There is a growing debate about taxing the rich. This is sometimes defined as an individual who earns one million dollars ($1,000,000) per year. This is understood by many people as being equitable. After all why should anyone be worth that much money to any business or enterprise?

There are two ways of looking at this question.

The first consideration is how much income is an employee or associate bringing to the enterprise. When asking entrepreneurs whether they would be willing to pay someone one million dollars, they are reluctant to say they would pay that much. However, as soon as I discuss the possibility of someone bringing $5,000,000 in revenue to their enterprise, suddenly it seems to make more sense.

The idea of making profit is necessary for an enterprise to grow. Although profit can be simplistically thought of as only being relevant to businesses alone, even not-for-profit organizations must expect extra income in order to cover expenses and to grow.

When entrepreneurs invest in their enterprises they take tremendous risks in order to develop success. If they can make a good return on their investment – that is good. However, people think that if an entrepreneur makes only $10,000 per annum for five years that is because their enterprise is not worthwhile. If the enterprise starts to create wealth, why is the entrepreneur not entitled to receive pay back when the enterprise starts to make money?

The second consideration is for the entrepreneur to be able to continue the enterprise. One million dollars may appear to be quite a large amount. Entrepreneurs know that there are times when their enterprise has slow periods and must hold the line. For example if an entrepreneur has 20 employees making approximately $50,000 per annum (one million dollars in salaries alone) the entrepreneur requires access to one million dollars for this period. Entrepreneurs are often required to put up as collateral everything that they own in order to offer guarantees to the bank.

Entrepreneurs hire employees since they recognize the talent these people have to create wealth for their enterprise. This isn’t restricted to sales people. There are numerous employees that create a good impression for an enterprise. Most entrepreneurs recognize that their employees are assets to their enterprise.

When recessions come, people begin to worry. This requires enterprises to have the capacity to ride it out. When an enterprise loses business, it may be necessary for an entrepreneur to attempt to keep employees whenever possible. This means that having a salary of one million dollars may be deferred in order to pay their own employees. Only entrepreneurs are willing to work for nothing in order to assure having the right people as employees.

Let us consider the repercussions if we don’t recognize the relevance of having one million dollars.

One million dollars must be considered within the context of entrepreneurship. There is no recognition of entrepreneurship within the context of taxation.

Entrepreneurs are responsible for more than their own income. Entrepreneurs can go years with essentially no income. When an entrepreneur finally makes some money, suddenly many want the entrepreneur to pay 50% tax, because they eventually earn enough money to pay themselves what they are worth.

Taxation penalizes all businesses and enterprises. Entrepreneurs know that sales taxes are due when the invoice is generated. Taxation creates a situation that requires tremendous cash flow for the enterprise. Payroll taxes require a great deal of work by the entrepreneur and/or staff with no remuneration from any government. If an entrepreneur is too busy trying to make money, there are fines and penalties to add to the misery.

One million dollars is only an adequate amount for cash flow obligations.

One million dollars for an entrepreneur is really just a basic amount to try to keep an enterprise alive. As an enterprise it is only a micro enterprise. Entrepreneurs aim at creating a small enterprise, which means revenues of approximately fifteen million dollars. Better still; many entrepreneurs today want to create a medium-sized enterprise, which means annual revenues of seventy-five million dollars!

Entrepreneurs create wealth for everyone. Entrepreneurs require one million dollars to assist in creating this wealth!