After apologizing for his comments comparing increased taxation on the rich to the Nazi pogrom of Kristallnacht, you might have expected Tom Perkins – the pioneering venture capitalist who backed firms such as Netscape, Genentech, AOL, and Google – to moderate his tone. Not a bit of it: on Thursday night he suggested that if you don't pay income or property tax, you shouldn't be allowed to vote.
Perkins was addressing San Francisco's Commonwealth Club, America's oldest and largest public-affairs forum, with a talk entitled "The War on the 1%," and said he thought the way forward for America had been signaled by Thomas Jefferson's idea of allowing only male property owners to vote. He cited the example of the late UK Prime Minister Margaret Thatcher's poll tax* as a way to ensure that those who paid for society should run it.
"The Tom Perkins system is: you don't get to vote unless you pay a dollar of taxes," he said. "But what I really think is, it should be like a corporation. You pay a million dollars in taxes, you get a million votes."
His idea ruffled feathers among the business-friendly Commonwealth Club audience, and in a closed press session after the talk Perkins said he was just trying to be outrageous, but the fact that 50 per cent of voters paid no income tax was the reason the US is in such a mess. Mrs. Thatcher, whom he described as "a charming lady" in person, had the right idea, he said.
"We need another Margaret Thatcher," said Perkins. "I think she just had it right. Free market capitalism is what has created most of the wealth in the world – it's the only way to proceed. And don't tax it to the point where it can't do anything."
During his hour-long public conversation with Fortune's senior editor Adam Lashinsky, Perkins said that he had been inspired to speak out because of what he perceived to be attacks on his second (and now ex) wife, author Danielle Steele. Using her as an example, he said it was unreasonable that she pay the government 50 per cent of her earnings and another 50 per cent in inheritance tax when she died – leading, he said, to an effective tax rate of 75 per cent.
Perkins, 82, said that ever since the arrival of the Obama administration the government had been persecuting the top one per cent of earners through unjustified taxation. The president, whom he said was "not a politician, but a brilliant leader in a certain direction," was demonizing the wealthiest one per cent of Americans; the very men and women whose tax dollars keep US society afloat.
"We never used to have the demonization of the one per cent. We wanted to be in the one per cent, we admired them," he said. "I remember when I was a little kid, John D. Rockefeller would go around and give dimes to little children and I thought 'how wonderful, I'd like to be John D. Rockefeller and give dimes'."
Perkins said he did regret using "the forbidden word" Kristallnacht in his original letter to The Wall Street Journal that kicked off the controversy, but said the one per cent were being targeted with economic persecution, and that the government would then focus on the top five per cent and top 10 per cent of taxpayers.
These included the employees of technology firms of Bay Area, and he said the protests over corporate buses were an example of how the top earners in society are being demonized. Rents in San Francisco were going up because Silicon Valley workers wanted use the city as "a suburb," and this was simply market forces in action. He advised Google and others to tough out the protests.
But the long-term prospects for the US looked dire unless the country changes its policies, Perkins said. The biggest mistake the country had made was President Johnson's war on poverty that instituted social security programs, he said, which had caused a dramatic rise in single-parent families, particularly among ethnic minorities.
This had then led to a lack of interest in education among children, he asserted, and the problems had been compounded by teacher's unions, which were refusing to get rid of bad staff. But he acknowledged that the venture capital industry also shared some of the blame.
Too many young people these days were dropping out of education to join technology startups, he said, thanks to the huge amount of venture capital sloshing around the system. All they were doing was producing applications, not learning business and technology skills, and Perkins said that the result was too much software chasing too small a market.
Perkins said that if he were 20 today, he would move to Australia, where the culture was more forward-looking and the country in better financial shape. He also recommended Norway, which had harvested its oil revenues into a trillion-dollar capital wealth fund.
The octogenarian venture capitalist said that this would be his last comment on the persecution of America's top earners, saying that too much had been made of it. He complained that the company he founded, Kleiner Perkins Caufield & Byers, had "thrown him under a bus" over his comments, and in the future he would be keeping his opinions to himself. ®
The UK's poll tax, or community charge as it was referred to by Mrs. Thatcher's government, was introduced in the late 1980s as a new way of funding local government.
Up until its introduction, local government was partially funded from an annual payment by householders based on the value of their property. Mrs. Thatcher's big idea was to replace this with a flat fee that everyone paid irrespective of income or property ownership.
The tax was wildly unpopular, and Perkins is correct in his assertion that it helped bring down the Iron Lady from power – it had become clear that the Conservatives couldn't win the next election with her at the helm, so she was forced to resign by her own party.
But Perkins is wrong in suggesting that the poll tax was in some way linked to the right to vote. Large sections of British society refused to pay the poll tax (including this hack) as a protest, and yet we still voted in the next election with no problems at all.