• This is a rush transcript from "The Journal Editorial Report," November 10, 2007.

    PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," billionaire Warren Buffett said Congress should raise his taxes. But are there costs to soaking the rich? We ask one of Silicon Valley's top CEOs.

    Al Gore's new gig, is he a venture capitalist or Washington lobbyist? We'll take a closer look.

    New York's governor abandons his plan to give driver licenses to illegal immigrants. Was it the right move?

    Those topics, plus the Barry Bonds indictment, but first the headlines.


    GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Warren Buffett went to Washington this week to ask Congress to raise his taxes. The billionaire businessman told the Senate Finance Committee, quote, "I think we need to take a little more out of the hide of guys like me."

    Here with a look at taxes and their consequences is entrepreneur T.J. Rogers, founder and CEO of Cypress Semiconductor, a Silicon Valley computer chip maker.

    Thank you for being here.


    GIGOT: I think Warren Buffett was not just talking about himself, but also guys like you, saying raise their taxes. Do you agree with him?

    ROGERS: I agree with that comment, but I'd have to modify it. Warren Buffett is not talking about himself. He is the master of hypocritical statements. He is talking about guys like me. Warren has billions, tens of billions of dollars beyond the tax stage. It is easy for him to say tax the other guys.

    I am a micro millionaire. My money is invested in Silicon Valley companies. And if he starts taxing the wealth creators in the world, which are younger guys like me right now, we are simply going to move a bunch of money from productive investment to Washington. If anybody believes it will be more productively invested there, I need to talk to them.

    GIGOT: OK. The capital gains tax, in particular now, the rate is 15 percent. There are a lot of people who say why should people pay 15 percent on capital gains when ordinary workers on a salary, earners are paying 28 percent, 31 percent, 35 percent. What is the argument for that differential rate?

    ROGERS: Well, there has always been an argument for it to be different. For example, if I work in an investment company and earn salary and I earn income tax on that. I invest money and earn capital gain on that and that's, in effect, an added tax on top of the salaries that financial companies pay. If you raise that tax — let say it is 50 percent, let's say a parity between capital gains and income — if you raise that tax, what happens is people lock up their investments. Any rational human being will avoid being taxed, giving their money to the government.

    That means instead of being able to move my money from one, today, energy investment, to a different energy investment, that means that I lock up my money and I'll avoid taxable events or put it in tax-free whatever. And the net result is that the tax structure will force people to change their behavior and it will harm investment and Silicon Valley in particular.

    GIGOT: The corporate rate is about 35 percent in this country. It is either the first or second highest in the world after Japan, depending upon how you measure it, if you include estate taxes as well. Has that affected your behavior as a CEO and where you invest and how you invest? And would it make a difference if reduced.

    ROGERS: Sure. You know, add on to the 35 percent California, which is one of the high tax areas, and can you look at — for example, Silicon Valley is no longer Silicon Valley. We talk about Silicon Valley as if it is a place you can go see. They make silicon there. We don't make silicon here anymore. I was one of the last hold outs in Silicon. I, meaning Cypress Semiconductor, one of the last hold outs in Silicon Valley to still keep the silicon fab here. I shut my fab down and sold it last year. So I make no silicon in Silicon Valley. I make it in Minnesota and Texas. And if they creating more punitive tax laws, I move it out of the country.

    Right now, the center of silicon manufacturer is moving to Taiwan and to mainland China. So it is like anything. If the tax on cigarettes gets to be $100 a pack, then people will stop smoking or the mob will help us out by moving tax free goods.