The 'taxing' plight of success
blog In recent light of Australia's Henry Tax review digging a hole in the pockets of miners, it's interesting to look at New Zealand's tax tale surrounding Kiwi web entrepreneur Sam Morgan.
The poor little poppet had been bleating about not paying much tax following his 2006 sale of New Zealand's most popular website, Trade Me, to Fairfax for $700 million.
"I was lucky enough to sell my company in a country with no capital gains, so I paid no tax on the sale of my company," he cried.
"Now I've got no income effectively, because I don't have a proper job, so the tax that I pay is minimal."
Morgan's share of the $700 million was about $230 million.
"I pay basically no tax. And that's not right, but what am I supposed to do?" he added in the interview.
Such comments made the papers, leading to some predictable and rightful scorn.
Morgan will be paying withholding tax on the interest he gets from the millions he has stashed in the bank. He can also pay more voluntarily to the Inland Revenue if he wants, leading our Finance Minister Bill English to welcome any contribution to funding the government's huge budget deficit.
However, the issue is, should government have grabbed much of his good fortune? If the state were to take a huge chunk of his cash, will it deter other entrepreneurs? And if Morgan is so guilty at his good fortune, can't he do a better job than government in helping others?
After all, people do not develop businesses to pay the taxman. No, Bill Gates and all those other technology entrepreneurs spent all that time with those garage start-ups to enrich themselves. And as I noted recently they also enrich us socially, culturally and economically.
Why no Sam Morgan School of Technology and Enterprise to educate the kids, why no Sam Morgan Innovation Fund to help technology start-ups seeking cash, why no Sam Morgan Export Fund for the bigger firms looking for overseas markets?
I am sure Morgan can make much more impact than some government ministry.
Now, you may recall the recently announced planned Pacific Fibre link between New Zealand, Australia and the US. Morgan is involved in that and was one of those calling for investors.
This is something where he could really make a difference. Even if the cable made no profit, though I am sure it will, funding the link or a chunk of it would be a fine philanthropic present to the country that raised him and made his wealth (which he apparently finds so embarrassing) all possible!
Morgan said he intends to give all his money away before he dies. Let him leave a notable lasting legacy of his own choosing, rather than a mere blip in the government accounts. I know that's what I would want, if I had his wealth, and that would probably inspire me to generate more wealth too.