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Comment by jrlocke | Hacker News Reader

Exactly. There would still be sufficient economic motivations for startups and startup founders in a world where startup founders were taxed at a 75% rate.

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When the Beatles found themselves taxed at 95%, they wrote a song about it ("Here's one for you, nineteen for me..."), but they didn't hang up their guitars.

They did break up. Also, many wealthy Britons moved to Barbados to avoid the taxes.

I never heard the theory that they broke up because of the tax rates. Thought it had something to do with Yoko :-)

Tax avoidance is a significant issue that will require some international coordination - but I do think it is a solvable problem.

See for example the Facebook co-founder who had to pay an exit tax to move his assets offshore.

Current share price of Facebook is roughly ~4x what he sold many of his shares at

That is so far away from anything that is likely to happen in even the medium term, it's worth filing under "cross that bridge when we come to it".

In the meantime, making things just a little fairer could help a vast amount of people.

Perhaps, but as the higher the tax rate, the higher the greater the incentive to avoid taxes. As PG mentioned in his essay, when the marginal tax rate was at 90%, there was a lot more tax avoidance and lavish, wasteful benefits companies offered their employees in lieu of wages (health care, housing, first class flights). If the tax rate were high enough, the government would actually bring in less revenue as there is more avoidance but it would also have negative externalities like padded expenses, people fleeing the country, shell companies, etc.

A lot of those lavish benefits would inject money into to the system instead of sitting in an offshore account. That helps everyone.

As Paul Krugman says, "your spending is my income", and visa-versa

I hear this from liberals all the time, often in more extreme form of "even if only a cent of a million is left there will be motivation to make that million!". But wtf are you so sure? I for one am not looking for a smaller bump in salary at 50% tax already as I don't see how additional effort would pay for itself. I imagine a lot of people don't consider an effort to found startups at this rate too.

Because the self-made rich don't stop working. Because hugely productive people work on open source. Because hugely productive people work at non-profits. Because hugely productive, active, socially beneficial people spend their lives in poverty working for the benefit of others.

It's a bizarre mind that can simultaneously believe that you need huge rewards to motivate people AND know that 95% of startups fail.

Startup founders I know well (n=20) are intrinsically motivated and only superficially extrinsically motivated. They don't stop once they get "f-u" money. They do the same thing over again, with a nicer car.

I am sorry, I don't see how it follows. Even if such people exists in statistically significant quantities, a lot of people don't work for free at all.

Trying to put in the effort to get a bump in salary is very different from the kind of creation that is the main benefit of startups to society.

To counter your anecdote with another one, if only half of the characterization of Steve Jobs is true, do you really believe the exact amount of potential financial upside was ever really a question for him?

Sure, if the economic environment had been so extremely bad as to make it impossible to make a living off founding Apple it's likely he would have gone somewhere else. But that's a strawman and you know it.

>Trying to put in the effort to get a bump in salary is very different from the kind of creation that is the main benefit of startups to society.

Exactly my point. It's a very small effort comparing to running your business. Even by itself it's not much - reply to a recruiter, have some interviews, change direct deposit, insurance, 401k etc.

>To counter your anecdote with another one, if only half of the characterization of Steve Jobs is true, do you really believe the exact amount of potential financial upside was ever really a question for him?

I am not familiar with Mr. Jobs but seeing how he has been extremely well compensated all his life I see no reason to believe he was not financially motivated.

It's flawed logic because people only look at the reward end of the risk reward equation, even if the reward is potentially still higher nobody would bother instead of just taking a regular low risk job.

I'm not sure about that. Work your ass off for four years, successfully exit with equity worth $4 million, and you only keep $1 million? That's about what you could have made at Google.

This is the case for any and every startup today, which is why it can be a mistake to work at one, unless you're doing it for reasons other than the theoretical future value of your equity.

The interesting thing is that if the potential outcome of founding or working at a startup were less, salaries at Google would likely be lower, too. After all, those Google salaries are so high in part because of competition by startups.

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