s and D’s.

    Since you can’t support “both” and play both sides, often the easiest cop-out is just to criticize both sides.

    I agree with you 100% that the entrepreneurial spirit built this country and will sustain it.

    I also believe that as a small business owner, my world is different than yours and YOU BETTER BELIEVE we make hiring and firing decision based on government policy INCLUDING tax policy. At the billionaire executive level, I think you are removed from the level of decision making that has to take place in small businesses. Businesses where the owners see the people they hire and may have to let go every day… and a few thousand dollars change in tax policy OR known and unknown costs associated with Obamacare result in us making the decision not to add a few more people that we otherwise might.

    Given that the majority of business is not big-business, but small business, AND given that just a few percentage points of growth is the difference between a boom and bust economy… You better believe tax policy, OVER-REGULATION, and the loss of more and more control over our business to the government is the primary threat to our economy.

    The entrepreneurial spirit will always exist, but if you don’t think even entrepreneurs of SMALL businesses (not hit-it-big-quick Shark-Tank participants) have to balance risk vs. growth… If you don’t think small business owners WITH entrepreneurial spirit WANT to grow their businesses, but DO delay in doing so because the risk assessment hinges on things like tax policy, hyper-regulation, and Obamacare known and unknowns… If you don’t think that there is a stark and notable difference between the 2 candidates we have left for president. If you don’t think Mitt Romney, while far short of the libertarian that would REALLY propel this country into prosperity, is exponentially a better choice for free markets… Either you are out of touch with small business (which collectively is the big business) or you are afraid to publicly be decisive and make a decision… or I’m on the wrong blog.


    From MC> Have you ever run a small business ? You worry about your next sale. You worry about keeping your customers happy. You worry about your competition. Yes you want lower taxes and overhead, everyone does, but every small businessperson knows you play the hand you are dealt and you go to work. You tell me a company that is waiting on the government and that is a company that I want to compete with. Taxes are so far down the list on the impact meter for small business that they only get discussed when you have to write a check to the Fed or your accountant. And even then you appreciate the fact that you are profitable and are writing a check because of that.

    Now if you want to make a big deal about complexity and how much time and money gets misdirected to having to fill out forms and pay lawyers and accountants, i agree 100pct with that. But I would be the guy who wants to see standardization and automation of forms across city, state,federal level, which in turn means more federal intrusion in or business. Which i would gladly accept if it means i have more time to work and less time to clown around with lawyers and accountants.

    Comment by wisconsincarry (@wisconsincarry) -

  28. Curing the economic woes means repealing the DMCA and many other IP laws which give monopolistic powers to too many companies. Apple, Motorola, and Sony should not control how I can make their products better.

    Comment by Daniel Andrews -

  29. Seems simple enough to all of us. Why can’t the politicians figure this out? Why won’t they listen to the people who cast the votes? Or maybe it is because the majority vote really doesn’t mean anything anymore. Its all about the electorial college. There is something wrong with that.

    Comment by Monica Ortega -

  30. Entrepreneurs with big ideas don’t care about tax rates, but businesses considering expanding or trying something new have to consider the potential costs versus the potential benefits. Venture capitalists have to consider the potential reward before deciding whether to save or invest the marginal dollar. MOST businesses won’t care about tax rates, but you’re missing the point.There’s a 1% of businesses at the margin that do care. You should deepen your understanding of how to think at the margin before calling discussion on tax rates “something that economists masterbate to.”

    Imagine I said, “I can bench 400 pounds, so I don’t care if you increase the weight on the bar from 225 to 230. Almost nobody would be affected by that weight.” However, if you had a group of 10,000 people and asked them to do a single rep with both 225 and 230, there’s no question that slightly more people would fail with the heavier weight because 5 pounds was their tipping point. Marginal thinking.

    Comment by Steve Cronk -

  31. Pingback: The Cure to our Economic Problems « moneymikeyj

  32. When they are starting the business, you are right.

    The rub is when it is time to expand the business. When it is time to hire that employee. Any small business owner ALWAYS asks the same question — “can I afford to hire someone?” Taxes are a huge part of that, and getting huger. You have to be able to pay a wage high enough to get someone worth hiring. But the wage is only a small part of it. You have to pay the business’ half of the SS and payroll taxes. On top of that, NOW they have to consider thousands of dollars a year either in health insurance premiums or tax penalties.

