I've written previously about why mansion or wealth taxes are both impractical and counter-productive in terms of helping the economy to recover. They are also unlikely to reap vast rewards for the treasury, but popular soundbites put left-wing parties into power. It's not about whether it actually makes money for the country, it's about whether it's popular and sounds like it might.
My basic argument to would-be wealth taxers is:
I live in a ‘mansion’. I bought it with money I made taking risks which created jobs. If you tax me for owning it, the money the Treasury takes can't be used by me (a proven job creator) to risk in new businesses. Who’s more likely to create jobs with that money? Me or the government?
Instead of penalising me for taking risks, why not encourage me, forcibly or otherwise, to invest some of those rewards in new businesses.
- I’m happy (because you are respecting me for what I do best - creating jobs, and I might make even more money)
- You’re happy (because you’re getting me to use that wealth for the public good)
- The new tax-payers I help employ will be happy.
A mansion tax punishes people who know how to create jobs and reduces their appetite for risk.
My idea is to create a concept I'm calling Entrepreneur Credits. It would work like this:
So instead of punitive, vote-grabbing, negative ideas like mansion taxes, why not insist that a proportion of liquid wealth that would otherwise end up in private equity, hedge funds or any of the myriad 'instruments' that investment bankers and their like peddle to wealthy targets, goes instead into SEIS/EIS opportunities.... "We will tax you on your investment wealth unless you can prove every year to have risked some of it in SEIS / EIS programmes".