French President announces pro-business measures
rudebaguette.com
rudebaguette.com
It's virtually impossible to get help from a bank if your previous startup has failed. There's a bigger picture here. France is so incredibly intolerant of failure it's not funny. There's the rampant myth of the "genius superstar that never fails" and you only get one chance to prove yourself. It's no surprise that people will (generally, there are exceptions) prefer steady and safe employment in big corporations.
I think the best thing we can do for entrepreneurs is to encourage people to take risks and fail a few times. But this needs a major overhaul of the mentality in the country. I'm glad to see the government is taking a first step.
Ford (cars), Disney (media), Lincoln (president), Heinz (condiments), Hershey (candy), Twain (author), Fox (media) -- tons of others...
I'd bet that the countries with the lowest barriers to exiting bankruptcy (eg 6 months in the US) also have the highest start-up success rates.
Bankruptcy laws are inversely proportionate to an innovative start-up ecosystem.
Getting rid of the '040' label is definitely a step in the right direction and I'm delighted to see that Hollande recognizes how important it is to remove this stigma.
On a side note, Liam Boogar, the editor of the Rude Baguette (source of this article) is an absolute gentleman who works tirelessly to better the fate of French start-ups. Keep up the great work!
Perhaps, but someone is still footing the bill for those failures that were able to write off debts they couldn't afford, so I wouldn't be too quick to assume a very liberal culture with regard to bankruptcy is always better.
Remember, bankruptcy doesn't just mean a company failed to make money, it implies that the company ran out of money without even paying its debts. In this context, that usually means taking on a bigger loan than it could afford to repay.
If banks are going to lend more money to businesses run by people who make that mistake, they're probably going to be putting up interest rates on loans across the board to pay for it. That's going to hit other businesses that are borderline successful in their early days instead, possibly even killing them off before they become established and sustainable.
I know it's popular around places like SV and around HN to talk up failure like it's a badge of honour and guarantees you'll have valuable experience to learn from for next time, but a failure is still a failure. Even if most one-time failures shouldn't merit the end of someone's entrepreneurial career, banks should lend responsibly and be hesitant about lending to someone with track record of not repaying their debts.
Now it seems we have gone to the other extreme, "fail fast" is the slogan of the day. Sometimes companies fail so fast they never get a chance to grow into a success or pivot.
Banks that get bailed out are companies that should have died.
1 - encouraging entrepreneurship by reducing the risk (no more bad credit score aka banning 040 code)
2 - increasing the reward through tax breaks on early capital gain.
That's a french mentality issue (I'm french)
French people need to understand the learn from your failures concept
France's capital gain taxes are a real issue, and even the new, changed and improved rates will not do much to counteract this.
And that's just one of the things working against French entrepreneurs, the various employment laws don't help a whole lot either.
It would be fair to class France as start-up hostile at the present date, but the situation is improving. Which gives me all the more respect for those French entrepreneurs that succeed.
I'd say you have a real problem if that happens. Germany is pretty entrepreneur unfriendly (source: I'm an entrepreneur in Germany) and if your country is even worse ... well.
Apologies, I just received a letter saying I owe the impots an additional 400€. For reasons I can't imagine since my salary hasn't appreciated that much. Entrepreneurship is hard enough already, the government taking more money doesn't make it any easier no matter how many visas they grant.
URSSAF or RSI on the other hand...
good luck with yours
Unfortunately, I don’t think Hollande’s efforts are going to have too great an effect long-term. My experience has indicated that the French system is set up in such a way as to reward people who don’t take any risks. It is not simply the banking system or taxes that is to blame. There is a cultural stigma against taking risks that does not exist in the States. The education system is at least 100x better than the best schools in America, yet good test score count for very little when it comes to the hustle required in entrepreneurship, much less web based entrepreneurship where everyone is brilliant and hard working. There is simply not the same commitment to innovation. I often felt that I had made a faux pas when I lived in France and spoke about different business ideas at dinner or a party.
Unfortunately, politics is not the only problem holding the many brilliant people in France back from innovating and changing the world. In France, it is not culturally acceptable to want to be like Elon Musk.
We are sort of in the same position. We would like to head out to Silicon Valley get some experience there and then move back to France and become involved in entrepreneurship in Paris while our children would finish high school and go to university.
Also, creating incentive for big companies to work with startups is awesome. The bigcorp/startup link is almost non-existent here (compared to the US for instance). This one alone will help the ecosystem big time.
There is also a lot to do to change the mentality, because the crowd don't believe in "entrepreneurship" and prefer to work directly in big company.
