> “Generally, if you are self-made man and earn money, you are looked at with suspicion,”
> there’s a deep-rooted feeling that you don’t show that you make money
> It’s more like, if someone has something I can’t have, I’d rather deprive this person from having it than trying to work hard to get it myself
This. A lot of people still don't understand money can me made. They see succesfull men and woman and assume the money must have been stolen instead of made.
"They see succesfull men and woman and assume the money must have been stolen instead of made."
Well, that's textbook Marxism, strong here in the US, I assume much stronger in France (after all the French Communist Party is still competitive to a fair degree, per Wikipedia was part of the "Plural Left" coalition that held the legislature from 1997–2002).
ADDED: and our path is particularly odd there: as has been joked for some time, there is no French word for entrepreneur.
That's not Marxism at all, just go read The Capital. It's seminal and extremely important. Communism has nothing to do with it. It's all about a mixture of catholic hypocrisy and envy.
Trust me, I'm Italian, I know what I'm talking about.
I don't mean to play devils advocate here, but let me apply two other possible interpretations: My statistical prior that someone with money did questionable things to obtain it has only been rising with time as I see increasing evidence of illicit business practices among the highest earners. (everything from insider trading to the more recent wage fixing).
Secondly, is it reasonable to assume that one might find distaste for people with money who flaunt it? And that this might cause one to share that distaste for others with money, even if they don't flaunt to such a degree? I realize the latter half is a generalization that can cause problems, I'm just trying to state a rather "human" response. If it is constantly shoved in your face that certain people drive cars worth enough that it could bring your family out of debt for life, you may grow bitter at this.
I believe money can be made, I just also believe there are a lot of "bad actors" in the system, for whom it is "stolen" to some degree, and it only seems to be becoming more common.
You are correct. The part of stolen money would not be a problem if we had a functioning government that actually -you know- prosecuted people, like they did with the savings & loans crisis where more than 1,000 bankers were convicted by the Justice Department.
increasing evidence of illicit business practices among the highest earners
Corruption is the core problem. I think that worry about corrupt businesses is misplaced when a corrupt government is 10x worse.
everything from insider trading
There's a good example right there. Congress can inside trade. It's absolutely extraordinarily corrupt. They wrote a law a while back to prevent it when there was some press on it, but then quietly scaled back the restriction.
Consider this: Political office holders can lie to us outrageously and never face repercussions besides (perhaps) not being re-elected in a future cycle. You could list case after case of politicians who knowingly made definitive, verifiably false claims that have caused real damages to people. If they were officers of a public company, they would be sued into oblivion. They would be hounded by the Justice Department. But since they're in the political club, they've written the rules so that they can't be held accountable.
Be wary of confirmation bias. If you believe that succeeding requires acting badly, then you are more likely to remember and believe stories that frame success that way.
In my view it's reasonable to interpret "self made" as meaning that a person made money within a society that provides an elaborate economic infrastructure. I don't know what it's like in France, but here in the states, we have things like a stable currency, public support of education and research, and limitation of liability for shareholders of corporations. And of course if inheritance is involved, then the "self" is a family and not an individual.
What it's hard for people to understand is that both "stealing" and "making" are simplistic ideals, and that reality is much more complex for most of us.
Let's not forget all those benefits were made possible by the people adding value and selling something (each in their own way, some products, others selling their craft of just their time). This adding of value was then taxed. (I'm not protesting to taxes, just showing all those benefits were made possible by the people and executed by the state).
This is pretty clearly a knee jerk reaction by the New York Times to Hollande's wealth tax:
>He had taken that job after his attempt to start a business in Marseille foundered under a pile of government regulations and a seemingly endless parade of taxes. The episode left him wary of starting any new projects in France. Yet he still hungered to be his own boss.
>
>“A lot of people are like, ‘Why would you ever leave France?’ ” Mr. Santacruz said. “I’ll tell you. France has a lot of problems. There’s a feeling of gloom that seems to be growing deeper. The economy is not going well, and if you want to get ahead or run your own business, the environment is not good.”
A feeling that something just isn't quite right about the place, and it's better in London? Gee I wonder if they mean this:
>Some wealthy businesspeople have also been packing their bags. While entrepreneurs fret about the difficulties of getting a business off the ground, those who have succeeded in doing so say that society stigmatizes financial success.
Yep. This article isn't about poor, plucky upstart rags-to-riches entrepreneurs at all. It's about manufacturing consent for slashing taxes on the ultrawealthy. The rich are pissed about Hollande's 75% tax and they want you to do something about it for them.
The 75% wealth tax point was only a minor point in an article that expressed many many other points and anecdotes, and whose greater argument was that the entrepreneurial climate in France was poor. The fact that your argument focuses on this minor point in order to dismiss the whole point is rather telling about what consent is being manufactured here...
There is quite some bullshit in this article, because the current government has not changed any law about creating a company (so we are exactly in the same state as before). Moreover it's merrily intermixing entrepreneurs problems with banking problems. And there is a little detail here: banking salaries are higher in London than in Paris and bankers are driven by money, so they emigrate massively in the pursuit of money. This has strictly no link to entrepreneurship, starting companies, or creating value from nothing, but hey, there is a complaint train, let's take it.
And you can see the intermix quite a few times (got his wealth in finance, he worked in finance, the google references), Place de la Madeleine, is exactly who Fleur Pellerin is not trying to help, this are different people doing different things. And if for anything, bankers are part of the problems entrepreneurs have.
So here is a nice little piece of context that was not in the article: here in France it's an election day today, and yesterday and today, political propaganda are forbidden in the country. The journalist is based in Paris, and has been for years, so she probably knew that nobody could answer to the article.
because the current government has not changed any law about creating a company
You don't necessarily have to change any law for the weight of decades of laws and regulations to finally catch up with the previous decent momentum of the private sector -- especially in a global market where the actions of other countries negatively impacts your lack of adjustments. Add to that a generally poor global economy, and new businesses will flee an anti-business climate.
Moreover it's merrily intermixing entrepreneurs problems with banking problems.
This is a big problem with current envy-driven politics surrounding wealth.
A lot of people don't like seeing bankers with big bonuses after they trashed the economy for everyone else. They're suspicious of old money children who have inherited a fortune but seem to have contributed little of value themselves. They're envious of highly paid sporting or artistic celebrities who get more salary in a week than most of us make in a year.
And so they support punitive rates of tax for those who earn noticeably more than they do, not necessarily based on any rational economic argument, but more because they feel it's "fair" for the "rich to contribute more" or some such argument.
Unfortunately, what that usually does in practice is hit highly qualified professionals or modestly successful entrepreneurs. It hits the doctors who spent years training, then more years working long hours for little money as juniors, and who finally made it to more senior positions where they are literally in a position to save lives with their greater experience but earn a fair bit of money. It hits the top public servants: the veteran judges, the experienced military commanders, the senior civil servants, basically the kind of people who keep government actually working despite the whims of successive political administrations. It hits the lucky entrepreneurs, the ones who made it after maybe putting their lives on hold for years and investing their savings to build a real business that creates value and maybe jobs for other people. All of these people are the kind of people we really need in society to keep everything working, and usually they are people who have reached those positions not through good fortune or family connections but through a lot of hard work over a long period of time.
