This is nonsense, because you are forgetting to take into account one obvious fact: that your second million is worth much less to you than your first million.

If you take this into account when calculating the expected return of the potential entrepeneur, then (my mathematician's instinct tells me) you will find the small (in percentage terms) increase in future expected taxes has a tiny impact on her decision. Which is also what one's instinct tells one from the beginning.

The situation is a little more dire than even the author's estimates suggest. Even the most fanatic entrepreneur, even one zealously and irrationally devoted to the welfare of the Collective and not their own personal gain, would find it much more difficult to succeed in the current and projected environment.

You simply cannot remove capital by taxation (or water it down via inflation) at such a prodigious rate and fund growth. That's apart from the non-financial issues, like trying to predict what the likely sales environment will be in two to five years under a regime which sows massive uncertainty daily with aplomb.

As an actual high-tech entrepreneur (senior executive in leading software firm from pre-IPO to multi-billion dollar market cap), I've helped build a company, I have invested in start-ups, I have acquired start-ups, and I have worked in a company that was acquired. I'm in that top 2 percent bracket that will pay more taxes under Obama. I also would personally benefit financially by the elimination of the capital-gains tax on start-ups. I am actually one of those Silicon Valley Obama supporters whom you assert "may find themselves in an uncomfortable environment" because we have been presumably betrayed by the president.

You are dead wrong. I speak for myself, but also have spoken to many peers, and the fact is that we are not stupid - we see an economy in precipitous decline and a lot of tough choices to make. Things were bad on November 4th, when Obama was elected; but they are much much worse now. We don't expect Obama to be stupid, either - "a foolish consistency is the hobgoblin of small minds" (I am probably mangling that quote.) When we voted for Obama, we knew he would raise our marginal tax rate. If delaying an elimination of capital-gains taxes on start-ups is one of those tough tradeoffs, that is OK. We are not going to suddenly stop building companies, or turn on Obama, for one or two or any small number of tough choices - in the big picture, he is showing that he gets the seriousness of the situation and that he is keeping consistent with the priorities and general direction he espoused in the campaign, while also being reasonably pragmatic about the details. If he is backing off from a detailed promise, such as this tax cut at this time, that is not the end of the world. It's just one of many details and tradeoffs we all have to wrestle with, and it seems pretty reasonable given the deterioration in the months since November 4.

You are correct. I am one of those strategy consulting types you mentioned and harbor entrepreneurial ambitions. Over the last year, I have assessed and passed on two start-up opportunities, because after building the business models and looking at the potential after-tax income under a variety of scenarios, I saw that the gains came up short compared to the less risky income I can reasonably expect to enjoy from my current career. Potential entrepreneurs and smart businessmen in general perform thorough planning and analysis of opportunities under a range of expected futures, and it comes naturally to consider likely regulatory and taxation regimes. To assume otherwise - that we will make major life changes and investments without considering these factors - is both naive and, quite frankly, insulting to our intelligence.

Manzi misses the biggest impact. Certainly the individual who invents might do so anyway. But the VC or private investor who funds the start-up will demand a higher rate of expected return. This will basically mean taking a much larger piece of the company for the same amount of money. In the old days, your inventor might have sold 20 percent of the company for $1 million. With higher taxes on the successful deals, the same VC will now demand more of the company for the same $1 million.