With zero percent taxation on capital gains, interest, and dividends (proposed in the Ryan plan), does it make sense for job creators to continue working?
Imagine a McDonald's franchise owner with 10 locations and an enterprise value of $10,000,000. If this franchise owner sold all ten locations and cleared this long-term capital gain, the job creator would have $10mm to invest and build additional wealth.
Managing this portfolio full-time should ensure a 6-7% growth in assets each year. Taxed at 0% percent means that this franchise owner will take home $600-700k every year for the rest of his/her life.
Sure, the franchise owner could continue to work. He/she could pay themselves $1million a year and come out ahead with Ryan's 25% top income tax rate. However, all of the asset value would still be locked up in the franchises and there would be a whole lot of hassle, late nights, meetings and issues in running 10 franchises.
Why not just sell it all and walk away tax-free? Snark of course. This is what I would do though. I would sit on my butt and enjoy a very nice life forever.