I am French myself, moved to Canada 6years ago, then moved to London a year and half ago. I have kept a very close eye on France, I tried to find jobs there, interesting jobs, but it is just not happening, there are so many hurdles it's not even funny, just to list a few : salaries are way off compared to places like London or Berlin, Paris is expensive and being pretty much the only place to find "startups" you become locked with a small salary and high expenses, it is elitist as hell, unless you have an engineering degree, good luck finding a decent job, and even if you find one, it'll take years before you move up or get a raise. The list could go on and on, but it is clear to any frenchman/woman who decided to move away that any amount of measures will not change the culture, a culture of elitism which doesn't leave room for talent.
I'll add that there are decent jobs in France, but there are scarce and the fight for them is high. You are more likely to end up working for Peugeot, AXA or some big corp like that. If you want a future in tech, avoid France, that place will never rise to the challenge.
Generally, in every french university, you can really learn stuff, have a good core curriculum - and even do that at a discount price if you shop around or know how to play the game.
Your decision to study in France is wise. Make the most of it. I just recommend you reevaluate where to start your business when the times come, because of the opportunity costs.
I'm french, and if things had been different (or in the future) I'd consider starting my business in India :-)
1) A crisis and less jobs means more and more young people here are just saying "fuck it, let's startup my own business".
2) Some French startups have done great and became global players in the last couple years, like Criteo, and there are plenty new and fast growing companies that are recruiting talent not only in France but from all over Europe.
I should know, I work for one such company, it's called Pretty Simple, and its hit social game of investigation is in the top 5 Facebook games. And we're recruiting like crazy (jobs@prettysimplegames.com), from iOS devs to game artists to game designers. We have self-taught people as well as engineers. We're nothing like the outside cliche of France would have you believe, and we're kicking ass with an international team that speaks English interchangeably with French.
Also, Paris is one hell of a cool city to live in, we've got good food, good parties, good benefits, and good people, and living here is not that expensive either when compared to London or the Valley.
India's Purchasing power is 3rd highest in the world, yet its actual GDP is only 7-8th largest. India, is where I would be, but not right now. Not for post graduation, quality education is something hard to find, due to such intense competition in India, your chances of getting into a IIM, is lower, compared to getting struck by a truck.
There are a lot of people working hard to try to solve this but to say that France is 'sprinting' where the USA, UK, China and India are 'exhausted' is showing a serious lack in knowledge about the state of affairs.
India is 'The' place to be in this century. With a relatively young free market economy, and a negligible competition space in the start up market. You can practically do anything you want and achieve in India currently.
Don't simply blindly believe the place you want to go to is the best, rather research properly- find the best place and go there.
As a student entrepreneur, I find India a lot harder than France.
But certainly, if you can grab an opportunity, run with it.
However the only trouble on those stories is they were describing France a bit too much like California.
That said many foreigners usually do see opportunities when locals are just blind.
So if there is any attractiveness to France seen by Indian people who believe they can leverage those opportunities, this should be welcomed and probably rewarded too.
Its more like, you might know something is cool, before its cool. The same way, people would laugh at the overpriced education in US/UK, 20 years back in India..
we will see how it goes.. I know clearer than a day, that at the first opportunity, I'm going to France.
That's a pretty bold claim. Outside my window are quite a few chinese businesses. Not necessarily the YC-type though. Import/exports, textiles, restaurants, restaurant suppliers, etc. I'm sure for every frenchman that goes to China there are 100 Chinese coming here to start a small, family run enterprise.
For English speakers out there, the title means "they decided not to work anymore"
That's what you get for giving out welfare without setting any expectations to the person who gets it: people abusing the system.
I can't say that I'm a big fan of the tax breaks though. We shouldn't subsidize any business, they should fail or succeed on their own merits.
It _would_ be, but that's the part I'm the least confident about. Simplifying goes against the DNA of both France and bureaucracy, so I don't expect much of French bureaucracy about this; I expect the ministère des finances to reintroduce at least as many byzantine rules as they're forced to abrogate.
The ministère is stuffed to the brim with [ENA alumni](http://en.wikipedia.org/wiki/%C3%89cole_nationale_dadministr...), i.e. people extremely well connected and well versed in stealth sabotaging of unwanted reforms. They've a strong track record of politically killing finance ministers who wanted to "simplify" them.
> We shouldn't subsidize any business, they should fail or succeed on their own merits.