    Everyone starts out as an idealist. Once they are going, though, they have to keep the business running, and that means making payroll. Too much of that payroll is demanded by Uncle Sam.

    From MC>You are absolutely right. Every company looks at the total cost of hiring . THe more it costs the harder the decision.. But its all relative as well. Unless you have a monopoly, you compete with companies in the same circumstance as you. When it comes down to hiring, like any business decision, the question is whether or not you can get a return on that personnel investment and give your company a competitive advantage or increase your profits. You also realize that your competition is going through the same scenario. Who can be the most productive with their money.
    I have investments and help run many, many small businesses and we make that decision every day. It always comes down to the same question “Are we smart enough to make it work ? Are we smart enough to get a return on the person ? Have we done everything possible to make the hiring the decision the right decision ?

    We all would love to pay fewer taxes, myself included. The reality is that we still have to run our businesses and be innovative to overcome the hurdles. I personally would rather pay more taxes and pay less money to lawyers and accountants. Give me simplification so i can spend my brainpower on improving my businesses rather than listening to lawyers and accountants review my options. I would rather there be single forms across all governmental entities so i dont pay to have taxes done in 30 states and a hundred plus taxing entities. That is what gets me madder than anything. Even when I was struggling to make payroll I hated all the braincells that were killed because of time spent with “professional service firms”

    Comment by everlastingphelps -

  33. Pingback: Mark Cuban: Tax Rates Don’t Drive the Economy | FrontBurner

  34. So, if entrepreneurship is the key and new ideas are what will move our country forward, how come you dislike patent laws so much? Do you really think Apple would have gotten to where it is today without the protection of patent law?

    Comment by Sanford Gray Thatcher -

  35. and like 4 years ago, i disagree. what applies in europe today, applies in the u.s. as,well. austerity is in order for the moment. its the lack of government austerity that impedes all kindss of progress, including in the free market.
    http://fix-fiscal-america.us

    Comment by mydogbruno -

  36. We can only hope the government does not get in our way or give too large an advantage to large companies. All the tax talk is about manipulating the system. At the end of the day you still have to produce.

    Comment by Nick Sparagis (@Sparagi) -

  37. Thank you for the inspiring post!

    Comment by Heather Buen -

  38. Mark, you are talking about macro-economic principles and applying them on micro-economic terms. By doing so, you create a not-so-obvious disconnect, which flaws your conclusion.

    Before we even speak about the need for taxes, we must examine the need for government. What do we really need the government to do for us?

    Do we need military strength to protect our shipments and commerce activities around the world? Do we need to protect our borders from invasion by those who intend harm or unjust enrichment? Do we need roads, bridges, tunnels, and other interstate infrastructure? Do we need to help those who are UNABLE to help themselves (e.g. The disabled elderly and other infirm among us)?

    I believe that we can all agree in the affirmative to the above questions, with the debate centering around the concept of “how much.”

    Do we need the government to be a nanny state that provides a cushion to those who will not contribute (e.g. Lazy people, drug addicts and illegal aliens)? Do we need the government to replace private industry in providing health care? Should the federal government have any involvement in education (primarily a local endeavor, in the best case)? Should we take money from American citizens/taxpayers and give it to our allies and enemies overseas, while ignoring our needs at home?

    From an economic standpoint, the less the government does FOR the people, the less it can do TO the people.

    The Declaration of Independence RECOGNIZED certain rights that are given to us by GOD. Note that these rights were NOT provided by the government. In order to ensure that these God-given rights would not be challenged, the Bill of Rights (Amendments 1-10) were added to the US Constitution.

    Over the past several years, politicians on both sides of the aisle have spent tremendous amounts of money in the hopes of diminishing our enumerated rights. Most often, you hear of attacks against Free Speech and Freedom of Religion and Gun Control (1st and 2nd Amendments), but a lot has been done to take away our Due Process, Freedom from Search and Seizure, and many other rights under the other amendments (have you taken a flight lately?). Is this the government we feel that we should be buying through our taxes?