However, the people these punitive taxes don't hit are the ones that the popular moneylust craves, because the super-rich are the people who have the flexibility to move their assets and/or themselves around to avoid high-tax environments. Absent serious international co-operation to overcome the naturally competitive tax environment that today's globalised society creates, these people will continue to be super-rich no matter what.
I like to think that if the people supporting these high rates of tax for those with some above average level of wealth realised who they were really targeting, we'd have a different attitude to taxation today. As it is, I fear the politics of envy will continue to trump rational economic policy for the foreseeable future, and unfortunately the people who actually did earn their wealth will be the ones who suffer most for it.
> This is a big problem with current envy-driven politics surrounding wealth.
It seems like most of the envy is more perceived by the ultra-rich (or wannabes) than actually exists...
> I like to think that if the people supporting these high rates of tax for those with some above average level of wealth realised who they were really targeting, we'd have a different attitude to taxation today.
You realize the 75% tax rate is on year income exceeding one million euro, right? One million euro is 34x the average salary in France, which means that anybody hit by that tax makes more money in less than two years than the majority of their countrymen will earn in their entire lives.
I make way more than an average salary where I live and I don't really have any problem paying higher tax rates. Sure, I work harder than lots of people who work 9-5 jobs, but I don't work any harder than friends I have who work two jobs. There is no question, in my mind, that people who work harder and take risks should reap greater potential rewards... the real question we need to answer is how much higher those rewards should be.
It's time to stop pretending that the doctor who spent years training, working as an intern, etc did it in a vacuum. It was tax francs that built the hospitals, that created the institutions that taught them and made them the best of the best. The entrepreneur sells a product shipped on roads built with taxes, over an electric grid built with taxes and might very well bill people using letters sent by mail... well, you get the idea. Not to mention the employees they hire, who were educated with what? Was it taxes? You betcha.
Besides with progressive taxes, that doctor will always make more, because progressive taxes do not penalize you for earning more. If you're making 100,000€, your after-tax income is ~62,500; if you're making 200,000€, it's ~133,000€.
> usually they are people who have reached those positions not through good fortune or family connections but through a lot of hard work over a long period of time.
You're a little delusional. France has a pretty high level of social mobility because of it's high taxes, not in spite of them. Having access to free higher education is a massive boon to lifting people out of poverty. France has the second highest birth rate in the EU due do a generous social safety net. These things cost money, but they're excellent long-term investments.
People don't exist in a vacuum, economies are wonderfully interconnected things and acting like the people who take risks and succeed are some kind of superheroes who shouldn't give back because of some deranged notion that they "did it themselves" is myopic, dishonest and, to be frank, total bullshit.
You realize the 75% tax rate is on year income exceeding one million euro, right?
Yes, though please note that I was commenting on a general trend of confusing going after bankers with actually catching entrepreneurs, not on the French situation specifically.
One million euro is 34x the average salary in France, which means that anybody hit by that tax makes more money in less than two years than the majority of their countrymen will earn in their entire lives.
By the time you allow for progressive taxation at lower levels, and for the other taxes in the French system, the multiplier for how much money those people are actually keeping is smaller than that. Of course it's still a wide gap, but let's not pretend these people are rich enough to retire after two years on that salary.
People don't exist in a vacuum, economies are wonderfully interconnected things and acting like the people who take risks and succeed are some kind of superheroes who shouldn't give back because of some deranged notion that they "did it themselves" is myopic, dishonest and, to be frank, total bullshit.
I have little interest in debating in detail with someone whose argument boils down to swearing at me and calling me delusional, but please consider this: taking the argument you seem to be making to its logical conclusion, why shouldn't everyone pay 100% taxes and have the state pay for everything, because we're all part of the same system?
<i>Of course it's still a wide gap, but let's not pretend these people are rich enough to retire after two years on that salary.</i>
Of course they're not retiring - someone earning enough to hit that 75% tax rate isn't living like your average mope. Give them five years, though, and they could easily put that money into blue chips, bonds and other low risk investments and support a middle class family with interest.
And while I do see the difference between entrepreneurs and those who live off the margins of financial transactions, I'm not really sure why they should be treated all that differently as far as tax law goes. Kids grow up wanting to be royalty, by college the fantasy is still there, now they're just Business Superheroes, because that's how we treat the rich.
Entrepreneurs aren't magic. We're people who've decided that we either don't like working for a boss or who've looked at the numbers and said, "hey, I think I can make more working on my own than for someone." Should we be in awe of someone who "worked hard" for a few years to get paid a couple million dollars to have a competitor shut their product down? Or amazed by a company who has managed to sell their stockholders on the idea that it doesn't need to be profitable, allowing them to destroy (or disrupt, in SV terms) traditional markets, where others can't compete, because their shareholders actually demand they turn a profit.
Now, are you telling me these Superheroes of Business will look at a progressive tax rate and say, "you know what, if I thought I could make $3 million after 3 years of hard work, I would do it... but since it'll only be $2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because that's the logical conclusion of what you're saying.
<i>why shouldn't everyone pay 100% taxes and have the state pay for everything</i>
Probably because that's not the logical conclusion of the reality I've described, although a lot of American businessmen do think the opposite should be true: all services should be privatized, yada, yada. That's crap, there tons of services that require long term, massive investments that will get shitty ROIs but benefit society and the economy as a whole.
We all know that, we all think people should be rich, I just don't think that income tax has the kind of dampening effect on entrepreneurship people claim it does. I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that.
Now, are you telling me these Superheroes of Business will look at a progressive tax rate and say, "you know what, if I thought I could make $3 million after 3 years of hard work, I would do it... but since it'll only be $2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because that's the logical conclusion of what you're saying.
No, I'm telling you that people who are capable of and considering starting a business, several years earlier in their career than the kind of relatively uncommon success story you're talking about where millions of dollars are flying around, are going to look at a progressive tax rate where a high proportion of their earnings if they are really successful are going to get stolen away by the state in taxes and they're going to think twice. Some of them are then going to decide it's not worth it and just stick with being someone's probably relatively well-compensated employee, which is bad for their national economy because usually small businesses drive a substantial proportion of growth. Others are going to move to a more supportive environment and start their business there instead, which is bad for the original economy, though good for the new one.
You're selling lottery tickets where there is no jackpot, and people who understand maths aren't going to play that game. Most people who are capable of starting a successful business (and anyone who professionally invests in young businesses) understand maths.
I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that.
OK, but what about 75% of your 1.5mil? What about 90%, a rate we actually had in the UK for much of the 1950s and 1960s? Or how about 98% on your investment income, again a rate we really had for a while? Still want to invest in a 20% share of a new business that might make a few million in this country, or would you rather invest in a SV start-up, or in energy and natural resource production in a developing economy, or any of the other vastly more profitable opportunities that would then be available to you?
At some point, the numbers become prohibitive. The interesting question is when that happens, not whether it does.
This is not a taxation by envy, this is Adam Smith "ability to pay" theory, it's the guy who rules UK who invented it, it can't be wrong, on an authority ground! Man! Adam Smith!
You have to understand that absolute tax rate is just not meaningful, you can't say it's high or low, you need a reference. The real question is: where does the money go?
In France it's easy the accounting is public: it goes mainly into retirement and medicines. (yeah, technically it's not taxes, but it's still money the State takes, it's bigger than actual taxes and the debt incurred there is carried by the State General Budget anyways). And then the discussion goes, are the pensions fair in France (and the system where one generation pays for the previous one), what about medicine prices? etc.
