The Origin of Venture Capital Firms and
Why Over-Regulation Can Kill Them

An interesting article last week in the WSJ on the history of the venture capital firm, and why higher taxes and more regulation could kill them.  One paragraph peaked my interest:

Uncertainty about which regulations applied to early-stage investing slowed the growth of venture capital. It wasn’t until deregulation in the late 1970s that the industry took off. The capital gains tax rate was cut to 28% from nearly 50% in 1978, and for the first time pension funds and other fiduciaries could include venture capital as part of an overall portfolio. During this vital period venture firms began to nourish what are today’s high-tech leaders, from information technology and the Internet to genetic research and health care.

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Whoda thunk?! Lowering taxes would help businesses? And even more important--lowering capital gains taxes in particular will help? Get rid of regulations, and have reasonable taxes and we'll help the economy? It's like these people have taken an economics course. Thought experiment: what would have happened if we had cut all capital gains taxes, dropped the corporate tax, and allowed businesses to move to the US more easily instead of passing the stimulus bill? I wonder if we'd still be in a recession.
>> Jeffrey Hosten August 20, 2009 12:56 pm

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