    Regardless of how you feel about these issues, at some point we have to draw a line and say, “This is what it will cost this year to give you this level of governance.”

    For the past three years, only the House has passed a resolution giving a budget number (of course, with a $1.5 trillion deficit, this number didn’t account for much). Obama’s last proposed budget was defeated UNANIMOUSLY. Our nation has been operating without a budget for three years, in spite of Constitutional requirements that a budget exist.

    We’ll leave deficits and the national debt to another discussion, but you must admit that they matter to the future economic viability of our country, not to mention the purchasing power of the US Dollar.

    Approximately 300 million people live in the USA. Some legally, some not. All enjoy the riches that derive from the US government.

    If everyone in America went to see a movie, at the same time, in the same place, we would likely all pay the same price (with perhaps some exceptions for students, children and senior citizens, and I’m good with that).

    If it makes sense that we would all pay the same price to see a movie in this country, why is it that it doesn’t make sense that we all pay the same taxes to live in this country?

    This year (2012), the amount of our national budget to be raised through individual income taxes is $1.165 trillion. This would be a liability of about $3,883 for every man, woman and child in the US (including US citizens living abroad, like myself).

    Now, those living below the poverty level cannot possibly hope to meet this requirement, so we have established a graduated tax scheme. The expectation is that those who can more easily afford to pay will pay more.

    This would make sense, until you discover that 47% of American households receive some type of government assistance (largesse or theft, depending on if you are receiving or paying), while the Top 1% of households pay 37% of the national bill (think carefully about that one!).

    This is not a workable system. This creates a dependent state and is in direct conflict to the stated goals of those who established this country. We are to be a Free Enterprise, Capitalistic System in which people have equal opportunity – not equal outcomes.

    It seems to me that it would be much more fair if everyone paid the same percentage tax across the board. Right now, the wealthy benefit from lower Payroll (i.e. Social Security taxes – Medicare is the same) tax rates than the poor, while the poor pay little to no income taxes, while receiving payouts instead.

    Let’s set a national flat tax rate paid by everyone. This ensures that everyone is a stakeholder in this nation and that we are not penalizing success. With US GDP estimated at $15.8 trillion, if we set tax rates across the board at 7.37% for 2012 (based on estimates), we would have a revenue-neutral alternative (Herman Cain calls for 9-9-9, which is a good proposal – read it).

    In reality, we would probably see huge additional investments in business and increased individual savings, which contributes to an easier supply of capital for businesses and borrowers.

    Mark, we are both proud of your accomplishments. As a fellow entrepreneur, I both appreciate and commend what you have accomplished. Early in my entrepreneurial career, I had great financial success (by my measure), and I was very good financially to those who worked for me. As life got real, and I got older, I found that my easy success early on actually handicapped me, as I endured failures later.

    My suspicion is that you achieved great success early, but didn’t experience enough failure to be able to relate to many of use who are not wonder kids who hit home runs in our first at-bat. From my own experience, I can tell you that when you make money very easily (e.g. Actors, athletes, some tech millionaires), it loses a lot of its value. This means that you don’t necessarily relate any longer to those who have to fight traffic, deal with bosses, go home to spouses and kids who complain, etc. You have your own problems, but they are not the same problems experienced by the masses.

    When you have millions and millions to spare, you really don’t give a shit about paying a few extra million in taxes. I can understand that. However, please don’t speak for me, because when I’m worth hundreds of millions or billions, I’d like to keep as much of what I earned as possible!

    However, for the couple struggling at $60k per year with two mortgages, multiple kids, a mountain of debt, et cetera, those extra few dollars in taxes each week can make the difference between keeping the lights on or feeding the kids a proper meal every night.

    It’s not all about taxes. It never was. However, when half of the country is surviving because money is being stolen from the other half to subsidize them, we are no longer following our Constitutional design. THAT is the problem!