Don't believe the complaint of the wealthy, they still have a better life than the rest of the population, the only difference is that their friends are journalists. Doctors in France have a better life than street workers. And the thinking than a banker is more important and deserve more money than the garbage man is more alive than ever (also only one of them is literally protecting us from the plague, and only one of them can say: "it me or the chaos in 3 days").
Nobody has been punished by taxes here, the wealthy are perfectly happy to come to Paris through a tax-funded airport, through a taxpayer maintained highway, or through a tunnel that was used to fuck over middle class people.
We have gated communities, we give truckloads of money to big corps, and some of the biggest fortunes in the world are here, we're not very different.
One difference is that the average people here don't think that they are temporarily embarrassed millionnaires, they know that only a very few people get out of their birth class. And they are conservative (and that drive me crazy).
I think the real problem is that we should enjoy the safety net for doing innovation, not mess with the taxes or what some special interests in the UK and US are saying.
I'm curious as to what you think of the first century of the US, where income taxes were 0% and tens of millions of people rose from poverty into the middle class.
Also, 85% of American millionaires are self made (see "The Millionaire Next Door").
So you select one country, over a carefully selected period of time, you select one parameter amongst hundreds to explain one other. I'm not very good at US history, but slavery, an almost infinite amount of natural resources comes to mind, more that the tax system. While during this time European countries were still wasting resources in wars, throne successions and a mostly feudal system.
If I give you another country that pushed people out of poverty into middle class with heavy taxes (Germany after the war for example), then I win at telling the taxes are not the primordial criterion?
Or maybe we cut the crap and we look at global data, statistics and economic theory instead of looking at one datapoint and make it an example.
Millionnaires are a very small population, they are statistically irrelevant at the people level. Having a very few millionnaires, all of them self made, doesn't influence the social mobility. Otherwise, a few winners at the lottery in a very poor country (imagine the winners being more numerous than the war profiteers) would be enough to claim that it's a country where there is social mobility. You're just looking at the statistics of an infinitely small population.
edit: and I probably forgot to throw some Chinese railroad workers in there.
Is it really careful cherry picking to pick one of the largest countries in the world over a 100 year timespan that had 0% income taxes?
It's a tough case to make that slavery in the US, 1800-1865, transformed tens of millions from poverty into the middle class. The southern states failed to industrialize, which is arguably one of the causes of the Civil War and one of the reasons they lost. The industrialization and rapid economic growth happened in the free states. There are innumerable books on this, but I suggest Bruce Cabot's "The Civil War" which discusses the two economies.
You might want to compare it with what happened in South America over the same time period.
Then we should have higher social mobility in the US than in France right? But it doesn't seem to be the case (look for "Country comparison"):
https://en.wikipedia.org/wiki/Social_mobility
Note also that the northern Europe countries are much better than either France or the US. Not really low taxation countries either.
This is a big problem with current envy-driven politics surrounding wealth.
This is not envy driven. Not wanting bonuses for bankers who were bailed out by public money has to do with bonus-driven bad decisions being a fundamental cause of the crash that cost everyone else trillions of dollars in wealth, economic growth, unemployment benefits and bailouts. Look up "moral hazard", and note that they are up to the same shenanigans that got us into this mess.
Furthermore, if the banks are, effectively, government guaranteed, then bankers should be paid as government employees. Greater pay is for greater skill and risk, their risk is borne by everyone but themselves and as for skill... So it is only proper (and not "envy") for the taxpayers to get those bonuses.
..old money children who have inherited a fortune but seem to have contributed little of value themselves
This is also a huge economic and social problem, no need to invoke "envy". The moneyed elites have started to decouple themselves from the rest of the world. I went to a prep school in Michigan where this was quite apparent, and scary. There was also a recent study that warned that this decoupling of the elites from everyone else could lead to (or contribute heavily to) the collapse of civilization [1]. For an artistic rendition, see "Elysium". What's so scary about that film is not the dystopian outlook, but rather how real a lot of it already feels.
They're envious of highly paid sporting or artistic celebrities who get more salary in a week than most of us make in a year.
Again, there are good economic arguments for this being a problem. Pay way in excess of the ability to consume creates a huge overhang in liquidity with which people start to gamble in the international financial casino, creating instability[1] See also "Giant Pool of Money"[2]
And so they support punitive rates of tax for those who earn noticeably more than they do
The rates are not punitive. They are stabilizing. Where this rate starts is a good question to which I don't have a good answer.
Unfortunately, what that usually does in practice is hit highly qualified professionals or modestly successful entrepreneurs
Not according to any statistics I have seen. References?
However, the people these punitive taxes don't hit are the ones that the popular moneylust craves, because the super-rich are the people who have the flexibility to move their assets and/or themselves around to avoid high-tax environments. Absent serious international co-operation to overcome the naturally competitive tax environment that today's globalised society creates, these people will continue to be super-rich no matter what
So should we not do this because it is wrong or because it won't work? It seems it can't work if we don't start somewhere. Certainly finance has globalized, so it seems it is time for enforcement to catch up. This seems to start happening, see the crackdown on Switzerland as a tax-haven/money-laundering center.
Looking at the replies to my previous post, I'm guessing my choice of words had connotations for some readers that I didn't intend. My point was merely that a lot of the people arguing for high tax rates for above average earners today seem to be doing so in the belief that they will be collecting more money from the super-rich, whom they regard for whatever reason as being legitimate targets. However, the reality is that it's usually not the bankers with million pound/dollar bonuses or the pop stars flying to their concert on a private jet who are ever going to be paying those rates, because they all have sufficient mobility to escape the high tax rates by moving their assets and/or themselves elsewhere. So, I think it's more likely to be those who are significantly wealthier than average but not super-rich who get hit by these rates, and many of those people are self-made and the lucky ones.
For example, while I'm not an expert on French taxation, I know that in the UK right now there is considerable debate about a 40% marginal tax rate for those earning above the higher rate threshold, because that threshold has been steadily reduced in real terms to the point where unlike the situation when that rate was first introduced, today quite a few people working full time in ordinary professional jobs would get caught in that bracket. (For context, with the latest tax bands and income levels, well over 4M taxpayers will be caught in that bracket, from a total population approaching 64M.)
Then there's a marginal 60% rate for a while when you hit £100k, which is certainly a very nice salary to be earning, but at a little over three times the national average it's hardly super-rich. It does cover the senior positions in some professional and executive management roles, but it also catches the entrepreneur who takes a couple of years of very low salary (forfeiting their ability to take more salary at lower marginal tax rates, of course) and then makes good on their business and is able to draw a larger salary the next year.
If you're interested in what people in different relatively well-paid professions really earn, you might find this helpful; it looks like being a doctor or a pilot is a promising option if you don't fancy the management path:
In short, I believe a lot of people don't think much of the super-rich, and they would be happy to see them get dinged for more tax. Sometimes there is some objective justification for this, but if anyone reading this thinks there's really no envy involved, I've got a nice second hand car to sell them. In any case, a lot of the people keen on the higher tax rates probably don't realise who is really going to wind up paying them, and how little effect they really have on the super-rich.
> because the current government has not changed any law about creating a company
Which has nothing to do with my argument. And no relevance whatsoever because the status quo is shitty, and not changing the status quo is bad in of itself.
>The 75% wealth tax point was only a minor point in an article that expressed many many other points and anecdotes, and whose greater argument was that the entrepreneurial climate in France was poor.
