French tax on startups • Hacker News Board

Re: French tax on startups

#31

Post by rayiner » Sat, Oct 20, 2012, 4:03 PM UTC

yummyfajitas wrote: post #26

xyzzyz wrote: post #22

Earlier quoted context omitted.

Ah, I live in one of these countries with low corporate income tax (it's 19% here), and yet right wing here wants to make it even lower to increase entrepreneurship, and everybody complains how hard it is to do business here, because taxes and insurance contribute additional ~13-15% cost to base salary, so that they have to use law loopholes to escape that (which is very widespread, and recent attempts by government…

Hearing all that, one could imagine that in countries like France, with >30% corporate tax and high employment cost, no business can take place at all, and it must have fallen in a deep economic depression a long time ago. That is generally the case. Unemployment rates in the 8-12 neighborhood are considered a disaster in the US. In France they are normal. France is as poor as Arkansas and Idaho, two of the poorest U…

France, like Arkansas and Idaho, has a high percentage of the country engaged in agriculture. A sensible comparison would be PPP GDP per capita growth rate.

Re: French tax on startups

#32

Post by VSerge » Sat, Oct 20, 2012, 4:24 PM UTC

rayiner wrote: post #29

This seems to affect VC's and people here are acting like you can't have startups without VC's. There are these things called banks...

At least in France, banks never invest in startups. And I mean absolutely never.

Re: French tax on startups

#33

Post by fab13n » Sat, Oct 20, 2012, 4:28 PM UTC

yummyfajitas wrote: post #11

snippyhollow wrote: post #3

I'm tired of this BS being spread by ppl who didn't even read the finances law in question (at least bullet points). It's not true, the 60% tax rate comes from the creation of a new bracket in the income tax and the treatment of selling your startup as income. To attain 60% you 1) need to sell for more than 150k 2) count all the acquisition money as instant revenue 3) do not intend to invest. And in fact, you have de…

VCs make nearly all their returns off a few big hits. So on the big hit, they will certainly: 1) make > 150k. 2) Sell out instantly, or at the very least in chunks considerably bigger than 150k. Even if they do sell out in 150k chunks, that will drastically reduce their returns - returns = log(outcome/investment)/t, so increasing t will lower returns. 3) Return the funds to investors. Sounds like this law will, in fa…

VC are companies, not people, so what they earn is counted as benefits, not revenue. Moreover, in their P&L, they can subtract the L from their P, and average their money streams over several years.

There are legitimate issues with this law:

* it creates a lot of gratuitous bureaucracy and complexities, where you need to apply to some byzantine exceptions to the exception to the common law to keep a decent share of the wealth you produced; this kind of unproductive BS drives genuine entrepreneurs crazy and disincentivize them, probably more than the tax bracket in which they fall;

* it creates a very legitimate sense of insecurity among small businesses;

* it sends an overall message that France is not a startup-friendly environment, and that if you can help it, you should rather incorporate in another European country.

This last message is, unfortunately, very true: both the corporate and political French elites come from the same few schools, mostly ENA; so politicians have many executive friends in the private sector, but they all only worked in huge companies. They wish that the next Google would appear in France, but they can't realize that Google-like wealth creation never comes from dinosaurs on the scale of AT&T or GM (or Orange, or Peugeot). Moreover, this cluelessness is shared by conservatives and liberals equally.

Re: French tax on startups

#34

Post by galactus » Sat, Oct 20, 2012, 4:30 PM UTC

adrr wrote: post #30

btb wrote: post #14

Earlier quoted context omitted.

Yeah the new 75% income tax bracket in France really is putting the Laffer curve theory to the test. Will be very interesting to see how it pans out. I'm sure socialist governments elsewhere in Europe is following this grand experiment closely.

US had a 92% tax rate for a few years and 70%+ during our great economic expansion after WWII, which was highest GDP grow in our history. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

How you dare questioning the sacred idea that an income tax bracket of 70%+ would destroy the economy?

Re: French tax on startups

#35

Post by mehdim » Sat, Oct 20, 2012, 4:33 PM UTC

Instead of whining, use your valuable time to make start-ups that solves big pains, bring value to users and customers, with a good UX, which will then make $millions revenues and valuated $billions. Then your voice will have power and audience to make things change if you want so, and you'll become politician from the do-ers side. I'll even vote for you, but lot of work before... I'm a french startup entrepreneur and I approve this message. :)

Re: French tax on startups

#36

Post by cdavid » Sat, Oct 20, 2012, 4:34 PM UTC

yummyfajitas wrote: post #26

xyzzyz wrote: post #22

Earlier quoted context omitted.