    Comment by Randall Parker Mba -

  39. It’s beautiful as always Mark, thank you so much! Here’s what I told my friends when sharing your article:

    “One of my favorite fellow Billionaires because Mark Cuban is always right on when it comes to politics, economics, finance, and even personal issues!” -Ben

    “And poor people and rich people alike love to rip into Mark because they’re so je
    alous of how brilliant and good looking he is!” -Ben

    ..Never stop sharing, no matter how much the recipients hate you for it! Thank you so much Mark!
    -Ben Arnold
    benarnold4u@yahoo.com

    Comment by Ben Arnold -

  40. Those arguing that “Angel Investors” will have less money to invest because of higher tax rates miss an important point. Taxes create incentives for business to re-invest into their companies because, instead of profit-taking, they continue to build the business because it creates less “profit”, while growing their wealth. By the end, the profit you see is the end result of the business. When taxes are low, it’s easier to cash out. Angel Investors are doing exactly that, building wealth, investing in ideas to avoid paying higher taxes. I’d rather invest in business and potential big ideas then paying the government, and when taxes are very lower, there isn’t nearly the same reason to do that.

    Comment by Gerry Geurts (@Guertez) -

  41. entrepreneurs are needed, but entrepreneurs need customers. think of how we got into this mess in the first place. it wasn’t because the entrepreneurial spirit went away; it’s always been with us. when all money goes to service debt and customers don’t have enough capital to generate meaningful customer demand, there are going to be problems. customers are more important than entrepreneurs. create customers and you create more entrepreneurs. create customers by cancelling debt and revising the means by which debt is introduced into an economy.

    Comment by kidmercury (@kidmercury) -

  42. Yes, four years ago, or 4,000 years ago, you likely could have wrtten the same thing and it would still fit.
    Politcs and governments are transitory, they come and they go, but do they really change? It is, as referred to, the people trying to make a living, raise families and be creative and find some self expression of meaningful values in the process, that unlike the former, do not change. As my father use to say, “We all have to live.”
    I do think the politicians need to be reminded and to remind, the ball, so to speak is in our court and they should feel some sort of obligation to let us play.
    We too, the people, often need to be reminded, politics and governments come and go, it is how we conduct ourselves and affairs that matter the most.
    Certainly there should be a balance between a responsive and productive government and one that allows its own people freedom of self expression, on all levels.
    The government should serve the people, but the people have an obligation to be true to themselves, regardless of what current government is hovering over their heads.
    I remember one of Bill Moyer’s remarks when he was leaving PBS after 30 years as a independent journalist. He warned, “Democracy only works when we embrace it as our own.”
    Our country, lives, hopes and dreams, only work when we embrace them as our own.
    Lets, Play Ball!
    (sorry, that was completely uncalled for).

    Comment by suttonsbaydoug -

  43. You are so right. I own a business and the last thing I think about are taxes. My concern is increasing sales. Everything else is fodder.

    Comment by Jamey Kirby -

    • Thank you Jamey for running a business. And thanks for your honesty about taxes.
      I pay a relatively high percentage of my income in taxes and don’t necessarily like it – but I also don’t obsess about it – because I am better just working to improve my income and relative quality of life. Sounds similar to your focus on sales….

      Comment by Patrick Pine -

  44. This is the only blog worth reading! You are the man!

    Comment by Dave Jones (@captainreset) -

  45. Mark Please keep sending these blogs. Maybe Washington will read one and hopefully realize the solution is with allowing business to do what it does best – create jobs. If you ever run for office you have my vote!!

    Richard Pizzi Electrocomm 248-334-4300 Ext 10 (office) 248-334-4303 (fax) 248-766-7774 (cell) electrocomm@sbcglobal.net

    Sent from my iPad

    Comment by R. Pizzi -

  46. The problem with saying that entrepreneurship can cure our country is that no one can agree on precisely how to encourage entrepreneurship. Almost everyone agrees that small businesses are valuable. The government’s support of small business funded my stay in DC this summer through the small software company for which I worked. Each side is quick to jump in when the other side does something that will “hurt small business.” However, neither side is actually promoting small business interests. I know, because my parents and aunt have been entrepreneurs for my whole life. The environment is not that great – even with the short term tax incentives for hiring during the 2008-2009 recession, we still couldn’t really afford to hire new people.

