Jane, Jobs, and Taxes

Jane is a smart and successful businesswoman. She saw an opportunity, started a business, grew the business, employed dozens. She’s done well. Jane now sees another opportunity, one that she likes even better than her current business. It will make millions (she thinks) and will employ hundreds. She wants to take the risk. She can sell her business and then devote her time, energy, and profits to launching the new one.

There’s the rub. When she sells the current business, she will make a lot of money and pay a lot of taxes. Will there be enough left, after taxes, to start the new business? She’s not sure – it will be a near thing at current tax rates. If taxes were any higher, there’s no way her plan will work. There won’t be any new business or new jobs. If taxes were lower, she’d have a greater margin of safety and would be more willing to make the leap.

The status quo is easy. Jane’s current business can run for many years, giving her a secure retirement – but it won’t create any new jobs.

Jane’s still trying to make up her mind.

If you made government policy and wanted to see more jobs created, what would you do? Raise taxes or lower taxes?


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