Indeed, but big companies have an unfair advantage over small ones: they're able to influence regulation (especially if they can afford to hire ENA alumni). In a heavily regulation-prone country such as France, this advantage is so important that it stifles SMEs; some countermeasures are needed.
We have also great entrepreneur with great exits or great companies. And some of us are business ready and don't complain all the time. Such a shame nobody ear of them...
Some facts :
- French are some of the most productive people in the world.
- Implementation of the law differs from company to company (35 hours, or additional day-off, or paid overtime).
- It's not uncommon for people to work longer unpaid hours.
- Salaries have stagnated (well, except for upper management and CEOs), which you can pin partly on that law.
- Unemployment is currently at an all time high, but it affects most of Europe.
* General salaries are sort of trapped outside the big cities. You can work 35-hours but don't expect any pay raises. I think the avg salary is around 1500€/mo. I would say most people have built there lives around the 35-hour week and even though it's not an upper limit anymore I haven't noticed an uptick in working hours.
* There are so many things wrong in the French economy you can't really site a single source. Sluggish economy, automation, globalisation, all play a part. Do remember that after 35 hours that extra time is voluntary, as Apple is finding out. A smart manager wouldn't build a work schedule around 40 hours knowing the workers can legally walk off at 35.
* Startup culture was much harder in the past. Where would you live? No property owner would rent you a flat because you don't have a "real" job. Bankruptcy was devastating, that 040 code. And then you have the social charges. The government wanted you to pay your pension, insurance, and the other social charges, in advance. Imagine what it costs to create a startup? Now imagine having to pay an entire year of taxes before you can sign your first customer. And the other thing was bureaucracy, lots of it.
The government tried to make inroads on the tax charges by allowing them to be delayed for 2 years. And a lot of companies failed at 2 years for this reason.[1]
[1] this was told to me by a political activist friend.
There are 2 ways the 35 hour week works:
1) You are paid for 35 hours/wk and work as much as you want all year long. December arrives and you go full RTT. You basically take a vacation while the company pays you the balance of those over 35 hour weeks. I've been in a few places where half the office is gone for the entire month of December, and sometimes November. If you don't use all your RTT by 31/12 you've basically worked for free.
2) Overtime. In my case my CDI (employee contract) is for 35 hours + 4 overtime hours that I've agreed to. Say the company only wants me to work 35hours/wk one month, too bad pay me 35+4. And if I go over 39 hours? RTT. Depending on the workplace, this can either get collegial or hostile very quickly.
Also, when it's 7-8 hours of work the french really do work those hours. This is in contrast to my American observation of working 6-7 and goofing off for 2-3. But then you're always having to stay late. This pacing requires proper project management, something that was really lacking in most of my american bosses (Americans tend to inherit the manager job, to go cadre in France you actually have to take courses on managing people).
But in reality, we work the full 39/40 hours, because we're paid by the day, and there's much work do be done anyway. So, we're averaging 35 hours on paper, but more like 37.5 in reality.
I guess that's just something to keep in mind while negotiating the salary.
Only Nixon could go to China.75% tax rate, who is he kidding? Who wants to work for free for years on their startup and sacrifice their savings, their social life, sometimes their family, just to be hit by 75% tax at the end of the journey?
No thank you Hollande, but no thank you.
I agree that it is ridiculous but, in a similar way, it is ridiculous to claim that one rate makes France unfriendly for business.
Of course! So have a look at me: worked 8 years in IT and saved about 150,000 USD in that time period. I paid taxes on this, mind you. To save this amount I had to live on much lower standard of living that my peers. My wife and my kid too. I quit the job, I'm trying to run a startup. I have a child, a wife and expenses related to that. Instead of getting regular income as everybody else, I spend my savings (accumulated capital) to try create something of value for the public. I take risks. My family does too. We live on 40000 dollars a year or less. Because I'm putting everything into this business. 2 years and 80000 so far plus income I lost by not working in 8-5 job in these 2 years.
Let's say it works out. I sell the business after 3 years for 1,000,000 dollars. You are telling me that it is fine to take 750,000 from me and from my family? For all the risks I took? For all the hard work? For years of living below standard my family could have afforded but decided to take risk and save, and invest? So, you would like to see me with just 1/4 of this? And give 3/4 to people who didn't take any risks, didn't save, are living comfortably (better than me!)
I don't think you understand. France is history.
If you sell it for 1,000,001 the 75% rate only applies to the extra 1. Not the whole 1,000,001 just the 1 that is over the million.
That's what is called a marginal taxe rate. Each tax braket only applies to the money within the backet range.
