Will Obama Kill Silicon Valley?

In the Wall Street Journal, Michael Malone makes that provocative suggestion. Read here.

First, he attributes the decline in venture capital activity mainly to Sarbanes-Oxley and mark-to-market accounting. For more on the role of Sarbox, click here.

Malone goes on to say that Obama's capital gains tax increases will erase the gains for Silicon Valley made by cuts under Reagan:

The most important government actions to foster business creation were the 1978 Steiger Amendment, which cut taxes on capital gains to 28% from 49%, and President Ronald Regan's tax cuts, which reduced them still further to 20%. These tax cuts unleashed the PC and consumer electronics booms of the 1980s, just as the Taxpayer Relief Act of 1997 restored the 20% rate and did the same for the Internet economy in the late 1990s.

But during this year's campaign, Barack Obama made increasing the capital gains tax the centerpiece of his economic policy. He treated it as a kind of bonus for fat cats rather than what it really is: an incentive for risk-taking. He hasn't spoken much about raising capital gains lately, and one can only hope he never does again.

Another policy related to the capital gains tax that Obama has not mentioned recently (but did discuss during the campaign) is waiving it for start-up businesses. That could reduce some of the pain if he does indeed increase the rates for people at the top. For more on this issue, click here.