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> Why should anyone build a business when any winnings will be slowly taken from you over the years? Because the payout might be better than wage labor and you
by rightbyte 2y ago
> Why should anyone build a business when any winnings will be slowly taken from you over the years?
Because the payout might be better than wage labor and you only pay the tax if you win big?
- robocat 2y agoYeah, I need to make a simple spreadsheet and try and figure it out. The problem is that the risks are high: the usual figures are less than 1 in 10 businesses succeed or that a 30:1 payout is the minimum sensible financial payout (VC figure). Winning is hard even though we don't have a CGT. Marginal tax at 39% doesn't encourage marginal business building. And once you have the house and the bach, the marginal utility of money drops for an individual: the marginal happyness from the next million is a lot lower than the first million (also see "income satiation"). The discount rate, and the personal cost are other huge factors, and the average person doesn't like a financial winner. Investing money and time in a high risk activity like starting a business is not fiancially sensible from what I have seen. We do it to chase status, not because it makes sense on a spreadsheet.