> 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.
> 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.
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.