U.S. Government shuts down.

[DeeBye]

If one persons net worth is low, say due to starting a small business, then their effective tax rate is small. This strategy supports entrepreneurship.

One part of this needs to be addressed. The overwhelming majority of new business ventures fail within a year, and the new business owners become bankrupt. Creditors have to eat those losses, and those losses get passed to others down the chain.

Once their risk has paid off and the value of the asset grows, the tax grows.

And what happens when their risk doesn't pay off?