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Comment by jt2190 | Hacker News Reader

Is the Norwegian government’s theory that a modern company might never realize their gains, and avoid taxation indefinitely, and thus this is a forcing mechanism to extract some tax revenue?

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That’s an accurate description of the majority of VC investment outcomes. The outlier-success stories aren’t called unicorns because they’re common. So it tracks that Norway would tax valuations to curtail investments that generate no economic value for Norway (such as a typical forever-profitless business in round G with no profits to tax) and promote investments that generate economic value for Norway (such as a typical profitable business with profits to tax) — and if the VC gamblers want to gamble in Norway, their claimed valuations are taken at face value and taxed accordingly, which provides a direct financial incentive against valuation inflation.

That round G company with negative cashflow is probably employing people, buying goods and services, etc all within Norway. To say it's not generating economic value is disingenuous at best.

What % of their annual spend goes to foreign clouds? For most unicorns that would be their largest or second-largest cost, since unicorns, by design, tend to be focused on growth engines that scale up users without scaling up headcount. Taking 1% of a VC startup’s headcount is almost nothing relative to the money left on the table from 1% of their cloud costs. A sensible startup wouldn’t necessarily fit this description, but those are out of scope — this post is focused on unicorns, so that’s my focus as well.

I don't know how a company could avoid all taxes. They say that Amazon does, but that's only the corporate income tax, surely they are paying billions in payroll, property, energy, and other taxes.

Property is an easy one:

Don’t tax us and we’ll bring jobs to your area.

Except it turns out they don't really do that in the long run.

I mean yeah

Good Jobs First has tracked $11b in public subsidies to Amazon so far

https://goodjobsfirst.org/amazon-tracker/

You have to take that into account and look at the NET of what we've paid Amazon vs what they've paid us

Stop throwing subsidies. Easy fix without a wealth tax.

There are a plethora of taxes that companies pay, but a tax on existence is just awful in so many ways. Make zero dollars this year? You lose a percent of the company -- congrats.

There is a middle ground: Make using the securities of the company as collateral a taxable event. If it's good enough to back a loan, it's wealth, realized.

All the examples you gave are cost cutting targets that any competent manager will do their best (worst) to minimize, except properties. Those appreciate over time a lot more than taxes are worth.

The wealth tax targets millionaires who structure their income so they don't pay income or corporate tax, but can't avoid owning assets like company shares and property. Loss-making startups with unicorn level valuations are a tiny edge case.

I'd much rather there be a pre-tax on loans rather than a wealth tax to prevent premature liquidation. The former makes sense: if you borrow money, you should pre-pay the tax you would pay once you pay off the loan, or at least some fixed minimum percent that can raised or lower at the time the loan is paid off. And get rid of the stupid step up in basis on death.

A wealth tax on unrealized assets is going to create huge distortions in the economy, there are other ways we can fix this.

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