If you make 1,000,001 the first 6,000 are not taxed and the last one is taxed at 75%. (Or will be if we ever get that).
--
Edit : There also seems to be a concensus about selling not being taxed like a salary. I wouldn't know. But there was also quite a debate on whether the taxes on selling companies was to high.
Look, I have saved for few years to have initial funding for my business. This means I had to take away from myself and my family. To save for future business. So, in that period of time, I had lower standard of living that my coworkers. Right? Maybe my daughter couldn't get the toys her friend. could. Maybe we couldn't go for a vacation in 5 years. Maybe we had to live is small apartment vs. a house. Drive car that's not really nice. All of this to save money to invest in future business. Once the money was saved, I quit the regular job. Now, it's even worse. I have no income at all. And still have to pay bills for the family + spend on the business.
The statistics are 1 in 10 startups make it. 10% chances. So after additional 2 years working on the startup and burning all the savings, let's say - 10% chance - it worked. I made it, I sold the business.
You are telling me to tax people like me at 50%. And how do you think now, why in France there is no Silicon Valley? Because nobody in their right mind is going to work their butt off to be taxed at the end at 50%. It just doesn't add up. It would be better for me to stay with a regular job if I were in France. And in the end that's bad for France. It makes it much less competitive, much less innovative, and scares prospect capital off its borders. California alone has bigger economy than France. But in California nobody will punish you with a tax at 50% for trying to be innovative. And California has good roads and sewage system too. Without extreme taxation and business unfriendly environment.
And yes, it's about policies that make sense for the economic constraints of the government and the values of the voters. Key words there being values of the voters. France might have a very state-driven economy, but most of the world's top economies certainly don't take the American neoliberal wannabe-anarcho-capitalist approach.
And if the rate was 15% your guess is there would be even more start-ups or less? And if more, wouldn't that be more valuable for the Israeli economy than to give this 30% difference to politicians to waste?
>And yes, it's about policies that make sense for the >economic constraints of the government and the values of the >voters. Key words there being values of the voters.
Agree 100% here with you. However when people vote for something they rarely see the side-effects that quite often are much worse than the potential benefits. Like with cough medicine that gives you heart attack. People don't see things through at times. They'll vote for a politician who promises the most, understanding he'll go deeply in debt and not really caring that their children will have to pay it all off. Democracy gives the people great power, the problem is they don't want to accept responsibility for it. I have a great example here: In 1990s Democrats in the USA got this really good idea that all Americans should have a house. Even ones who couldn't afford it. What they did is they told the banks: look we (the Government) are going to guarantee all the mortgages. If you give a mortgage to someone and that person stops repaying it, the Government will buy the mortgage back using taxpayers money. And you know people voted for it. So all the folks who really weren't qualified got mortgages they couldn't afford. How markets work is that there is a balance between greed and fear. You're greedy to give someone a mortgage but afraid he will not repay. The Government took the fear part out of equation. Obviously the whole thing had to collapse. And in 2008 it did. And what caused that? Good intentions, socialism - let's give house to everyone. Now everyone's screwed over. And the funniest part is that now they blame bankers and capitalism for that. It was socialistic idea from the start.
>France might have a very state-driven economy, but most of >the world's top economies certainly don't take the American >neoliberal wannabe-anarcho-capitalist approach.
US is much more socialist they you could think. They talk the talk but don't walk the walk. Currently in the US there are more people who get Government benefits than those who pay the income tax. That's not capitalism. If you want to see capitalism look at China.
First: you're thinking of social-democracy, not socialism.
But honestly, using China as an argument in favor of capitalism is INCREDIBLY BAD. China looks pretty dystopian to outsiders.
And if the rate was 15% your guess is there would be even more start-ups or less? And if more, wouldn't that be more valuable for the Israeli economy than to give this 30% difference to politicians to waste?
If the rate was 15%, I would guess that there would be roughly the same amount of start-ups. Never has the real business world been shown to respond predominantly to income tax rates. Other factors have always dominated the issue of business formation: availability of skilled labor force, public R&D investment, available infrastructure, solid legal system, etc.
Good intentions, socialism - let's give house to everyone. Now everyone's screwed over.
Neither socialism nor social-democracy gives people loans. You're talking about some kind of weird American state-capitalist thingy. In a social democracy, there are what the Brits call "council houses": available houses or apartments literally owned by the local government and leased or given out based on human need.
Get your brain out of the America and into the sensible world.
So, if the amount of startups would be the same why not to tax at 80% ? Would it still be the same?
