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A 2% wealth tax isn’t a 2% tax.
Charge it on a £100m business where all the wealth is locked in the company, and to pay a £2m bill the owner has to pull £4.4m of profit through corporation tax and dividend tax first.
That’s 44% of the entire year’s profit. Or 88 jobs. Every year.
The founder sells up and leaves. The staff don’t get that option.
A wealth tax the owner survives and the staff don’t 💀
#wealthtax #tax #economics #founders #smallbusiness
Transcript
So my proposal is a 2% tax on wealth of above £2,000,000. Absolute populist rank trap. I know why this is a populist cap trap. Because Gary is so good at maths from his time as a trader, we're gonna do five simple equations to completely break the mechanics of what he's proposing. I say this is an investor who does this all day better day for a living. Let's start with somebody that's worth a £100,000,000. For the sake of simplicity, it's all in the company that they own. Some £100,000,000 tier by 2%. That's the bill every single year. Some two, you're having to pay yourself in dividends which is 39% tax. So this amount of money you need to take out the company to be able to pay your personal tax of 2,000,000. But that's still after corporation tax, which is sum number three. So the business now has to earn 4,400,000 to cover a 2% wealth tax. Let's put that into context. If this company is valued at a 100,000,000 because it's a 10 x valuation, that means doing 10,000,000 of EBITDA. So what you're effectively doing is you are taking 44% of the company's net profits that year to cover a wealth tax. That is the same as 88 jobs at $50 a pop. And so this is sum number five, the fifth nail in Gary's wealth tax coffin.
