Tax Subsidy Delivers $9 Million Windfall to Google Founders

RESPONSIBLE WEALTH PRESS RELEASE
August 19, 2004
Contact: ckasica@FairEconomy.org">Christina Kasica
(617) 423-2148 x19

Tax Subsidy Delivers $9 Million Windfall to Google Founders

Break on Capital Gains Reduces Funds for Next Generation of Entrepreneurs

"It's hard to understand why we changed the laws to give people who sell stock half the tax rate that they would pay on wages," said Scott Klinger, co-director of Responsible Wealth. "Google's founder's success is something we should celebrate, but they don't deserve or need multi-million-dollar subsidies - just for selling stock."

Reductions in capital gains taxes over the last decade have added billions to America's largest fortunes. With the completion of Google's public offering, company co-founders Larry Page and Sergey Brin netted more than $36 million each. If the Google offering had occurred in 1997, the pair would have each owed nearly $20 million in capital gains taxes. Instead, the government's share will be just $11 million.

This tax cut and others have combined to cause reductions in a host of federal programs, including the Small Business Administration. For the coming year, President Bush proposes to slash SBA spending by more than 50%.

"Ironically," said Klinger, "padding the fortunes of America's newest billionaires threatens one of the government agencies planting the seeds for the next generation of Googles. Instead of subsidizing the already wealthy, we should be investing more in future opportunities."

Responsible Wealth has used Google to illustrate how society helps create wealth. In a recent report entitled, "I Didn't Do It Alone: Society's Contribution to Individual Wealth and Success," it calls attention to the public investment and social institutions that helped Google, including:

  • The enormous taxpayer-funded research in Silicon Valley and Stanford University, where Google's technology was developed.

  • The Internet platform, without which Google would not exist, an invention funded by the world's largest venture capitalist, the United States government.

  • Government regulation and oversight of the financial institutions and the stock market that Google is leveraging.

According to Klinger, "Google's success shows what kind of public investments are key to wealth creation. It's not tax breaks. It's real investments - from public education to technology research - that will deliver the Googles of the future."

"I Didn't Do It Alone: Society's Contribution to Individual Wealth and Success," was written by Chuck Collins, co-author with Bill Gates, Sr. of "Wealth and Our Commonwealth" and associate director of United for a Fair Economy; Scott Klinger, co-director of Responsible Wealth and a Chartered Financial Analyst; and Mike Lapham, co-director of Responsible Wealth. It is available online at responsiblewealth.org/notalone.

Responsible Wealth is a a project of United for a Fair Economy, an independent national non-profit that raises awareness that concentrated wealth an power undermine the economy, deepen the racial divide and corrupt democracy.

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