Ah, I live in one of these countries with low corporate income tax (it's 19% here), and yet right wing here wants to make it even lower to increase entrepreneurship, and everybody complains how hard it is to do business here, because taxes and insurance contribute additional ~13-15% cost to base salary, so that they have to use law loopholes to escape that (which is very widespread, and recent attempts by government…

Hearing all that, one could imagine that in countries like France, with >30% corporate tax and high employment cost, no business can take place at all, and it must have fallen in a deep economic depression a long time ago. That is generally the case. Unemployment rates in the 8-12 neighborhood are considered a disaster in the US. In France they are normal. France is as poor as Arkansas and Idaho, two of the poorest U…

France is not (much) different from other comparable countries in Europe on the quoted measure (i.e. Germany, UK and Italy are equally "as poor" as Arkansas and Idaho, using GDP-PPP/inhabitant). So it most likely doesn't have much to do with the original statement, given that Germany has e.g. a much lower unemployment. I am not sure per-state comparison of GDP-PPP per capita are really that meaningful: you would most likely need to adjust parity within the US. This is a weak argument, but I can't really see how France would be significantly poorer than Louisiana.

Describing France as perpetually in recession is rather nonsensical: I can't see any measure by which it would not be true for nearly every country if true for France.

Re: French tax on startups

#37

Post by rguillebert » Sat, Oct 20, 2012, 4:35 PM UTC

yummyfajitas wrote: post #26

xyzzyz wrote: post #22

Earlier quoted context omitted.

Ah, I live in one of these countries with low corporate income tax (it's 19% here), and yet right wing here wants to make it even lower to increase entrepreneurship, and everybody complains how hard it is to do business here, because taxes and insurance contribute additional ~13-15% cost to base salary, so that they have to use law loopholes to escape that (which is very widespread, and recent attempts by government…

Hearing all that, one could imagine that in countries like France, with >30% corporate tax and high employment cost, no business can take place at all, and it must have fallen in a deep economic depression a long time ago. That is generally the case. Unemployment rates in the 8-12 neighborhood are considered a disaster in the US. In France they are normal. France is as poor as Arkansas and Idaho, two of the poorest U…

"That is generally the case. Unemployment rates in the 8-12 neighborhood are considered a disaster in the US. In France they are normal."

Except that the way the unemployment rate is calculated is different in both countries, economists say that you should add 3 or 4% to the American unemployment rate to have comparable numbers.

Re: French tax on startups

#38

Post by ovi256 » Sat, Oct 20, 2012, 4:46 PM UTC

fab13n wrote: post #33

yummyfajitas wrote: post #11

Earlier quoted context omitted.

VCs make nearly all their returns off a few big hits. So on the big hit, they will certainly: 1) make > 150k. 2) Sell out instantly, or at the very least in chunks considerably bigger than 150k. Even if they do sell out in 150k chunks, that will drastically reduce their returns - returns = log(outcome/investment)/t, so increasing t will lower returns. 3) Return the funds to investors. Sounds like this law will, in fa…

VC are companies, not people, so what they earn is counted as benefits, not revenue. Moreover, in their P&L, they can subtract the L from their P, and average their money streams over several years. There are legitimate issues with this law: * it creates a lot of gratuitous bureaucracy and complexities, where you need to apply to some byzantine exceptions to the exception to the common law to keep a decent share of t…

There is no conservative/liberals differenciation in France. All French senior politicians and civil servants have exactly the same life trajectory, are educated in the same school, ENA, and share the same values. There is a lot of opportunist movement from a party to another, showing that party ideology has zero weight.

PS: you may bring Nicolas Sarkozy as a counter-example. He, indeed, did not go to ENA because he failed to graduate from IEP Paris, which is a prerequisite.

Re: French tax on startups

#39

Post by Jach » Sat, Oct 20, 2012, 5:11 PM UTC

adrr wrote: post #30

btb wrote: post #14

Earlier quoted context omitted.

Yeah the new 75% income tax bracket in France really is putting the Laffer curve theory to the test. Will be very interesting to see how it pans out. I'm sure socialist governments elsewhere in Europe is following this grand experiment closely.

US had a 92% tax rate for a few years and 70%+ during our great economic expansion after WWII, which was highest GDP grow in our history. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

This number is ignoring that the tax structure of the time was quite a bit different than today. It's more enlightening to look at effective tax rates, which depending on the year were around 20-40%. (Edit: Actually very rarely far from 20%. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... shows effective personal tax rates on the 1% from 1979, and this http://www.freeby50.com/2010/08/effective-tax-rates-1934-to-... shows average effective taxes from before then (and after match the first link fairly closely).)

Re: French tax on startups

#40

Post by flyinglizard » Sat, Oct 20, 2012, 5:12 PM UTC

galactus wrote: post #34

adrr wrote: post #30

Earlier quoted context omitted.

US had a 92% tax rate for a few years and 70%+ during our great economic expansion after WWII, which was highest GDP grow in our history. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

How you dare questioning the sacred idea that an income tax bracket of 70%+ would destroy the economy?

What should be considered is not the maximal tax rate but the effective tax rate (after deductions, evasions and so forth).

Do you have any doubt that with the paper accounting of the 50's it was significantly easier to evade paying taxes? Do you really think anyone actually paid 70%?