50% Tax Rate Discourages Entrepreneurs? Nonsense
My letter on the 50% tax rate for entrepreneurs has just been published in the Guardian.
Hi, we are Happy
We are leading a movement to create happy, empowered and productive workplaces.
How can we help you and your people to find joy in at least 80% of your work?
"The suggestion that the 50% tax rate discourages entrepreneurs is nonsense. Very few entrepreneurs are on the 50% tax rate, or even aspire to be. Those who seek to make their fortune plan to do so by selling their company and the income from that is taxed at just 10%. It is the likes of bankers, lawyers and managers at major corporates that make up the top 1% of earners, who are above the £150k limit. I can’t imagine why the proponents felt these groups would not evoke public sympathy and evoked the valiant entrepreneur instead."
(Or view my letter and others on the Guardian website.)
No entrepreneur sets up a business and pays themselves over £150,000. If a six-figure salary is your aim you wouldn’t start up a new business. You would target the professions or a career in a big company.
Some entrepreneurs want to be able to control their lives. Many, like me, start by simply not wanting to have to do what others tell you. Some are certainly motivated by making a lot of money, and dream of being the next Bill Gates or Mark Zuckerberg. And some Brits have made it. Iain Dodsworth became a multi-millionaire when Twitter bought Tweetdeck. Michael and Xochi Birch pocketed $595 million when they sold Bebo to AOL. But the dream is of building the company and selling it, or at least part of it. And as I said in the letter, the tax rate on that gain, the tax rate that Dodsworth and Birch will have paid, is just 10% which couldn’t be a deterrent even to the most skinflint of free market evangelists.
There are many things that the government can do to help entrepreneurs but cutting the 50% tax rate is not one of them. A far bigger deterrent to setting up in business is the fact that being an entrepreneur is probably the only profession where a mistake or simple bad luck can lead to losing your house. That doesn’t even happen to convicted criminals. Or the fact that government procurement is so biased towards large, expensive (and inflexible) big businesses, rather than the free and fair competition the government advocates.
We have all been asked to tighten our belts at the moment and many many people have received no real salary increase for years. It is odd that the wealthy feel that they alone should be exempt from this sharing of the load, especially as they include far more of the people responsible for the crisis than the less well-off.
Related blogs
- It is Good to Pay Tax- Henry's thoughts on taxation.
Keep informed about happy workplaces
Sign up to Henry's monthly Happy Manifesto newsletter, full of tips and inspiration to help you to create a happy, engaged workplace.
Learn the 10 core principles to create a happy and productive workplace in Henry Stewart's book, The Happy Manifesto.
Henry's Most Popular Blogs
- 8 Companies That Celebrate Mistakes
- 9 Benefits of Having Happy Employees
- 321Zero: How I Solved my Email Overload
- 16 Companies That Don't Have Managers
- 5 Big Companies Who Swear by Mindfulness
- 49 Steps to a Happy Workplace
- A Four Day Week? Let's Start With a Four Day August
- Google: Hire Great People and Give Them Lots of Autonomy
- Buurtzorg: No Managers, Just Great Care From a Nurse-Led Service
- 30 Steps to Joy at Work: Get More Done by Being Less Busy
Henry Stewart, Founder and Chief Happiness Officer
Henry is founder and Chief Happiness Officer of Happy Ltd, originally set up as Happy Computers in 1987. Inspired by Ricardo Semler’s book Maverick, he has built a company which has won multiple awards for some of the best customer service in the country and being one of the UK’s best places to work.
Henry was listed in the Guru Radar of the Thinkers 50 list of the most influential management thinkers in the world. "He is one of the thinkers who we believe will shape the future of business," explained list compiler Stuart Crainer.
His first book, Relax, was published in 2009. His second book, the Happy Manifesto, was published in 2013 and was short-listed for Business Book of the Year.
You can find Henry on LinkedIn and follow @happyhenry on Twitter.
Next Conference: 2025 Happy Workplaces Conference
Our Happy Workplaces Conference is our biggest event of the year, and we'd love for you to join us on Wednesday 25th June!
Our 2024 event was our first ever hybrid event, and so we hope to run next year's in the same way. We will host up to 50 people face-to-face at Happy's HQ in Aldgate, London, and we can host up to 200 people online via Zoom. However you choose to join, there will be interaction, discussion, space for reflection and opportunities to network with others.
Stay tuned for full details of our speakers for next year's event. As always, our speakers share practical, hands-on ideas that you can implement to create happy and engaged workplaces.
Related courses
The Happy Leadership Programme
Brave Leadership: One-Year Leadership Development Programme for Women
Level 7 Senior Leadership Apprenticeship Programme
Not what you need? Take a look at all of our off-the-shelf Leadership and Management programmes.