Capital gains taxes don’t just steal your wealth, they change the way you make bets
If you have a 70% chance of doubling your money or losing everything, a full Kelly bet is 40% of your portfolio
But if you are taxed 50% on your winnings, your true upside if win is only +50%, not a double (+100%). Based on these odds, you’d only bet 10% of your portfolio for what is otherwise the exact same bet
And if your taxes are 60%, you shouldn’t take the bet at all
This is such an important concept to understand
1) for yourself so you size correctly
2) so you understand how damaging raising taxes is to entrepreneurs and funding investments that have the chance to make the world a better place.
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