Tax aversion leads man to invest in the future

Herald Tribune ^ | 3/4/2009 | Michael Braga

[surfer]

Harvey Vengroff is a very wealthy man and an unapologetic Republican, and he has a plan to help him avoid, in a small way, what he views as President Barack Obama's tax-the-rich approach to governance.

Rather than pay higher taxes that he knows are coming, Vengroff is planning to provide more than 200,000 square feet of office and warehouse space rent-free as part of an initiative to jump-start fledgling businesses in the Sarasota Manatee area, something Vengroff has dabbled in for years.

If the start-up companies fail, all Vengroff and Williams will have lost is the potential rent they would have collected (and paid taxes on) from paying tenants -- if they could land them in this economy. If the businesses succeed, Vengroff and Williams will get a cut of the companies' profits.

...

Vengroff clearly sees things in more political terms.

"We're doing our own tax revolt," Vengroff said. "We would rather give away free space to new businesses than pay taxes. It might do some good for the economy and benefit ourselves. When the government changes and taxes are lowered again, we'll have interest in these companies and we'll be ahead."

He is not the only wealthy American bridling at the thought of higher taxes.

Some think the Obama years could be marked by the kind of bitterness not seen since the 1930s, when the wealthy viewed President Franklin D. Roosevelt as a traitor to his class. These days, on the other side, is the negative image conjured up by thoughts of greedy businessmen, bankers and hedge fund managers.

[surfer]

Harvey is a very smart man. Obama is quite foolish and naive to think that the wealthy in this country will sit around and let the gov-a-ment take their hard earned cash!

Crazy times require creative solutions for sure.

Hat's off to Harvey for creating an innovative idea that could help people.

[freeandfreezing]

When the government changes and taxes are lowered again, we'll have interest in these companies and we'll be ahead.

Actually he's just doing what every investor, businessman and entrepreneur will be doing - trading ordinary income for capital gains to take advantage of their lower rate.

Having been around a long time I have seen that scenario before. It is one reason that attempts to increase the income tax rate ultimately generate much less revenue than would be expected -- people restructure their business endeavors to focus on capital gains. And then they borrow against those gains if they need cash to spend.

Harvey and his colleagues can be pretty sure capital gains taxes won't be raised to be equal to ordinary income tax rates - there would be too much push back from the wealthier elements of the Democrat party.

[OneWingedShark]

Indeed. It’s a good idea!