IEEE Spectrum: Letâ¿¿s Promote Nanotechnology Entrepreneurs by Taxing them out of Business or out of the Country

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Letâ¿¿s Promote Nanotechnology Entrepreneurs by Taxing them out of Business or out of the Country

POSTED BY: Dexter Johnson // Wed, October 10, 2007

In that wonderful mixed-up world of governments trying to support business development (presumably to grow the greater economy) and at the same time maintain tax revenues, the UK government has just unleashed a classic.

Over at TNTLog, which has first-hand knowledge of the subject being that itâ¿¿s London based, they are decrying the recent announcement by the UK government to raise the capital gains tax (CGT) on businesses from 10% to 18% by April 2008.

It was all well intentioned to be sure. More than likely they were aiming at imposing this tax increase on large private equity firms that buy a company for half-a-billion dollars and then sell it two years later for $2 billion.

While that was likely the design, the large private equity firms the tax increase is targeted for will likely find different ways of structuring deals so that they donâ¿¿t feel the effects. And for those small entrepreneurs who built up a business and have an opportunity to sell it and make their fortuneâ¿¦well, they are on the short end of the stick.

They will need to wait to see if they can double the price of the sale to make up for the doubling of the tax increase. Or, more likely, sell at a discounted price before April 2008 to the private equity companies for which the tax was intended.

Meanwhile the UK government through its Trade and Investment arm is running a conference to highlight all the wonderful nanotech companies that have been developed in the Kingdom. Luckily the conference is this November, just before all the companies either pack up their bags and move out of the country or get sold off to disappear into the nether world of â¿¿reorganizationâ¿¿.

And where are all the nanotech industry associations that have popped all over the UK that are supposed to be supporting these small companies while this bit of legislation promises to decimate the few companies that exist? Why theyâ¿¿re working out new codes of ethics for these companies.