    I recognize that this is a repost; if you were to give the next president (whoever gets elected in November 2012) specific action steps, what would you say?

    Comment by Caroline L (@LaMarEstaba) -

  47. Amazing irony Mark and spot on. I would add we should take a look at our balance sheet though and not think all revenues come from taxes. If we would tap into our balance sheet and think energy independence, we’d create a ton of jobs, keep our money here instead of sending it to countries that want to kill us, and not watch our balance sheet deteriorate with more debt.

    By the way Mark, you didn’t create MicroSolutions or Broadcast, somebody else did.

    Comment by Bill Broadbent -

  48. Mark- Just for some variety why don’t you repost something from years ago where you have been absolutely 100% wrong?

    Comment by tkelly1478 -

  49. I’m a serial entrepreneur who is risking it all to reach my dreams.. Thank you for this motivational piece and couldn’t agree with you more.. All those you mentioned sacrificed and went through thick and thin to build a successful empire. Our country was built with entrepreneurs and will only continue to succeed as long as business owners continue to flourish

    Comment by Camilo A Ferro -

  50. I agree with your thesis on entrepeneneurship. However, we need more revenue. We need to get the top tax rate up to 55 percent on all sources of income in order to provide more revenue. IMO, if we had such rates prior to 2008, the exonomic fiasco we suffered wouldn’t have happened; because Company CO’s wouldn’t have been quite so motivated to take such enormous risks when all they could have taken home would have been only 45 percent of their compensation. Such rates worked fine in the 50′s, 60′s, and 70′s, and we had a rapidly growing middle class, and very little unemployment.

    Comment by Larry Mammoser -

  51. Dear Mark,

    Bravo. This country was grown by Entrepreneurs. It’s beginnings were made by farmers, general store owners, and cattleman… All Entrepreneurs.

    The British tried to make us swallow Taxes and we threw their Tea into Boston Harbor.

    As you say, here we are in 2012 and our candidates need to remember our roots. Remember our spirit and where it came from. It certainly didn’t come from Taxes.

    I’m an entrepreneur. Bravo to you and Bravo to the create spirit.

    Best Way Forward,

    Peter

    Sent on the Sprint® Now Network from my BlackBerry®

    Comment by historicalpages@yahoo.com -

  52. Basically right on but as always the devil is in the details. Wanting it does not make it so. Taxes, regulations, availability of funding, employee pool, etc. still go a long way into turning a good idea into a successful idea.Unfortunately neither candidate has real hands on entrepreneurial business building experience like Mark.

    Comment by WS4FSM (@WS4FSM) -

  53. Mark, your position doesn’t fly for many entrepreneurs. The reason is entrepreneurs outside of places like San Jose and Austin rely on Angel Investors who are in the 200k to 500k range. Startups aren’t likely to get VC money and guys like you are more likely to use your funds to cherry pick startups that have other peoples money in.

    If taxes were higher when I raised capital, I wouldn’t have got funded. My investors would have had their discretionary income wind up in the Gov’s hands instead of seeding a company.

    On the other side, I’m with you on not needing to raise money. I have no interest in dealing with investors going forward and instead focusing on building businesses that have profitable transactions from the start. Good thing, because now that I’ve brought up taxes, I know you’d never invest in me! :-)

    Comment by Kirk Taylor -

    • you are 100pct wrong. Do the math. if an angel investor makes 2mm in regular income, raising their taxes from 35 to 39pct, all other things being equal, impacts their potential savings by 80k dollars.

      Thats a lot of money, but an investor either has the money in the bank to be an angel investor or they don’t. Rare is the occasion when a delta in networth of 80k is going to change their ability to invest 200k .

      Most angel investors have cash in the bank that they are willing to risk. If they like the investment they will take the risk. Their regular income taxes dont matter.

