Obama, taxes, investors, and capital: Why raising taxes hurts the startup industry

TL;DR: The startup industry largely supports Obama who wants to increase taxes on the wealthy. Raising taxes on the wealthy directly affects the amount of capital available to entrepreneurs because when investors pay more in taxes, they have less money to invest in new startups.

The internet startup "industry" is built off the fact that there are investors who are willing to write checks to entrepreneurs to create new businesses. Startup incubators like Y Combinator and TechStars have been able to fund a large number of businesses because investors have been willing to put their money at risk. In fact, the current total value of companies Y Combinator has funded is around $10 billion. In essence, the startup industry is the perfect example of how investing should work.

It's no secret that most people in the startup space support President Obama, and here's why I'm baffled by this: Obama wants to significantly raise taxes on everyone making over $250,000/year, and not just raise income tax but drastically increase taxes on investment returns. The problem with taking more money from this group is that it takes away money that would otherwise be invested in startups. Why does the startup community want to increase taxes on their own investors? What could have been used to fund a startup now goes to paying more taxes.

I don't think this correlation is made very often. When people in the startup space think about rich people paying more in taxes, I don't think it's associated with the very same people who are funding their startups and paying their salaries.

I'm thankful to the people who have invested in my startup. Because of the capital we've received, we are not only able to start a business, but actually hire people and create jobs! (Politicians says that the government can create jobs, but in reality, more available capital helps fund more startups who are able to create jobs.)

The shortsightedness of wanting to tax the rich to solve our problems needs to stop. Government is wildly inefficient at most of what it sets out to do, and it's not the answer to most of our problems today. I hope more people in the startup space will wake up to the fact that higher taxes on successful people (namely, our very own investors) is completely counterproductive and will do nothing but hurt our industry and future innovation in the long run.