I wouldn't start one with 45% tax rate, that's for sure. I agree I could start one if the chance of success were really good. I can take that. It's 45% tax, but I'm pretty sure it'll work out. But if you want to have a real risk-taking start-up creating a market - 45% will be a no-no. So that tax rate will force founders to look into easy solutions, not an innovative stuff that will change the world. That's why the really innovative things come out of the US because it still makes business sense to try starting them there. Google, MS, Facebook, Apple. These were all extremely high risk. No sense even approaching them with the Government cutting half of the potential reward when chances are 1 in 1000. 1 in 5 it may make sense. For my business now the rate is about 1 in 10. So, it wouldn't make sense with 45% going to the taxman. I'm sorry I wouldn't start my startup in Israel. Risk/reward ratio would be just too much against me. I'd rather sit with my ass in the comfortable office paying off mortgage.
Your council houses exist in the US too. They are called "projects" and are free housing for poor. Literally free: http://en.wikipedia.org/wiki/Public_housing#United_States
You see socialism in the US progressed so much that they are even one step in front of the Brits. After building all the Projects they decided to do even more "good" and started promising banks to repay poor's mortgages.
The economic question is: "At what level of taxation (both in terms of effective tax percentage and income level where it kicks in) do taxes become the largest factor preventing the formation of start-up companies?" We need to be talking about Big-O optimization: we should always solve first the problem that is largest and whose solution will cause the fewest new problems.
So, if the amount of startups would be the same why not to tax at 80% ? Would it still be the same?
See above. You are asking the wrong question: "Do we get more start-ups with a higher tax rate or a lower tax rate?" That assumes tax rates on high-income professionals (in Israel that 46% rate is for the top 10% of income-earners, the people earning the most income you can without owning a company) are the dominant factor in whether or not a start-up gets founded.
This assumption is ideologically based (in American anti-tax rhetoric) and almost definitely wrong. Why? It's obvious: a start-up founder running on savings and investment isn't actually bringing in enough new income to get hit with the top tax-rate! Think about it: if you're a founder getting your start-up going, in any country, do you burn your seed money to give yourself a salary in the top 10% of incomes, or do you forgo the larger personal income to keep more of the money in the business for a longer time? Obviously the latter.
So the tax rate on the rich and the upper-upper middle class is not the deciding factor. To pose a counterpoint: would you found a start-up in a country with a 10% income tax but no intellectual-property laws?
>All very nice for you, but we've hit a core issue: you are >now talking about your personal preferences for tax rates, >rather than addressing the actual economic question >regarding start-ups. >The economic question is: "At what level of taxation (both >in terms of effective tax percentage and income level where >it kicks in) do taxes become the largest factor preventing> >the formation of start-up companies?" We need to be talking >about Big-O >optimization: we should always solve first the >problem that is largest and whose solution will cause the >fewest new problems.
That's not that difficult to answer that question really. Just look at the data. Where most of the successful start-ups that made it big come from? Start-ups that changed the world (innovation) or created whole new segments of the economy? Amazon, Ebay, Facebook, Microsoft, Apple, GitHub, Oracle, Intel, whatever. Where are they from? France? Israel? Japan? Australia? Canada? Russia? You know the answer. US. And as you pointed out yourself that is where the "anarcho-capitalism" (lol) is, so please connect the dots ;-) (no offense intended) Actually, the only start-up I can think of that made it big and is non-US based is Skype (based of the UK). You know any others in the IT that made it big and created a new market or changed the world or created whole new market segments and are not US-based?
I think that the business environment is important factor as well. If a country imposes 75% income tax on whoever/whatever it just tells you a whole lot about the public attitudes towards business and capital in that country. It is like a thermometer showing you have a fever. Once you see 39C degrees you know that's no good no matter what's the excuse. It's the same with the tax rate for the markets. 75% looks like very unfriendly place business-wise imposed no matter on whom and for what. This is why it scares off the capital. Because it shows that the general public treats businesses with suspicion. So maybe better to invest somewhere else.
>This assumption is ideologically based (in American anti-tax >rhetoric) and almost definitely wrong. Why? It's obvious: a >start-up founder running on savings and investment isn't >actually bringing in enough new income to get hit with the >top tax-rate! Think >about it: if you're a founder getting >your start-up going, in any country, do you burn your seed >money to give yourself a salary in the top 10% of incomes, >or do you forgo the larger personal income to keep more of >the money in the business for a longer >time? Obviously the >latter.
Obviously not. I work almost for free for many years for a prospect of a single huge payout at the end. If I sell my business for $1 million, I don't want half of it to be taken by the Government! Let me explain in more detail below.