      As far as capital gains. Like the old saying goes “Taxes only matter if the deal pays you” You find me a deal that is going to make me a nice cash on cash return and I dont give a shit if i pay 15, 20, 25pct capital gains.

      where either party could screw it up is if they dont allow losses to offset gains. THAT is where you would see a change in the risk profile of investors.

      Comment by markcuban -

  54. Yeah. Maybe get a government loan to help you start that business. What a great idea!

    Comment by Jez (@jezmez68) -

  55. Yep. Those are some good points! I roll my eyes every time they talk about taxes inhibiting business growth. If the businesses have sales – they get on with it and produce. If they don’t have sales, all the tax cuts in the world won’t save their asses.

    Comment by Barrysentials, The He Said She Said Wine blog -

  56. Mark Cuban for president! Steve Case would be a good running mate. Politicians in Washington have no idea how to create jobs, or how to help entrepreneurs who want to create jobs.

    I have talked with hundreds of startups and entrepreneurs. Not a single one cares about tax rates. But they do care about government regulations, restrictions, and complicated laws.

    Comment by Don Dodge -

  57. You make some excellent points and they are still valid today. However, I feel the real problem with our fine nation is our public and private companies have become “wealth builders” instead of “job creators”. Corporate profits are at records highs and average wages are about the same as they were in the 70′s when you adjust for inflation. Our business leaders need to recognize this HOARDING OF CASH, and begin reinvesting in american jobs.

    The entrepreneurs you speak of probably make up less than 5% of the U.S. population, therefore, the entrepreneurs need to employ the other 95% and pay them wages they can live on.

    I also believe the majority of Americans have no idea what you or I are talking about, nor do they care. They are too busy watching “Honey Boo Boo”.

    Comment by Brett Basinski -

  58. But Mitt Romney is confusing ‘entrepreneurs’ with those, like him, who simply engage in financial transfers.I think of an entrepreneur as someone who invents a new product or service or makes a product or service better. Our financial wizards have failed to support ‘entrepreneurs’, in fact, they have thwarted the entrepreneur. So I will contend that we agree that we need more of the spirit you identify – but I do question whether the GOP nominees really will encourage that spirit – I really think they will instead thwart it. While President Obama has not done a great job in many respects – I believe the odds of generating the kind of spirit you suggest are higher with Obama than Romney.

    Comment by Patrick Pine -

  59. Spoken like a champion!! Hard (and smart) work pays off.

    Comment by Keith Dery -

  60. Funny, Mark, until know I had not realized that the word “taxes” never crossed my mind at any time while starting one of the 21 successful businesses I owned! I usually hired someone to deal with that nasty word. I still hate fooling with taxes. I have seen this country penalize those with the entrepeneur spirit for some time now. When we get out and DO IT and worry about it later, we will turn this country around. An old wise man told me once “you don’t worry bout taxes and insurance until you make enough to worry bout taxes and insurance-if you ain’t makin’ nothing you ain’t owing nothing”. Enough said. Love the blog……… Michael Nix Ashville, AL

    Comment by Michael Nix -

  61. And thus why he makes a good Shark, and presidential candidate, huh??

    Comment by Gary Gagnon -

  62. Simple plan with macro results. It amazes me how obvious it is, not only for the US but in developing countries also. Labor or in other words self sustaining economics is the answer to all the worlds problems. Domestic and global politics are bs, they keep people hostage to the limitations their gov’s force them to live under. They will have to answer for it someday. Sadly it will remain relevant for many for years to come. PS. sorry to take post somewhere you didnt intend. Good post.

    Comment by Nick H (@rifoyn) -

  63. Great post Mark! I love how you’re an independent but aren’t afraid to share you opinions on both candidates!

    Thomas

    Comment by Mobile App Tycoon (@MobileAppTycoon) -

  64. Spot on Mark!

    Comment by Tom De Napoli -

  65. Spot On; couldn’t agree with you more

    Comment by Emmanuel Tenkorang -

  66. Cuban in 2016!

    Comment by Rob Merlino (@Hotdogman1964) -

  67. As pitch-perfect now as it was 4 years ago!

    Comment by AccountabilityFactor (@Accountable731) -

Comments are closed.