Peter Thiel on Tax Fairness | Peter Thiel | Big Think

Peter Thiel on Tax Fairness

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When marginal tax rights are higher in the U.S. than in other countries, the U.S. is set at an increasing competitive disadvantage in this country vis-a-vis other countries.

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Peter Thiel:

Peter Thiel is an American entrepreneur, hedge fund manager and venture capitalist. He is Clarium’s President and the Chairman of the firm’s investment committee, which oversees the firm’s research, investment, and trading strategies. Before starting Clarium, Peter served as Chairman and CEO of PayPal, an Internet company he co-founded in December 1998 and was acquired by eBay for $1.5 billion in October 2002.

Prior to founding PayPal, Peter ran Thiel Capital Management , the predecessor to Clarium, which started with $1 million under management in 1996. Peter began his financial career as a derivatives trader at CS Financial Products, after practicing securities law at Sullivan & Cromwell.

In addition to managing Clarium, Peter is active in a variety of philanthropic and educational pursuits; he sits on the Board of Directors of the Pacific Research Institute, the Board of Visitors of Stanford Law School, and is an adviser to the Singularity Institute for Artificial Intelligence. Peter received a BA in Philosophy from Stanford University and a JD from Stanford Law School. He is self-described libertarian and a minority investor in Big Think.

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TRANSCRIPT:

Question: Is the current tax regime fair?

Peter Thiel: Well I think “fair” is always a tricky word. I don’t think it’s a terribly good regime, I guess. I’ll use an absolute term rather than a relativistic term. It’s not good for the U.S. because the United States, at this point, is living in an increasingly competitive world. And when you have marginal tax rights at 40 or 50 percent in the U.S., and they are 10 or 15 percent in other countries, we are at an increasing competitive disadvantage in this country vis-a-vie other countries. And so it is not good for the U.S. to have a tax regime that discourages businesses from setting up shop in the U.S.

For that reason, the debates about whether it’s fair, and whether the rich are paying their fair share and things like that actually miss the point almost altogether, that in this global world, we have to really think about how is the U.S. going to be the most competitive and maintain the kind of leadership it’s had in the 20th century, which I think it’s very much at risk of losing.

Question: What type of taxation do you endorse?

Peter Thiel: I think it certainly should be simplified. I think marginal rates around 15 to 20 percent rather than 50 percent would probably be a good starting point.

I think we should be taxing consumption rather than savings as a general matter. So the U.S. tax is consumption more than any other country in the world relative to taxing consumption less and savings more than any other country in the world. That ends up encouraging people to take a very short time horizon with respect to a lot of the decisions they make, which is a very big problem the U.S. has.

Question: Does private equity deserve a special place in the tax structure?

Peter Thiel: I think that it would not be good for the U.S. to lose the finance industry, and for the industry to leave New York City in particular and relocate to, say, London or elsewhere in the world. That would be an unmitigated disaster for the U.S.

The marginal tax rate in London on expatriate people work in London is effectively zero percent. I don’t think we have to get it to zero in the U.S. to be competitive; but 50 percent is not competitive. And if we talk about raising it even more, that’s almost suicidally crazy.

I think you have all sorts of internal fairness problems; where if you have super rich people paying a lower rate than people in the middle or upper middle class, that does create a lot of legitimate questions. But I think the way we deal with those is not by taxing the rich more, but rather by taxing the middle class and the upper middle class a lot less; and then basically starting to disentangle those middle class entitlements that people have gotten too used to.

Question: Is the government capable of changing the system?

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