Yes, the greater argument was that "the entrepreneurial climate is poor" because they wouldn't get very much sympathy saying "stop taxing the ultrawealthy so much. We don't like it!".
Nonetheless, it's pretty obvious what they thing the 'fix' for this supposedly poor climate of this is when you read stuff like this:
>Some wealthy businesspeople have also been packing their bags.
>While entrepreneurs fret about the difficulties of getting a business off the ground,
>those who have succeeded in doing so say that society stigmatizes financial success.
>The election of President François Hollande, a member of the Socialist Party who
>once declared, “I don’t like the rich,” did little to contradict that impression.
Or this:
>“It is a French cultural characteristic that goes back to almost the revolution and
>Robespierre, where there’s a deep-rooted feeling that you don’t show that you make money,”
>Ms. Segalen, the recruiter, said. “There is this sense that ‘liberté, égalité, fraternité’
>means that what’s yours should be mine. It’s more like, if someone has something I can’t have,
>I’d rather deprive this person from having it than trying to work hard to get it myself.
>That’s a very French state of mind. But it’s a race to the bottom.”
Essentially, this article is emphatically NOT about entrepreneurs, particularly not struggling entrepreneurs. It's basically a good old whinge by the French elite.
It's interesting how your argument insists on collapsing this issue into a black and white issue: it's the elites whining and not in any way about entrepreneurs. And yet the only evidence you provide is one or two quotes where the article talks about the anti-wealth sentiment.
Fun fact: an appreciation of wealth-generation is absolutely necessary and goes hand in hand with encouragement of entrepreneurship. Follow the incentives.
>It's interesting how your argument insists on collapsing this issue into a black and white issue: it's the elites whining and not in any way about entrepreneurs.
Right, because none of the issues presented in the article were actually ABOUT the problems entrepreneurs face.
Did it mention fundraising? No.
Did it mention hiring? No.
Did it mention anything about gaining traction? No.
Did it mention anything about finding a mentor? No.
Did it mention something about how the proles were getting uppity about the rich needing to pay more taxes? Hell yea.
Learn to read between the lines.
>Fun fact: an appreciation of wealth-generation is absolutely necessary and goes hand in hand with encouragement of entrepreneurship. Follow the incentives.
Neither fun nor a fact. My incentive is to be my own boss, not to one day become a billionaire asshole like Eric Schmidt. If I were making a million dollars a year I'd be fine with being taxed at 75%.
Uh, that's how I could describe my current situation in Germany. We were a little too successful last year and now the tax advance payments are endangering our liquidity.
It feels as if this year I had spent more time reading about taxes and regulations than working on the business.
Something is wrong when taxes become such a prominent part of your daily business life ...
I'm not sure it's the same in Germany as in the Netherlands, but I'd recommend getting a good tax lawyer.
Our tax company generally tends to lay down strong demands (which makes sense,) but becomes very lenient when it's clear they're more likely to recover the full amount by being patient.
Interesting to hear the German perspective. If you could share any more anonymous data e.g. tax rates, what you would have done in retrospect, etc I would very much appreciate it. No hard feelings if you can't.
> Something is wrong when taxes become such a prominent part of your daily business life ...
it's not just business life. i once watched a talk of a professor of law who said the ethical side of laws (tax law specifically) obligates them (even by a guideline, i thin) to be readable and digestable by every person to whom this law applies.
he said, since this is clearly not the case in germany anymore our tax laws are thus rendered unjust and invalid.
he obviously is right. now, good luck in front of the supreme court of our great democracy.
of course, this discussion perfectly stretches into the area of tax evasion and if and/or why there's much incentive for doing so. also, isn't the state of tax laws only incriminating people by making tax evasion a crime due to the law being overly excessive on one side and undigestable on the other?
In Norway, you have to pay net worth tax of 1% of your assets in excess of ~$200,000. So if you own 2 million of stock in an unlisted company, you are on the hook for $20,000 in additional taxes every year. Most successful entrepeneurs here have to sell stock every year just to pay their tax bill.
Company profits tax of 27%, capital gains tax of 28% and personal income tax of ~35% ensures that you even in the best case get to keep <50% of the profits your company makes, even before the annual net worth tax comes into play. Some successful businessmen in cyclic businesses here have emigrated purely because paying the full tax every year would deplete their companies' rainy day buffers.
(We also have a 25% VAT on all consumer purchases, including "compulsory" products purchased from the state such as the national broadcasting license or local government residential parking permits).
And still you read in the newspaper every other week of someone wanting to create the "new Silicon Valley" in some Norwegian city. It's delusional; the incentives are completely wrong.
Heh, you know how developing countries "solve" the bureaucracy problem? Through corruption! A few hundred [local_currency] here and there and you've got your business started in no time.
If things don't improve soon, France (and other countries) will have to resort to the same thing - and it's a bad thing since it's hard to come back from that, when everyone gets their share independently and no one follows the rules anymore.
> Heh, you know how developing countries "solve" the bureaucracy problem? Through corruption!
True and this "grease lubricating the economic engine" does "work" on a small scale. Problem in an environment where pervasive corruption trumps over "rule of law" for the small honest budding startup up-start -- there's always be someone bigger with better connections and deeper pockets willing to outbid you when it comes to securing local market dominance which will more than pay off their elbowing-you-out ;)
Still, you have a point. A western-style rule-of-law environment is generally better for business and worth paying some amount of taxes -- within reason. But there comes a point where the tax and regulation codes do overwhelm small agile but resource-limited up-starts. (Of course there's still many success stories, but they have perhaps much to do with pressing forward relentlessly at the slight risk of perhaps missing one minor regulation or other tax facet and simply inadvertently gambling on the very tiny off-chance of doing so actually blowing them up.)
Then if you do decide "taxes and regulations are really kind of too expensive but still just-about worth it for just and fair legal protection", you'll be well advised to keep telling yourself that fairytale where your taxes are directly funding a functioning well-balanced governance system, rather than being simply a metric used NOT even to pay interest on the governments past and present outsized debt excesses --which would be crazy enough, but nowadays your average western "non-corrupt" government will borrow even for interest payments-- BUT simply for said government to reach some kind of good agency rating as a "quality" borrower.
Yeah I don't think its taxes that suppress corruption in America. Its the tendency of ordinary people to blow the whistle on bribe-seekers. As such, its cultural, and making laws won't change that quickly.
> French entrepreneurs have been fleeing to other countries, especially England, which some 350,000 now call home.
It's been estimated that between 70 000 and 300 000 French live in the U.K so I really doubt that 350 000 entrepreneurs live in England (granted the article also use the more wide "French nationals", but still).
Here is my advice: go somewhere else than Paris, one of the 15 biggest cities in France (look at the TGV, and tram, bike life, weather). Your quality of life will just skyrocket.
That's it. That is way cooler for a French to go in London than Paris. Especially, if it does not work out for him he will just come back with a solid resume that will get him a comfortable position easily.
Like he decided to live in Kengsinton. Sure he share, like most singles in London, but he tries to live the life and was not too successful (yet, hopefully for him).
> "Sometimes I do ask myself if I'm making the right choice," he acknowledged. "But if you don't take risks, there will be no reward."
This is true, but one of the most important things I learned in my 20s was knowing when to take risks. It takes money to make money, and if you're a starving founder waiting for an investor to cut you a check or trying to bootstrap your business with insufficient savings, you increase your risk of failure substantially.
