JEFFREY BROWN: The ‘Occupy’ movement, the bipartisan congressional super committee, deficits, taxes, fairness, economic inequality, they’re all very much in the air right now. Over the past few months, we have been exploring these issues in a series of reports and conversations.
Tonight, we hear from a group that wants higher taxes on itself. They call themselves Patriotic Millionaires for Fiscal Strength. And members were on Capitol Hill lobbying today.
Joining us now is one of the group, Garrett Gruener, founder of Ask.com and now director of the venture capital firm Alta Partners.
Welcome to you.
GARRETT GRUENER, Patriotic Millionaires for Fiscal Strength: Nice to be here.
JEFFREY BROWN: First, I want you define this group. Who are you, how many, and where do you come — where do the members come from?
GARRETT GRUENER: These are about 200 folks so far who make a substantial amount of money and who believe that the — it’s time to roll back the Bush tax cuts, that essentially what we need to do for the sake of the country is to tax folks like ourselves more.
JEFFREY BROWN: And is there a consensus on how much more when you talk about — you’re talking about the marginal rate?
GARRETT GRUENER: That’s right.
We are talking about moving back to the marginal rate that prevailed under President Clinton of 39.6 percent on, in this case, folks who make more than a million dollars a year.
JEFFREY BROWN: What’s the argument? Why?
GARRETT GRUENER: Well, simply, first of all, the country needs the money, and we think it’s the right thing to do.
We think that, you know, like other Americans, we love this country, and that those in the upper 1 percent essentially have been treated too good for their own sake, too good for the sake of the country. We have all done very well, and it’s time to give back.
JEFFREY BROWN: And how did this get organized or how did it come about?
GARRETT GRUENER: Well, I think there are a variety of people who came together.
I wrote an op-ed that ran in The L.A. Times that — entitled “Tax Me More.” And that was certainly one of the strains. But I think a variety of people came to the same conclusion, that the relentless desire on the part of the Republicans to push down marginal rates was causing us to have an excessive deficit, which we believe is a big problem, and to under-invest in things that we think are critical for a good society.
JEFFREY BROWN: Now, Warren Buffett, the billionaire, famously put this forward a few months ago, and he got a lot of pushback. And we hear regularly the argument from many Republicans, you shouldn’t raise taxes on those who create jobs…
GARRETT GRUENER: Right.
JEFFREY BROWN: … particularly at a time like this, when we need those jobs.
GARRETT GRUENER: Well, that’s something I can speak to directly.
I have built up a number of companies myself, and I have been a venture capitalist now for almost 20 years. So I have been involved in the creation of lots of high-technology companies, companies in life sciences, in software and hardware, now in clean tech. And I’m currently running a company that’s built on nanotechnology.
And I can say, for myself, that not a single one of those investments, not one was ever impacted by marginal tax rates. I invested under the Clinton rates. I invested under the Bush rates. I invested under the rates before that. And, by the way, in history, the rates were much higher than they are today.
JEFFREY BROWN: Then why do we hear that so often from small — the millionaire class, which includes many small businesses, we hear, why do we hear that tax rates do have an impact on whether they start their business, whether they hire that one extra person?
GARRETT GRUENER: I think it’s — frankly, I think it’s a myth.
I think that this is something, that it’s a good line. It — certainly, if it were true, if it were a critical aspect of growing the economy, then I might be a supporter of it. But my own experience is, it literally has had zero impact on the investment decisions that I have made.
And when you think about it, it makes perfect sense, that the kinds of things that I’m doing at least in venture capital, what we’re trying to do is grow companies that have the ability to grow into major companies and employ a lot of people. Sometimes, we get it right. Sometimes, we get it wrong. But, anyway, that’s always the objective.
And if that’s the case, a few points of marginal tax rate one way or the other are not going to make a big difference.
JEFFREY BROWN: Critics also pushed back at Warren Buffett and others and said, look, the — the wealthiest already pay a far higher share of taxes in this country than anyone else, and, in that sense, the fairness factor is already there.
GARRETT GRUENER: Well, there’s a number of elements of fairness in all of this. In the end, if you have an awful lot more income, you have more wherewithal to pay taxes.
And in this country, we have gotten to real extremes of wealth being controlled by the upper 1 percent. We’re now an outlier internationally. And it got so bad that in — or so good, depending on how you want to think about this — that, in 2007, the upper 1 percent was capturing 23.5 percent of all of the income.
The last time that had happened was 1928. And I believe that the — what happened next, the Great Depression in 1929 and the great recession of 2008, was a direct result of that bias in the distribution of income.
JEFFREY BROWN: Some of your members of your group today met with Grover Norquist, the anti-tax crusader.
And he has said of Buffett and — and your efforts here, he said, you want to pay — essentially, he and other says, you want to pay more taxes, be my guest. Go ahead. Just do it. Put your money where your mouth is. You don’t need to — you don’t need to change the law. Go ahead and do it.
GARRETT GRUENER: Right, Grover’s position — I literally heard him saying this about an hour ago — is that if you want to up your own taxes, why don’t you just make a contribution?
And I think, frankly, that’s pathetic. The U.S. government is not a charity. We didn’t take — we didn’t pass the hat when we decided to go into Afghanistan. We don’t pass a hat when we decide whether or not to — the country needs another aircraft carrier or to build a freeway or what have you.
What we do is, we make a decision as Americans, and then we fund it. And, alas, we have gotten out of the habit recently of understanding that the decisions we make as a country are decisions we have to pay for. And we need to make sure that the funding resources, that the revenues are there in order to meet the choices we make collectively.
Now, I think it’s a good thing to debate whether or not these taxes should be increased for the upper 1 percent. Obviously, I strongly believe we should. But if we decide that, well, then it’s the law of the land, and we’re all responsible for paying.
JEFFREY BROWN: All right.
GARRETT GRUENER: And that’s what we’re arguing for.
JEFFREY BROWN: Garrett Gruener, Thank you very much.
GARRETT GRUENER: It’s been a pleasure. Thank you very much.