Let' say I sell the business for $1M. Let's say the tax rate is 46%. So, after 2 years of work and investing $100k in it, I make the math: 1. My last job I made $150k a year. Two years equals $300k in lost income. 2. $100k invested from savings 3. Low quality of life for the family 4. $1,000,000 - $460,000 = $540,000 after taxes. (yes, I know it'll be less because rates are progressive, so let's say: $1,000,000 - $350,000 = $650,000) 5. $650,000 - $100k burnt savings - $300k lost income equals... yeah! I just made $250k profit! While the Government made $350k.
I invested years of my live, substandard living, and $100k in savings plus $300k in lost income. The Government invested nothing. Oh, actually it has been trying to make it as difficult for me as possible all the time because that what Governments do by design when they come in touch with any business: regulations, paperwork, imposing controls, etc. So, at the end: I made $250k. The Government made $350k. You call this fair because I could use roads and sewage system? Geeez, thanks!
Now look at these numbers again as they explain why you won't see Google or Amazon going out of France or Israel any time soon.
As I said in the previous post the tax scheme that you have in Israel works only with a short-term business plan that is a sure thing. Like an IT consultancy when I know that clients are there for sure. And they are there right now. So, I don't loose $300k in income and don't need $100k in savings to work on something without any income for another 2 years. I can start today and have income tomorrow. But that's NOT how innovation happens. I'm sorry. Innovation takes time and funding. Your taxation scheme kills it before it even has chance to happen.
>So the tax rate on the rich and the upper-upper middle class >is not the deciding factor. To pose a counterpoint: would >you found a start-up in a country with a 10% income tax but >no intellectual-property laws?
No. But I would in a country with comparatively low income tax and very strong intellectual property laws.
This is the kind of experimental design that would and should fail an undergrad experimental-design course. And I really mean that, I'm not trying to make an ideological point or condescend to you. This is really bad reasoning.
Not only have you jumped to claiming that Correlation Equals Causation, you're not even correlating tax rates (the variable you want to examine) with start-up success. You're correlating national headquarters with start-up success, and then claiming this says something about tax rates.
The fact that US tax rates have themselves varied over time and place is counterevidence against your claim! What does it mean to you if California-with-high-tax-rates produces as many start-ups as California-with-low-tax-rates? Or what does it say about California versus Texas versus New York versus Massachusetts? The actual evidence points towards Silicon Valley being special somehow rather than a general effect from tax rates.
There's also a huge issue with the phrasing, "Start-ups that changed the world (innovation) or created whole new segments of the economy?" To once again reference HPMoR, yes, only your start-ups are in this new reference category you've constructed to include only them by definition.
Let' say I sell the business for $1M. Let's say the tax rate is 46%. So, after 2 years of work and investing $100k in it, I make the math: 1. My last job I made $150k a year. Two years equals $300k in lost income. 2. $100k invested from savings 3. Low quality of life for the family 4. $1,000,000 - $460,000 = $540,000 after taxes. (yes, I know it'll be less because rates are progressive, so let's say: $1,000,000 - $350,000 = $650,000) 5. $650,000 - $100k burnt savings - $300k lost income equals... yeah! I just made $250k profit! While the Government made $350k.
Sheer nonsense. Merely probably opportunity cost is not on the actual accounting books; you could have lost your job the next year anyway. You made $550k and the government got $350k.
Besides, if you already made $150k/year, you're ridiculously fortunate and you have no valid claim to society's pity. You made 61% of the net profits after a 46% tax rate, and for a small start-up sale like $1,000,000 a profit to the founder of $550k is pretty freaking good.
Now look at these numbers again as they explain why you won't see Google or Amazon going out of France or Israel any time soon.
http://mappedinisrael.com/ -- Try and stop us.
So, do you know any any IT companies that made it big and created a new market or changed the world or created whole new market segments and are not US-based? Or not? I'm sorry, but I could care less about you reasoning if it has no evidence based in reality.
>The fact that US tax rates have themselves varied over time >and place is counterevidence against your claim! What does >it mean to you if California-with-high-tax-rates produces as >many start-ups as California-with-low-tax-rates? Or what >does it say about California versus Texas versus New York >versus Massachusetts? The actual evidence points towards >Silicon Valley being special somehow rather than a general >effect from tax rates.
