At the TaxPayers’ Alliance, we’ve released a new report, Tax and Entrepreneurship, today looking at how the tax system affects the incentives for entrepreneurs. The report sets out how the new 50p top rate will mean fewer new businesses and, as a result, fewer jobs.
In order to make it worth a potential entrepreneur’s while to bear the risks that come with starting a new venture, instead of sticking with an existing organisation, there needs to be a big reward if things go well.
Often, the pay off will be more than the entrepreneur needs and the real reward will be money that can be saved, invested in a company and then left to their children. That’s why Theo Paphitis, on the BBC’s Dragon’s Den, refers to the money he invests as his children’s inheritance. Unfortunately, saving and then passing on income means that it gets taxed repeatedly.
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