Patience is a virtue, as is focused and consistent saving, but in a lot of professions, like finance and technology, you won't have to work until you're 60 to build up meaningful savings that you can invest in yourself. If you've trapped yourself in the startup bubble, it's easy to convince yourself that your best opportunities are behind you by the time you hit 30, but the reality is that most businesses are not founded by 20-somethings. The Kauffman Foundation did a study called The Anatomy of an Entrepreneur a few years back and found the average entrepreneur was about 40 years old when he started his first company.
Beyond being in a position to capitalize your own venture, one of the great advantages of starting a business in your 30s, 40s or later is that you're far more likely to have the domain expertise so many young founders lack. There are literally countless untapped, unsexy million-dollar opportunities that 20-somethings running around Silicon Valley will never pursue because they don't even know that certain industries and problems exist.
I don't see any actual evidence cited that entrepreneurs or "creatives" in particular are fleeing France. They might make up a larger percentage of the diaspora, but that's generally true of expatriates from any country.
France has about the same percentage of citizens living abroad as the US, and about a quarter as many as the UK:
France: total population ~63m, living abroad ~2m, about 2.5%
US: total population ~317m, living abroad ~6m, about 1.9%
UK: total population ~63m, living abroad ~6-12m, about 9.5% or more
Being from the France tech scene and now living in SF ther are several things we should not forget.
CONS
- Yes you get big taxes, and setting up a company is a pain (RSI/URSSAF), administration is slow and inefficient.
Finding fundings can be hard and investements are generaly smaller than in the US.
French market is smal unless your target is international from day 1.
But,
PROS
- You have a pool of not so pricy talented workers (Well supposing you benefit from “Credit impot recherche” otherwise the total cost of an employee is x2 his salary).
- Fight for some government subsidies (time consuming).
- Leverage the government to pay your salary while bootstrapping. For startupers with previous work experience, you can quit your company in good terms and receive unemployement paychecks for a year or so.
The US has it's issues, but Europe is simply decades behind.
The irony of all this is that the EU has very successfully created an internal market allowing for easier trade between countries in the EU, but it's ability to foster new comanies is still hindered by it's old industry understanding of a new industry.
"Les misérables
Europe not only has a euro crisis, it also has a growth crisis. That is because of its chronic failure to encourage ambitious entrepreneurs..."
It would be interesting to know how _personal_ taxes work in European countries. I remember conversing with somebody, maybe from England, who told me that the typical worker doesn't file any paperwork for their annual taxes, unless they're doing something unusual. If that's the case, then filing business taxes for the first time would come as somewhat of a shock. In contrast, my personal tax return here in the US is about 10x more complex than my business tax paperwork (Schedule C plus a state sales tax return).
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[ 3.5 ms ] story [ 142 ms ] thread> there’s a deep-rooted feeling that you don’t show that you make money
> It’s more like, if someone has something I can’t have, I’d rather deprive this person from having it than trying to work hard to get it myself
This. A lot of people still don't understand money can me made. They see succesfull men and woman and assume the money must have been stolen instead of made.
Well, that's textbook Marxism, strong here in the US, I assume much stronger in France (after all the French Communist Party is still competitive to a fair degree, per Wikipedia was part of the "Plural Left" coalition that held the legislature from 1997–2002).
ADDED: and our path is particularly odd there: as has been joked for some time, there is no French word for entrepreneur.
A goofy quote from G.W. Bush relaunched by Newsweek some months ago.
Secondly, is it reasonable to assume that one might find distaste for people with money who flaunt it? And that this might cause one to share that distaste for others with money, even if they don't flaunt to such a degree? I realize the latter half is a generalization that can cause problems, I'm just trying to state a rather "human" response. If it is constantly shoved in your face that certain people drive cars worth enough that it could bring your family out of debt for life, you may grow bitter at this.
I believe money can be made, I just also believe there are a lot of "bad actors" in the system, for whom it is "stolen" to some degree, and it only seems to be becoming more common.
Corruption is the core problem. I think that worry about corrupt businesses is misplaced when a corrupt government is 10x worse.
everything from insider trading
There's a good example right there. Congress can inside trade. It's absolutely extraordinarily corrupt. They wrote a law a while back to prevent it when there was some press on it, but then quietly scaled back the restriction.
Consider this: Political office holders can lie to us outrageously and never face repercussions besides (perhaps) not being re-elected in a future cycle. You could list case after case of politicians who knowingly made definitive, verifiably false claims that have caused real damages to people. If they were officers of a public company, they would be sued into oblivion. They would be hounded by the Justice Department. But since they're in the political club, they've written the rules so that they can't be held accountable.
Worrying about private sector corruption misplaced? One shouldn't have to tolerate _any_ kind of corruption.
What it's hard for people to understand is that both "stealing" and "making" are simplistic ideals, and that reality is much more complex for most of us.
>He had taken that job after his attempt to start a business in Marseille foundered under a pile of government regulations and a seemingly endless parade of taxes. The episode left him wary of starting any new projects in France. Yet he still hungered to be his own boss. > >“A lot of people are like, ‘Why would you ever leave France?’ ” Mr. Santacruz said. “I’ll tell you. France has a lot of problems. There’s a feeling of gloom that seems to be growing deeper. The economy is not going well, and if you want to get ahead or run your own business, the environment is not good.”
A feeling that something just isn't quite right about the place, and it's better in London? Gee I wonder if they mean this:
http://www.dailymail.co.uk/news/article-2161151/With-Holland...
>Some wealthy businesspeople have also been packing their bags. While entrepreneurs fret about the difficulties of getting a business off the ground, those who have succeeded in doing so say that society stigmatizes financial success.
Yep. This article isn't about poor, plucky upstart rags-to-riches entrepreneurs at all. It's about manufacturing consent for slashing taxes on the ultrawealthy. The rich are pissed about Hollande's 75% tax and they want you to do something about it for them.
And you can see the intermix quite a few times (got his wealth in finance, he worked in finance, the google references), Place de la Madeleine, is exactly who Fleur Pellerin is not trying to help, this are different people doing different things. And if for anything, bankers are part of the problems entrepreneurs have.
So here is a nice little piece of context that was not in the article: here in France it's an election day today, and yesterday and today, political propaganda are forbidden in the country. The journalist is based in Paris, and has been for years, so she probably knew that nobody could answer to the article.
You don't necessarily have to change any law for the weight of decades of laws and regulations to finally catch up with the previous decent momentum of the private sector -- especially in a global market where the actions of other countries negatively impacts your lack of adjustments. Add to that a generally poor global economy, and new businesses will flee an anti-business climate.
This is a big problem with current envy-driven politics surrounding wealth.
A lot of people don't like seeing bankers with big bonuses after they trashed the economy for everyone else. They're suspicious of old money children who have inherited a fortune but seem to have contributed little of value themselves. They're envious of highly paid sporting or artistic celebrities who get more salary in a week than most of us make in a year.
And so they support punitive rates of tax for those who earn noticeably more than they do, not necessarily based on any rational economic argument, but more because they feel it's "fair" for the "rich to contribute more" or some such argument.