Of course Sillicon Valley is somehow special. The same way Los Angeles is somehow special that it is de facto movie and music industries capital of the world, New York is finance capital of the world, Las Vegas is gambling capital of the world, Chicago is commodities trading capital of the world, and some claim New York is fashion capital of the world (heard it from a Parisian fashion designer), etc. You see, once you have friendly business economic environment, all types of beautiful and creative kind of things will happen all over the place. Not only in IT. Again probably theoritcally or academically you can come up with some "evidence" to the contrary, but the simple truth is that if you are serious actor, you will move to LA, if you are serious software developer, you'll move to SF and if you are seriously into finance you'll move to New York. And this wasn't built on 50% or more tax rates my friend. You are serious or you're not serious. With tax rates like this it looks like you're not really serious.
>There's also a huge issue with the phrasing, "Start-ups that >changed the world (innovation) or created whole new segments >of the economy?" To once again reference HPMoR, yes, only >your start-ups are in this new reference category you've >constructed to include only them by definition.
Thank you for admitting that if you want to change the world, you have to move to the US and open company there.
>Sheer nonsense. Merely probably opportunity cost is not on >the actual accounting books; you could have lost your job >the next year anyway. You made $550k and the government got >$350k.
Lol, yeah, or I could win $10M in the lottery. And seriously: you had your classes at College, I had mine. You do add lost opportunity cost in your business plan.
>Besides, if you already made $150k/year, you're ridiculously >fortunate and you have no valid claim to society's pity. You >made 61% of the net profits after a 46% tax rate, and for a >small start-up sale like $1,000,000 a profit to the founder >of $550k is pretty freaking good.
It's not 550k. Deduct the opportunity cost. And then it's mere 250k. Now, add all years of saving, unhappy wife, etc. No, it's not worth it. And how came you don't address the fairness part of the whole thing. The Government is almost like a mafia here that provides nothing, or comes up with some kind of a BS like "sewage, roads" (mafia says that they provide "security services), you know it's BS. And then they take bigger part of the profits than me! Hahaha, I guess I would be really "fortunate" for me then :-). The Government doesn't deserve it. And still it's good in Israel. Now imagine France and me selling it for let's say $3m. The Government would collect 75% from each dollar above $1m. Fortunate me, huh. :-) I can pay 75% of my sweat to the mafia because I sweat all my life trying to do something great vs. sitting as a Government employee from 8 to 5 all my life. Yeah sure, penalize me. I'm sure it has no impact on enterprenuers decisions in France now, lol, Im sure ;-)
Another point is that leaving money with the people and not the government is better for the economy too.
Finally, fortune has nothing to do with it, but people who believe in socialism don't get it.
> http://mappedinisrael.com/ -- Try and stop us.
Your Government and attitudes like your do good job enough in that stopping department (sadly). A little bit like a cancer on overall healthy body of the nation. Quite to the contrary I wish Israeli IT Scene all the best. However, it would be difficult for them to cope with that type of Government and society believing as strongly is socialism as you do. I mean sure you can be a success story. But with this penalizing tax rate forget about creating something more than US-validated clone ideas for the local market. Because with that type of taxation nothing else probably makes sense.
Socialism works. For the capitalistic US and China it does! Because once you impose economic barriers on yourself they have much easier job competing with you. Hence why 'cancer'. Cells killing the body that hosts them.
For instance, if Israeli start-ups suck so much, why do your vaunted American investors keep buying them?
As the poster mentioned, if you are an entrepreneur, normally you forgo a steady salary and corporate benefits in order for a big payout later. When the government is going to take a huge chunk out of that payout when you've already been sacrificing hard just to get there - it begins to look less and less worth it.
I've spent my adult career going from startup to startup. Looking at the current regulatory and confiscatory tax environment, I don't know if I'd do the same starting over.
If I could go back 20 years, I'd probably just go work for a big company like IBM or UPS and stay there. If I'm noticing that pressure against entrepreneurs then others are noticing it too. The government is slowly but surely killing off drivers that increase risk taking.
That's a bad thing.
Utter bullshit. I'm an entrepreneur, and you know why I was able to create a company? Because of the very good French unemployment benefits that allowed me to build up my business for nearly two years after my previous startup failed! Without that, lacking a personal fortune I just wouldn't have been able to create the company.
Now you may not understand french but the table is quite understandable. Fist column the brackets, last column the marginal taxe rate.
You're so very wrong.
1° the 75 % tax doesn't apply if you reinvest the money in a new company. There are several different ways to avoid paying the tax through investment. It's a tax on revenue, earnings, NOT capital. If you use your money as capital, basically you'll never pay more than about 35% taxes overall.
