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PG is talking about investing in companies, not general funds. For a founder to invest (eg., $1m) in starting a company, there is of them losing their total in

PG is talking about investing in companies, not general funds. For a founder to invest (eg., $1m) in starting a company, there is of them losing their total investment. The expected ROI needs to be fairly high to offset that. The only people who /could/ make money under such a scenario are super-rich investors making many bets that average out risk. And they wouldnt, given -- as you say -- general equity would perform better. Any policy implemented in this way, over trivial amounts (eg., over 0.5%), would destroy investment & the business opportunities of a generation. Perhaps there's a different policy behind "wealth tax".

marcus_holmes 6y ago
> For a founder to invest (eg., $1m) in starting a company Do you mean founder, or investor? I don't know any founders who invest that much into their startup. Startups are high-risk, high-return investments. If a wealth tax was introduced, wealthy people would need higher returns (as others have pointed out) to cover their tax obligations and so would invest in riskier investments. Like startups. So startup investment would increase.
- erichocean 6y ago
  I know two startup founders who have both done that.
  - marcus_holmes 6y ago
    Are they actually founders, or are they rich kids making a lifestyle decision?
- chii 6y ago
  > to cover their tax obligations and so would invest in riskier investments. Just because the investment is riskier, doesn't mean the returns are automatically better. It only goes one way - higher returns are automatically more risky. If wealth tax is implemented, then an investment automatically becomes lower return (since the wealth generated is also going to be taxed indefinitely). So an equivalent startup that would've returned 10x with no wealth tax will _need_ to return 11x (or something higher) to make the investment worth the same risk as before the wealth tax. i.e., there will be fewer investment opportunities that are suitable, given the higher bar it must reach under a wealth tax. It's been shown time and time again, that a tax on something will discourage it (in the aggregate). I don't think a wealth tax is any different - it will discourage wealth creation.

marcus_holmes 6y ago

> For a founder to invest (eg., $1m) in starting a company Do you mean founder, or investor? I don't know any founders who invest that much into their startup. Startups are high-risk, high-return investments. If a wealth tax was introduced, wealthy people would need higher returns (as others have pointed out) to cover their tax obligations and so would invest in riskier investments. Like startups. So startup investment would increase.

erichocean 6y ago
I know two startup founders who have both done that.
- marcus_holmes 6y ago
  Are they actually founders, or are they rich kids making a lifestyle decision?
chii 6y ago
> to cover their tax obligations and so would invest in riskier investments. Just because the investment is riskier, doesn't mean the returns are automatically better. It only goes one way - higher returns are automatically more risky. If wealth tax is implemented, then an investment automatically becomes lower return (since the wealth generated is also going to be taxed indefinitely). So an equivalent startup that would've returned 10x with no wealth tax will _need_ to return 11x (or something higher) to make the investment worth the same risk as before the wealth tax. i.e., there will be fewer investment opportunities that are suitable, given the higher bar it must reach under a wealth tax. It's been shown time and time again, that a tax on something will discourage it (in the aggregate). I don't think a wealth tax is any different - it will discourage wealth creation.