Unfortunately, what that usually does in practice is hit highly qualified professionals or modestly successful entrepreneurs. It hits the doctors who spent years training, then more years working long hours for little money as juniors, and who finally made it to more senior positions where they are literally in a position to save lives with their greater experience but earn a fair bit of money. It hits the top public servants: the veteran judges, the experienced military commanders, the senior civil servants, basically the kind of people who keep government actually working despite the whims of successive political administrations. It hits the lucky entrepreneurs, the ones who made it after maybe putting their lives on hold for years and investing their savings to build a real business that creates value and maybe jobs for other people. All of these people are the kind of people we really need in society to keep everything working, and usually they are people who have reached those positions not through good fortune or family connections but through a lot of hard work over a long period of time.
However, the people these punitive taxes don't hit are the ones that the popular moneylust craves, because the super-rich are the people who have the flexibility to move their assets and/or themselves around to avoid high-tax environments. Absent serious international co-operation to overcome the naturally competitive tax environment that today's globalised society creates, these people will continue to be super-rich no matter what.
I like to think that if the people supporting these high rates of tax for those with some above average level of wealth realised who they were really targeting, we'd have a different attitude to taxation today. As it is, I fear the politics of envy will continue to trump rational economic policy for the foreseeable future, and unfortunately the people who actually did earn their wealth will be the ones who suffer most for it.
It seems like most of the envy is more perceived by the ultra-rich (or wannabes) than actually exists...
> I like to think that if the people supporting these high rates of tax for those with some above average level of wealth realised who they were really targeting, we'd have a different attitude to taxation today.
You realize the 75% tax rate is on year income exceeding one million euro, right? One million euro is 34x the average salary in France, which means that anybody hit by that tax makes more money in less than two years than the majority of their countrymen will earn in their entire lives.
I make way more than an average salary where I live and I don't really have any problem paying higher tax rates. Sure, I work harder than lots of people who work 9-5 jobs, but I don't work any harder than friends I have who work two jobs. There is no question, in my mind, that people who work harder and take risks should reap greater potential rewards... the real question we need to answer is how much higher those rewards should be.
It's time to stop pretending that the doctor who spent years training, working as an intern, etc did it in a vacuum. It was tax francs that built the hospitals, that created the institutions that taught them and made them the best of the best. The entrepreneur sells a product shipped on roads built with taxes, over an electric grid built with taxes and might very well bill people using letters sent by mail... well, you get the idea. Not to mention the employees they hire, who were educated with what? Was it taxes? You betcha.
Besides with progressive taxes, that doctor will always make more, because progressive taxes do not penalize you for earning more. If you're making 100,000€, your after-tax income is ~62,500; if you're making 200,000€, it's ~133,000€.
> usually they are people who have reached those positions not through good fortune or family connections but through a lot of hard work over a long period of time.
You're a little delusional. France has a pretty high level of social mobility because of it's high taxes, not in spite of them. Having access to free higher education is a massive boon to lifting people out of poverty. France has the second highest birth rate in the EU due do a generous social safety net. These things cost money, but they're excellent long-term investments.
People don't exist in a vacuum, economies are wonderfully interconnected things and acting like the people who take risks and succeed are some kind of superheroes who shouldn't give back because of some deranged notion that they "did it themselves" is myopic, dishonest and, to be frank, total bullshit.
Yes, though please note that I was commenting on a general trend of confusing going after bankers with actually catching entrepreneurs, not on the French situation specifically.
One million euro is 34x the average salary in France, which means that anybody hit by that tax makes more money in less than two years than the majority of their countrymen will earn in their entire lives.
By the time you allow for progressive taxation at lower levels, and for the other taxes in the French system, the multiplier for how much money those people are actually keeping is smaller than that. Of course it's still a wide gap, but let's not pretend these people are rich enough to retire after two years on that salary.
People don't exist in a vacuum, economies are wonderfully interconnected things and acting like the people who take risks and succeed are some kind of superheroes who shouldn't give back because of some deranged notion that they "did it themselves" is myopic, dishonest and, to be frank, total bullshit.
I have little interest in debating in detail with someone whose argument boils down to swearing at me and calling me delusional, but please consider this: taking the argument you seem to be making to its logical conclusion, why shouldn't everyone pay 100% taxes and have the state pay for everything, because we're all part of the same system?
Of course they're not retiring - someone earning enough to hit that 75% tax rate isn't living like your average mope. Give them five years, though, and they could easily put that money into blue chips, bonds and other low risk investments and support a middle class family with interest.
And while I do see the difference between entrepreneurs and those who live off the margins of financial transactions, I'm not really sure why they should be treated all that differently as far as tax law goes. Kids grow up wanting to be royalty, by college the fantasy is still there, now they're just Business Superheroes, because that's how we treat the rich.
Entrepreneurs aren't magic. We're people who've decided that we either don't like working for a boss or who've looked at the numbers and said, "hey, I think I can make more working on my own than for someone." Should we be in awe of someone who "worked hard" for a few years to get paid a couple million dollars to have a competitor shut their product down? Or amazed by a company who has managed to sell their stockholders on the idea that it doesn't need to be profitable, allowing them to destroy (or disrupt, in SV terms) traditional markets, where others can't compete, because their shareholders actually demand they turn a profit.
Now, are you telling me these Superheroes of Business will look at a progressive tax rate and say, "you know what, if I thought I could make $3 million after 3 years of hard work, I would do it... but since it'll only be $2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because that's the logical conclusion of what you're saying.
<i>why shouldn't everyone pay 100% taxes and have the state pay for everything</i>
Probably because that's not the logical conclusion of the reality I've described, although a lot of American businessmen do think the opposite should be true: all services should be privatized, yada, yada. That's crap, there tons of services that require long term, massive investments that will get shitty ROIs but benefit society and the economy as a whole.
We all know that, we all think people should be rich, I just don't think that income tax has the kind of dampening effect on entrepreneurship people claim it does. I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that.
No, I'm telling you that people who are capable of and considering starting a business, several years earlier in their career than the kind of relatively uncommon success story you're talking about where millions of dollars are flying around, are going to look at a progressive tax rate where a high proportion of their earnings if they are really successful are going to get stolen away by the state in taxes and they're going to think twice. Some of them are then going to decide it's not worth it and just stick with being someone's probably relatively well-compensated employee, which is bad for their national economy because usually small businesses drive a substantial proportion of growth. Others are going to move to a more supportive environment and start their business there instead, which is bad for the original economy, though good for the new one.
You're selling lottery tickets where there is no jackpot, and people who understand maths aren't going to play that game. Most people who are capable of starting a successful business (and anyone who professionally invests in young businesses) understand maths.
I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that.
OK, but what about 75% of your 1.5mil? What about 90%, a rate we actually had in the UK for much of the 1950s and 1960s? Or how about 98% on your investment income, again a rate we really had for a while? Still want to invest in a 20% share of a new business that might make a few million in this country, or would you rather invest in a SV start-up, or in energy and natural resource production in a developing economy, or any of the other vastly more profitable opportunities that would then be available to you?
At some point, the numbers become prohibitive. The interesting question is when that happens, not whether it does.
You have to understand that absolute tax rate is just not meaningful, you can't say it's high or low, you need a reference. The real question is: where does the money go? In France it's easy the accounting is public: it goes mainly into retirement and medicines. (yeah, technically it's not taxes, but it's still money the State takes, it's bigger than actual taxes and the debt incurred there is carried by the State General Budget anyways). And then the discussion goes, are the pensions fair in France (and the system where one generation pays for the previous one), what about medicine prices? etc.
