Taxing unrealized gains has caused an entrepreneurial exodus in Norway • Hacker News Board

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#31

Post by no_wizard » Thu, Nov 28, 2024, 10:51 PM UTC

barbazoo wrote: post #19

no_wizard wrote: post #10

Earlier quoted context omitted.

It’s amazing to me that people think this is what socialism is. This isn’t seizing the means of production.

Wouldn't that be more communism than socialism?

The unpolluted definition of socialism is about public (e.g. social) ownership of the means of production. Technically, it’s not mutually exclusive of market systems, simply that participants are socially owned in some form. To be more specific about what I said, the roots of socialism called for the “seizing of the means of production” if governments and capital would not voluntarily convert to some form of social ownership

Communism differs in that it takes this a step further advocating not only for social ownership but also the dissolution of of all private property ownership and its corresponding economic role, and distribution, and exchange that allocates products to everyone in the society based on need.

For the record, I think communism is a dead end as it flys in the face of human nature. Market socialism might have legs though.

I was being a bit tongue in cheek but taxes aren’t inherently socialism. Taxation has been levied under multiple periods of economic philosophy like in feudal Europe or during the age of mercantilism for example. Seems to be a hallmark of highly organized civilizations

Something like an employee owned co-op is a valid socialist concept, for example. Social doesn’t automatically mean government.

Though communists like Marx believed in revolutionary uprising and those tend to be inherently violent. It’s a shame that the only exposure people have to any form of socialist ideas is via Marx.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#32

Post by Aloisius » Thu, Nov 28, 2024, 10:51 PM UTC

exe34 wrote: post #2

easy, impose an exit tax. capital doesn't need to be free when it's trying to evade justice. you pay tax on unrealised gains the same way the rest of us do when facing an unexpected bill that we can't afford - you sell your stuff.

Norway already has an exit tax which levies a 37.84% tax on unrealized gains.

The "easy fix" isn't working for some reason. Perhaps a one-time tax is still preferable to an ongoing one.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#33

Post by freefaler » Thu, Nov 28, 2024, 10:53 PM UTC

HPsquared wrote: post #27

freefaler wrote: post #25

This is a bad solution to taxation. It brakes the long-established tax practice of "realization principle". Suppose the same principle was applied to a home owner. At the end of each year your property is evaluated and you're taxed on the difference between last and this years price. You own an asset and this asset is valued by the rating agency as more expensive than before. Now you have a liability that you need to…

The other thing is what happens when the notional value goes down a year later? Do they get a tax refund?

At most you'd get a rebate of your future tax payment as is the current practice.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#34

Post by formerly_proven » Thu, Nov 28, 2024, 10:54 PM UTC

mediaman wrote: post #26

Norway doesn't care. It is a country with a reputation for good governance and northern-European economic strength. But economically, it is a country that is largely a gas station: like a democratic Russia with more competent governance. Over half its economy is based on oil and mining. It has failed to develop meaningful economic diversification, and, because it has wisely banked so much of the proceeds of its oil (…

In a nutshell, Norway can afford to have some mildly self-sabotaging economic policies.

The rest of europe absolutely cannot (but that won't stop them, just like with rent control).

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#35

Post by novok » Thu, Nov 28, 2024, 10:55 PM UTC

HPsquared wrote: post #27

freefaler wrote: post #25

This is a bad solution to taxation. It brakes the long-established tax practice of "realization principle". Suppose the same principle was applied to a home owner. At the end of each year your property is evaluated and you're taxed on the difference between last and this years price. You own an asset and this asset is valued by the rating agency as more expensive than before. Now you have a liability that you need to…

The other thing is what happens when the notional value goes down a year later? Do they get a tax refund?

Usually, you get a credit or deduction that can only apply to future tax liability in the same category. Ex: Capital losses are stuck with capital gains in the USA and can only be applied to $3000 of your income per year otherwise. These rule systems are usually incredibly self-serving.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#36

Post by devjab » Thu, Nov 28, 2024, 10:56 PM UTC

kingstoned wrote: post #5

exe34 wrote: post #2

easy, impose an exit tax. capital doesn't need to be free when it's trying to evade justice. you pay tax on unrealised gains the same way the rest of us do when facing an unexpected bill that we can't afford - you sell your stuff.

It's amazing to me that on a startup-oriented forum like this one you see these kinds of socialist comments when it comes to something that is harmful to startup founders and the entire ecosystem. Honestly curious to see what people who are hostile to entrepreneurship are even doing here.

I’m not sure why you think a wealth tax is related to entrepreneurship ship. I get that you’ll find a lot of people who like the author don’t want to pay taxes, but you’re going to find quite a lot who do. Especially here in Scandinavia. Of course it’s less of a problem when you have a non-crypto product which actually makes money or gives you the opportunity to take out a loan based on your assets.

I agree that there will be an ideologically divide, but I don’t think it’s related to entrepreneurship as much as it is to greed. Especially because those crypto “billionaires” were moving to Switzerland anyway. Personally I can see why you would think it was anti-business because it is. You have to keep in mind that not everyone thinks “businesses” which can’t make money, and likely never will, are always a benefit to society.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#37

Post by freefaler » Thu, Nov 28, 2024, 10:57 PM UTC

DataDaoDe wrote: post #24

Here's a thought: as long as some countries somewhere have enough freedom to innovate, and entrepreneurs can leave their countries and get to the freer ones, countries like Norway can piggyback off all the innovation from others (or outsource it). I think it would only be a problem if for some reason there was technology that couldn't be copied.

How will they pay for that technology they need to import when the oil ends? They'd need to barter something for something else.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#38

Post by skobes » Thu, Nov 28, 2024, 10:58 PM UTC

freefaler wrote: post #25

This is a bad solution to taxation. It brakes the long-established tax practice of "realization principle". Suppose the same principle was applied to a home owner. At the end of each year your property is evaluated and you're taxed on the difference between last and this years price. You own an asset and this asset is valued by the rating agency as more expensive than before. Now you have a liability that you need to…

> You own an asset and this asset is valued by the rating agency as more expensive than before. Now you have a liability that you need to pay...

Isn't this exactly how property taxes usually work? (In the absence of caps like California Prop 13, that is.)

The realization principle is a hallmark of income tax law, but many taxes are not income taxes.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#39

Post by cscurmudgeon » Thu, Nov 28, 2024, 11:01 PM UTC

bryanlarsen wrote: post #3

> This creates a perverse scenario where business owners must extract dividends or sell shares every year just to cover their tax bill. With dividend and capital gains taxes at around 38%, you need to withdraw approximately 1.6 million NOK to pay a 1 million NOK wealth tax bill. Why wouldn't you just take a loan against the assets? A few percent of interest is a lot cheaper than 38%. In Canada you used to have to pay…

> A few percent of interest is a lot cheaper than 38%

Not sure why that is comparable.

Re: Taxing unrealized gains has caused an entrepreneurial exodus in Norway

#40

Post by Analemma_ » Thu, Nov 28, 2024, 11:03 PM UTC

SiempreViernes wrote: post #12

Holy shit, this blog tries to sell me the the right to highlight text! This gotta be the most extreme instance of NFT brain I've ever encountered...

It's hilariously self-defeating how I'm encountering this """"feature"""" for the first time on an article complaining about taxation. Like, you might have done a better job convincing me of the evils of government, if it wasn't directly alongside your vision of an ultra-capitalist nightmare hellscape where I have to pay to highlight text!