2° you don't understand how marginal tax rates work. You pay 75% of tax on everything ABOVE 1 million. So if you sell your company for 2 millions, the 75% applies on the second million but not the first one.
I don't know about French taxation, but I don't think the sale of the business would be taxed as a million dollars of income.
75% is the income tax when you are very rich. (And it's still a project). now, the income tax is 50% for the rich people.
Sure. There are also several places with much worse infrastructure around the world. If you don’t want to pay taxes, go to Somalia.
Really, Cyprus and Malta are not that different from Dubai, and neither is their business model. The difference is that Cyprus and Malta are part of a larger entity that guarantees certain things, such as human rights[0], reimbursement of up to 100k € if the bank goes bankrupt[1] and support for temporarily failing countries[2]. Oh, and the risk of Iran attacking Cyprus or Malta is surprisingly low as well.
[0] extradition to the US from the UK being one of the interesting things here.
[1] cf. the EU’s opposition to the Cypriot government’s original idea to just take n% from everybody.
[2] extra loans to Ireland, cheap money to Italy etc.pp.
He promised it for populist reasons, but never wanted to do it; so he does it in such a way that it affects virtually nobody.
It has a nasty effect, though: it reinforces the idea that wanting to become rich is somewhat antisocial in France, and ought to be punished. A 75% tax is what you levy on vice: oil, tobacco, alcohol or lottery. This is insulting and discouraging to entrepreneurs, many of whom crave social recognition at least as much as wealth.
http://en.wikipedia.org/wiki/Taxation_in_France#Taxes_on_inc...
In order to hit 40% income tax, you have to be a single on 70k or a nuclear family on 210k. Even if they have 20% VAT equivalent, that only works out to another 10% of what's left, leaving 50% as disposable income. And that's the highest tax bracket, and given that the average wage in France is supposedly ~30k euro, that's less than half the highest bracket cutoff.
I am not French (Czech living in Ireland), so I dont know what is situation exactly, but I bet it is not much different. In Czech Republic I payed about 55% tax from my 1500 euro/month salary (bellow average for Prague).
From wiki you linked: > Taxes paid by employers on wages, namely social contributions, are not considered as taxes by the French central government.
He's taking about hidden taxes such as this one, which is paid by the employer, so many French people I've talked to about it seem to think it's somehow magically not money out of their pocket.
One source among others: http://www.beggarscanbechoosers.com/2011/09/america-prospere...
I met a French clothes designer in New York recently. He told me he escaped Paris and France because he couldn't afford to open fashion house in Paris. He told me that just to open a fashion design shop in France he would need to pay 15,000 euros (about 20,000 USD) in fees in taxes to the Government. Just to obtain a few pieces of paper from the Government to be able to start the business. Just to open. No profit yet, doesn't know if it will work out or not, has no customers. Using his life savings or going into debt to start his own business and contribute to the society. Penalized to the point he said good bye. He escaped to the USA. Good job Hollande!
So, the following don't count?
Bouygues (http://en.wikipedia.org/wiki/Bouygues) founded in 1952. Large conglomerate with 130,000 employees world wide.
Capgemini (http://en.wikipedia.org/wiki/Capgemini) founded in 1967. One of the largest IT consulting firms in the world.
Carrefour (http://en.wikipedia.org/wiki/Carrefour) founded in 1958. It is the second largest retail group in the world.
JCDecaux (http://en.wikipedia.org/wiki/JCDecaux) founded in 1964. The largest outdoor advertising firm in the world.
Sodexo (http://en.wikipedia.org/wiki/Sodexo) founded in 1966. One of the largest food service companies in the world.
etc.
I now can blame the French for the spotty food service in my company.
The companies from your list are not innovative enough too. They are not like Benz that was first cars manufacturer in the world. Or Microsoft that was the first software company in the world.
Yeah, they opened a few stores more than others, or are one of a bazillion successful IT consultancies.
That's not innovation. And innovation is this what requires friendly tax regimes and little to no regulation. That's why it's not happening in the EU.
Put in place that most of the big companies mentioned are huge successes mostly in IT - and the distortion becomes more obvious - IT plays homage to the network effect, the biggest home market in the world is the USA, so get yout IT play right there, you get it right everywhere.
When a home-grown IT company busts out of India or China (or rather out of Bangalore or Chengdu) then it will be time to blame overregulation.
The difference to the US seems to be that many businesses that grew after WW2 already existed beforehand (e.g. Aldi) and/or didn’t really grow, but still outcompete everybody else in their respective fields (SME aka German Mittelstand).