Don't believe the complaint of the wealthy, they still have a better life than the rest of the population, the only difference is that their friends are journalists. Doctors in France have a better life than street workers. And the thinking than a banker is more important and deserve more money than the garbage man is more alive than ever (also only one of them is literally protecting us from the plague, and only one of them can say: "it me or the chaos in 3 days").
Nobody has been punished by taxes here, the wealthy are perfectly happy to come to Paris through a tax-funded airport, through a taxpayer maintained highway, or through a tunnel that was used to fuck over middle class people. We have gated communities, we give truckloads of money to big corps, and some of the biggest fortunes in the world are here, we're not very different.
One difference is that the average people here don't think that they are temporarily embarrassed millionnaires, they know that only a very few people get out of their birth class. And they are conservative (and that drive me crazy).
I think the real problem is that we should enjoy the safety net for doing innovation, not mess with the taxes or what some special interests in the UK and US are saying.
Ironically, high income taxes will ensure that result.
edit: and this is frightening to see this kind of thinking on HN, this is not Fox News here, we all have access to the same google.
Also, 85% of American millionaires are self made (see "The Millionaire Next Door").
If I give you another country that pushed people out of poverty into middle class with heavy taxes (Germany after the war for example), then I win at telling the taxes are not the primordial criterion?
Or maybe we cut the crap and we look at global data, statistics and economic theory instead of looking at one datapoint and make it an example.
Millionnaires are a very small population, they are statistically irrelevant at the people level. Having a very few millionnaires, all of them self made, doesn't influence the social mobility. Otherwise, a few winners at the lottery in a very poor country (imagine the winners being more numerous than the war profiteers) would be enough to claim that it's a country where there is social mobility. You're just looking at the statistics of an infinitely small population.
edit: and I probably forgot to throw some Chinese railroad workers in there.
It's a tough case to make that slavery in the US, 1800-1865, transformed tens of millions from poverty into the middle class. The southern states failed to industrialize, which is arguably one of the causes of the Civil War and one of the reasons they lost. The industrialization and rapid economic growth happened in the free states. There are innumerable books on this, but I suggest Bruce Cabot's "The Civil War" which discusses the two economies.
You might want to compare it with what happened in South America over the same time period.
Note also that the northern Europe countries are much better than either France or the US. Not really low taxation countries either.
This is not envy driven. Not wanting bonuses for bankers who were bailed out by public money has to do with bonus-driven bad decisions being a fundamental cause of the crash that cost everyone else trillions of dollars in wealth, economic growth, unemployment benefits and bailouts. Look up "moral hazard", and note that they are up to the same shenanigans that got us into this mess.
Furthermore, if the banks are, effectively, government guaranteed, then bankers should be paid as government employees. Greater pay is for greater skill and risk, their risk is borne by everyone but themselves and as for skill... So it is only proper (and not "envy") for the taxpayers to get those bonuses.
..old money children who have inherited a fortune but seem to have contributed little of value themselves
This is also a huge economic and social problem, no need to invoke "envy". The moneyed elites have started to decouple themselves from the rest of the world. I went to a prep school in Michigan where this was quite apparent, and scary. There was also a recent study that warned that this decoupling of the elites from everyone else could lead to (or contribute heavily to) the collapse of civilization [1]. For an artistic rendition, see "Elysium". What's so scary about that film is not the dystopian outlook, but rather how real a lot of it already feels.
They're envious of highly paid sporting or artistic celebrities who get more salary in a week than most of us make in a year.
Again, there are good economic arguments for this being a problem. Pay way in excess of the ability to consume creates a huge overhang in liquidity with which people start to gamble in the international financial casino, creating instability[1] See also "Giant Pool of Money"[2]
And so they support punitive rates of tax for those who earn noticeably more than they do
The rates are not punitive. They are stabilizing. Where this rate starts is a good question to which I don't have a good answer.
Unfortunately, what that usually does in practice is hit highly qualified professionals or modestly successful entrepreneurs
Not according to any statistics I have seen. References?
However, the people these punitive taxes don't hit are the ones that the popular moneylust craves, because the super-rich are the people who have the flexibility to move their assets and/or themselves around to avoid high-tax environments. Absent serious international co-operation to overcome the naturally competitive tax environment that today's globalised society creates, these people will continue to be super-rich no matter what
So should we not do this because it is wrong or because it won't work? It seems it can't work if we don't start somewhere. Certainly finance has globalized, so it seems it is time for enforcement to catch up. This seems to start happening, see the crackdown on Switzerland as a tax-haven/money-laundering center.
[1] http://www.sesync.org/sites/default/files/resources/moteshar...
[2] http://translate.google.com/translate?sl=auto&tl=en&js=n&pre...
[3] http://www.thisamericanlife.org/radio-archives/episode/355/t...
For example, while I'm not an expert on French taxation, I know that in the UK right now there is considerable debate about a 40% marginal tax rate for those earning above the higher rate threshold, because that threshold has been steadily reduced in real terms to the point where unlike the situation when that rate was first introduced, today quite a few people working full time in ordinary professional jobs would get caught in that bracket. (For context, with the latest tax bands and income levels, well over 4M taxpayers will be caught in that bracket, from a total population approaching 64M.)
Then there's a marginal 60% rate for a while when you hit £100k, which is certainly a very nice salary to be earning, but at a little over three times the national average it's hardly super-rich. It does cover the senior positions in some professional and executive management roles, but it also catches the entrepreneur who takes a couple of years of very low salary (forfeiting their ability to take more salary at lower marginal tax rates, of course) and then makes good on their business and is able to draw a larger salary the next year.
If you're interested in what people in different relatively well-paid professions really earn, you might find this helpful; it looks like being a doctor or a pilot is a promising option if you don't fancy the management path:
http://www.theguardian.com/money/2013/dec/18/what-are-the-be...
In short, I believe a lot of people don't think much of the super-rich, and they would be happy to see them get dinged for more tax. Sometimes there is some objective justification for this, but if anyone reading this thinks there's really no envy involved, I've got a nice second hand car to sell them. In any case, a lot of the people keen on the higher tax rates probably don't realise who is really going to wind up paying them, and how little effect they really have on the super-rich.
Which has nothing to do with my argument. And no relevance whatsoever because the status quo is shitty, and not changing the status quo is bad in of itself.
Yes, the greater argument was that "the entrepreneurial climate is poor" because they wouldn't get very much sympathy saying "stop taxing the ultrawealthy so much. We don't like it!".
Nonetheless, it's pretty obvious what they thing the 'fix' for this supposedly poor climate of this is when you read stuff like this:
>Some wealthy businesspeople have also been packing their bags. >While entrepreneurs fret about the difficulties of getting a business off the ground, >those who have succeeded in doing so say that society stigmatizes financial success. >The election of President François Hollande, a member of the Socialist Party who >once declared, “I don’t like the rich,” did little to contradict that impression.
Or this:
>“It is a French cultural characteristic that goes back to almost the revolution and >Robespierre, where there’s a deep-rooted feeling that you don’t show that you make money,” >Ms. Segalen, the recruiter, said. “There is this sense that ‘liberté, égalité, fraternité’ >means that what’s yours should be mine. It’s more like, if someone has something I can’t have, >I’d rather deprive this person from having it than trying to work hard to get it myself. >That’s a very French state of mind. But it’s a race to the bottom.”
Essentially, this article is emphatically NOT about entrepreneurs, particularly not struggling entrepreneurs. It's basically a good old whinge by the French elite.
