One Entrepreneur Speaks His Mind: Targeting the Wealthy Kills Jobs
Cypress Semiconductor CEO T.J. Rogers let it all hang out in the Op-Ed pages of The Wall Street Journal. He compared his San Jose, CA company’s investment totaling $797 million to create chip-making plants between 1983 and 2003 leading to the creation of 4,003 jobs — roughly an investment of $198,000 per job– and contrasts this with $500,000 to $4 million per job created by the Obama administration in the course of its stimulus program.
August 23 2013 by ChiefExecutive.net
A native of Wisconsin but longtime Silicon Valley libertarian who does not suffer redistributionist fools gladly, Rogers challenged President Obama for allegedly dividing the country into haves and have-nots and using income disparity to engender envy if not class warfare. He cited 2012 IRS income tax data, showing the top 1% of U.S. taxpayers earned 20 percent of all income and paid 36 percent of all taxes. The top 5 % earned 36 % of all income and paid 58% of all taxes. “Will even higher taxes help the economy,”he asks? “My experience in Silicon Valley tells me that high and so-called progressive taxes are a major cause of the country’s current economic problems, not the solution.”
Rogers critics are many and they were out in force to savage him. Some pointed to a Reuters story that drew upon a Congressional Budget Office study claiming that allowing income tax rates to rise for wealthy Americans, and maintaining rates for the less affluent, would not hurt U.S. economic growth. Others cite the fact that during the 1950s, a prosperous decade, tax rates on the rich were high. This overlooks that with numerous deductions available at the time, no one actually paid taxes at those nose-bleeding rates.
Rogers is no stranger to controversy. In 1995, Sister Doris Gormley of the Sisters of St. Francis of Philadelphia wrote a scalding letter to him urging Rogers that he ought to add women and minorities to his board of directors. Rodgers sent a blunt reply suggesting that the good nun hadn’t the vaguest clue how business actually operated and what was required of a tech company board director. What may be acceptable to a consumer products company like Johnson & Johnson did not work for a B2B Silicon Valley firm. “Bluntly stated,” he told her, “a `woman’s view’ on how to run our semiconductor company does not help us, unless that woman has an advanced technical degree and experience as a CEO.” (Chief Executive later learned that Rogers was looking for a talented CEO with engineering experience and pursued Carol Bartz, then CEO of Autodesk and later CEO of Yahoo. For whatever reason it didn’t happen.)
The debate over wealth and job creation will likely intensify as we approach the2014 congressional elections. Not all entrepreneurs are of a like mind, Warren Buffett and Bill Gates being celebrated examples. Buffett made a big deal that he was being taxed less than his secretary, a somewhat disingenuous claim since the tax rates for ordinary wage income vs capital gains is like comparing chalk and cheese. It’s hard to argue, however, that the investments in most start-up companies must come from individuals who can wait 10 years or more to get a return on their investment. Only the well-to-do can be that patient.