Broback's Blog

At least that’s the first thing that came to my mind when I heard of what seems to be an illusory business-friendly tax cut.

I’ve heard him say this many times, and it’s always sounded non-sensical to me. Obama says he will:

…eliminate all capital gains taxes on small and start-up businesses to encourage innovation and job creation.

This is all that’s mentioned about this elusive break in the “Barack Obama’s Plan For Small Business” PDF on his site.

I don’t understand. Where and how do startups and small businesses pay this tax now? I’m trying to imagine the scenario where this happens. Perhaps someone who sells stock to fund a startup would not have to pay capital gains? Seems unlikely.

Seriously, if anyone has any knowledge about this I’d like to know.

UPDATE: My friend Steve has a notion that I did consider but rejected almost immediately. That is that when you sell your business you wouldn’t pay cap gains. I find it that very hard to believe. Cashing out reflects a mature business owned by what’s largely received as a “fat cat.” Both seem in violation of the spirit of what Obama is proposing, and certainly would not sit well with his core constituency. In a nutshell, I don’t believe it.

The fact that no one (so far) seems to be able to decipher what Obama means implies either his vaunted economic expertise may be overstated, or he’s just trying to slip one by us. Of course, I could be missing something, and the plan could be fully baked somewhere that I just haven’t read yet…