Fun fact: an appreciation of wealth-generation is absolutely necessary and goes hand in hand with encouragement of entrepreneurship. Follow the incentives.
Right, because none of the issues presented in the article were actually ABOUT the problems entrepreneurs face.
Did it mention fundraising? No. Did it mention hiring? No. Did it mention anything about gaining traction? No. Did it mention anything about finding a mentor? No.
Did it mention something about how the proles were getting uppity about the rich needing to pay more taxes? Hell yea.
Learn to read between the lines.
>Fun fact: an appreciation of wealth-generation is absolutely necessary and goes hand in hand with encouragement of entrepreneurship. Follow the incentives.
Neither fun nor a fact. My incentive is to be my own boss, not to one day become a billionaire asshole like Eric Schmidt. If I were making a million dollars a year I'd be fine with being taxed at 75%.
Uh, that's how I could describe my current situation in Germany. We were a little too successful last year and now the tax advance payments are endangering our liquidity.
It feels as if this year I had spent more time reading about taxes and regulations than working on the business.
Something is wrong when taxes become such a prominent part of your daily business life ...
If it moves, tax it.
If it keeps moving, regulate it.
If it stops moving, subsidize it.
Our tax company generally tends to lay down strong demands (which makes sense,) but becomes very lenient when it's clear they're more likely to recover the full amount by being patient.
it's not just business life. i once watched a talk of a professor of law who said the ethical side of laws (tax law specifically) obligates them (even by a guideline, i thin) to be readable and digestable by every person to whom this law applies. he said, since this is clearly not the case in germany anymore our tax laws are thus rendered unjust and invalid.
he obviously is right. now, good luck in front of the supreme court of our great democracy.
of course, this discussion perfectly stretches into the area of tax evasion and if and/or why there's much incentive for doing so. also, isn't the state of tax laws only incriminating people by making tax evasion a crime due to the law being overly excessive on one side and undigestable on the other?
Company profits tax of 27%, capital gains tax of 28% and personal income tax of ~35% ensures that you even in the best case get to keep <50% of the profits your company makes, even before the annual net worth tax comes into play. Some successful businessmen in cyclic businesses here have emigrated purely because paying the full tax every year would deplete their companies' rainy day buffers.
(We also have a 25% VAT on all consumer purchases, including "compulsory" products purchased from the state such as the national broadcasting license or local government residential parking permits).
And still you read in the newspaper every other week of someone wanting to create the "new Silicon Valley" in some Norwegian city. It's delusional; the incentives are completely wrong.
If things don't improve soon, France (and other countries) will have to resort to the same thing - and it's a bad thing since it's hard to come back from that, when everyone gets their share independently and no one follows the rules anymore.
True and this "grease lubricating the economic engine" does "work" on a small scale. Problem in an environment where pervasive corruption trumps over "rule of law" for the small honest budding startup up-start -- there's always be someone bigger with better connections and deeper pockets willing to outbid you when it comes to securing local market dominance which will more than pay off their elbowing-you-out ;)
Still, you have a point. A western-style rule-of-law environment is generally better for business and worth paying some amount of taxes -- within reason. But there comes a point where the tax and regulation codes do overwhelm small agile but resource-limited up-starts. (Of course there's still many success stories, but they have perhaps much to do with pressing forward relentlessly at the slight risk of perhaps missing one minor regulation or other tax facet and simply inadvertently gambling on the very tiny off-chance of doing so actually blowing them up.)
Then if you do decide "taxes and regulations are really kind of too expensive but still just-about worth it for just and fair legal protection", you'll be well advised to keep telling yourself that fairytale where your taxes are directly funding a functioning well-balanced governance system, rather than being simply a metric used NOT even to pay interest on the governments past and present outsized debt excesses --which would be crazy enough, but nowadays your average western "non-corrupt" government will borrow even for interest payments-- BUT simply for said government to reach some kind of good agency rating as a "quality" borrower.
It's been estimated that between 70 000 and 300 000 French live in the U.K so I really doubt that 350 000 entrepreneurs live in England (granted the article also use the more wide "French nationals", but still).
- cost/quality of life favorable to Paris by a large margin
- France is 2nd biggest consumer market in Europe, giant opportunities still open there (like Germany)
- a gifted talent scene, among which many are short on capital/language to work elsewhere in Europe
- google campus is 2.5h away door to door
- buzzing US community here
- world hub for fashion and 3d
Yes, there are more of this in London: - capital (London is a fiscal paradise)
- big startups
- middlemen (all things admin to outsource)
- flexible offices (this is changing fast though)
- English speakers
This article (and main character) feels like a giant whine/rant.
If you want a quick buck, London's great- though expect everyone to be working on a booking.com-like something or "Airbnb for x".
As for the next 2 decades, I bet that Paris and Berlin will take off just as smoothly.
Concerning expatriation, I think many people want to live abroad just to experience a different lifestyle. It's not always about taxes.
Like he decided to live in Kengsinton. Sure he share, like most singles in London, but he tries to live the life and was not too successful (yet, hopefully for him).
This is true, but one of the most important things I learned in my 20s was knowing when to take risks. It takes money to make money, and if you're a starving founder waiting for an investor to cut you a check or trying to bootstrap your business with insufficient savings, you increase your risk of failure substantially.
Patience is a virtue, as is focused and consistent saving, but in a lot of professions, like finance and technology, you won't have to work until you're 60 to build up meaningful savings that you can invest in yourself. If you've trapped yourself in the startup bubble, it's easy to convince yourself that your best opportunities are behind you by the time you hit 30, but the reality is that most businesses are not founded by 20-somethings. The Kauffman Foundation did a study called The Anatomy of an Entrepreneur a few years back and found the average entrepreneur was about 40 years old when he started his first company.
Beyond being in a position to capitalize your own venture, one of the great advantages of starting a business in your 30s, 40s or later is that you're far more likely to have the domain expertise so many young founders lack. There are literally countless untapped, unsexy million-dollar opportunities that 20-somethings running around Silicon Valley will never pursue because they don't even know that certain industries and problems exist.
France has about the same percentage of citizens living abroad as the US, and about a quarter as many as the UK:
France: total population ~63m, living abroad ~2m, about 2.5% US: total population ~317m, living abroad ~6m, about 1.9% UK: total population ~63m, living abroad ~6-12m, about 9.5% or more
CONS
- Yes you get big taxes, and setting up a company is a pain (RSI/URSSAF), administration is slow and inefficient.
Finding fundings can be hard and investements are generaly smaller than in the US.
French market is smal unless your target is international from day 1.
But,
PROS
- You have a pool of not so pricy talented workers (Well supposing you benefit from “Credit impot recherche” otherwise the total cost of an employee is x2 his salary).
- Fight for some government subsidies (time consuming).
- Leverage the government to pay your salary while bootstrapping. For startupers with previous work experience, you can quit your company in good terms and receive unemployement paychecks for a year or so.
Except the last one, which is just plain disgusting.
The US has it's issues, but Europe is simply decades behind.
The irony of all this is that the EU has very successfully created an internal market allowing for easier trade between countries in the EU, but it's ability to foster new comanies is still hindered by it's old industry understanding of a new industry.
"Les misérables
Europe not only has a euro crisis, it also has a growth crisis. That is because of its chronic failure to encourage ambitious entrepreneurs..."
http://www.economist.com/node/21559618