In this past election, I did something I now really regret: I voted 'yes' to Proposition 30.
As this article by Ethan Anderson lays out, Prop 30 is very, very bad for entrepreneurs. Specifically, it institutes a retroactive tax on 2012 income. And for any entrepreneurs who had an exit in 2012 (or otherwise had a large chunk of income hit this year) and live in California, that's a really bad thing. It's especially bad for entrepreneurs because our income is often deferred for years only to hit in a specific year. If that was 2012 for you, suddenly you have a huge retroactive new tax burden you weren't expecting.
Instituting a retroactive tax is a shameful thing, and I can't believe I voted for a proposition that does that. And even worse, I can't believe that the ballot didn't mention it was a part of the proposition. Taxes should never be applied retroactively, because the populace can't go back and change their behavior or decisions retroactively.
When our politicians do something like this to us, it makes me want to become more conservative, and just never vote "yes" to anything that could have -- and in this case, did have-- hidden gotchas no matter how principled the ideal might be.
If you're more of an expert on Prop 30 than I am, and you feel differently on this, or feel that I'm missing something, please let me know in the comments below. Because right now, on behalf of not just myself but all the entrepreneurs out there, I'm feeling really violated by my California legislature.
Austin, TX is looking like a really attractive place to be an entrepreneur right about now.
One point worth making - you shouldn't feel violated by the state legislature they don't have any role there. It's California's prop system in general that is to blame. While it's trying to serve the ideal of direct democracy, it's deeply flawed. Special interests (no judgement there, we all have particular interests) are the ones who put things on the ballot and it's just too easy to put a measure up for consideration and to then structure it in a misleading way and subsequently promote it in a fashion that preys on people's general ignorance and goodwill. There were more misleading props than this one this year - like the horrible sex trafficking law that passed in a landslide and will inadvertently catch a lot of innocent people in its too wide net - but hey, who is ever going to vote against a law that says it means to stop child trafficking? I only voted on a few props I felt I understood well enough to make an informed decision about and I still did it with great resentment and reluctance, knowing that most of the votes being cast would be hugely uninformed. Direct democracy doesn't work when the signal to noise ratio is so low.
I'm not sure which is more damaging - the CA prop system or all the states that require such a super majority to pass new taxes that they can never raise sufficient revenue.
Yeah my general disposition moving forward will be not to vote at all on a prop unless I've researched the hell out of it. I remember thinking to myself when I was in the voting booth "I'm sure that the most relevant points would be listed on the ballot" but that wasn't the case.
Not blaming anyone other than myself -- like I said in the title, shame on me.
I have never made anywhere close to being able to be affected by this,
nor do I have immediate plans to. I'm a nonprofit entrepreneur, and
part of the reason why I am moving out of california is precisely
because of crap like this. I think there's a lot of questionable moral
anti- and pro- tax arguments (the "no double taxation" argument is one
of them, I think - if taxation is okay at any level, why is double
taxation any worse).
But a retroactive tax offends the morality because as a matter of principle the relationship between the individual and the state should be well-defined at any given time - to engender rational planning on the part of the individual. The only retroactive things that should happen should afford leniency to the individual (for example, commuting sentences). That this has happened, quite frankly, is terrifying on principle and as precedent - even if it does not affect me.
What if california decided to legalize marijuana via the legislature, and an upset populace decided to retroactively make it illegal by referendum in november, and police decided to round up people who had offended the law earlier in the year?
For what it's worth, I voted against prop 30, mostly because I knew that it was retroactive.
Are you truly 'voting with your feet' and moving out of the state due to this? What is "this" exactly -- the "prop" system in general, or the way it's being used in this specific use case? Or other?
Real entrepreneurs left California years ago. It's only the coddled Silicon Valley wannabes college grads that continue to congregate there (hipsters in SoMa who think their next boring social app will net them billions) but that will change very soon once people realize how stifling California taxes are to innovation.
This is the first of a multi-part blog post I'll be writing over the next week that will chronicle my experience raising a $1MM round for AppMakr.
I'll be sharing my learning and experiences as a first-time fundraiser out here in the Valley. My goal is to provide pragmatic tips to help other entrepreneurs understand the process and short-cut the time fundraising typically takes. Think of it as download that condenses 4 months of learning into a series of blogs you can read in an hour.
Be sure to subscribe to the blog if you'd like to get those future posts. Also, we're throwing a party to thank the investors who made this round possible, and celebrating the fact that over 1,000,000 people have now used apps made through AppMakr. RSVP here to join us on 10/28 at 6:30pm. You'll meet Mitch Kapor, George Zachary, Pietro Dova, Ben Narasin and other AppMakr investors.
For this first post, I scored an interview with Naval Ravikant, one of the co-founders of VentureHacks, which runs AngelList. AppMakr went through AngelList, and intros from AngelList were responsible for 54.5% ($545k) of the $1MM we raised. Needless to say, these guys rock. I'd also like to give a huge shout-out to my brother Sam Odio and amazing entrepreneur James Hong, both of whom intro'd me to Nivi & Naval of AngelList at the beginning of our fundraising process.
Here's the video with Naval:
Last time, on Long Term Returns...
What is a Bond?
A bond is a loan contract, but more promiscuous: Some bonds get passed around ten times a day or more. But it's otherwise similar to a loan: You ‘buy’ the bond, or lend out your money, and will receive interest payments until the maturity date. When the bond matures you will receive your principal back.
When an entity goes bankrupt and tries to pay its debts, bondholders get paid before stockholders see a single cent- one reason why bonds are safer than stocks.