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Taxing unrealized gains has caused an entrepreneurial exodus in Norway

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

#71

Post by asadotzler »

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?

Yes.

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

#72

Post by vidarh »

cbmuser wrote: post #28
jplrssn wrote: post #8

Not surprising that an Atlas Shrugged reading entrepreneur dislikes taxation. But government services cost money, and by other accounts [0] Norway are doing pretty well: Norway performs well in many dimensions of well-being relative to other countries in the Better Life Index. Norway outperforms the average in jobs, work-life balance, education, health, environmental quality, social connections, civic engagement, saf…

I have lived in Norway for a year and it’s definitely not as bright as you’re painting it. Rent prices are extremely high and apartments are quite small compared to other European cities. Alcohol is so expensive, that Norwegians go on alcohol shopping tours to Sweden. Trains in Oslo don’t run 24 hours, so you have to take long detours with busses at night or pay obnoxiously high rates when taking a cab. No, Norway is…

Alcohol is so expensive as a choice with broad political support in Norway. Yes, Norwegians like to whine about it, and go to Sweden or Denmark to avoid it, yet Norwegians also keep voting for the parties (almost all) that agree with keeping alcohol taxes high.

Rent is high in large parts because average incomes are high. This is one of the effects of a relatively flat income structure. As someone earning far above average, I'm better off in the UK, while someone on a job below the top ~10% or so would probably have a higher standard of living in Norway.

Not having things run 24/7 is annoying, but a factor of being a country with one of the lowest population densities in the world.

> They were against the socialist government trying to rip them off with a completely unfair taxation.

Nobody forced them to start their businesses. The wealth tax is not new, and has remained in place through both left- and right-wing governments, thought with some swings back and forth in rates.

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

#73

Post by mikrl »

thrw42A8N wrote: post #63
mikrl wrote: post #61

Earlier quoted context omitted.

I think the rationale is that if you have unrealized gains, there is a high likelihood that you are well off, and can therefore be pressured into reifying your economic potential into a resource that the government can appropriate (ie money) It’s not a straightforward tax like income tax, it’s more of a class based tax that has some aspects in common with income / CG taxes. It makes sense when you consider that the c…

What a nice way to preserve feudal classes. It'd be just terrible if someone not rich attempted startups.

I don’t support these kinds of taxes but I think that is also a little hyperbolic.

Poll taxes, and even flat taxes can also be seen as unjust taxes on ‘money you do not have’ when you subtract the cost of life from someone’s income.

This one is novel in the modern era because it only substantially negatively affects capital owners, rather than wage / fixed income earners.

As both capital owner and wage worker though, I just see it as yet another potential headwind… and yes, there are class dynamics at play that go beyond the economy and up into political power and the state.

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

#74

Post by asadotzler »

freefaler wrote: post #37
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.

How will any oil-dependent finances deal with the end of oil? By saving and diversifying. Norway's got the savings down good, and in a few decades they should start thinking about diversifying. Until then, they're in a great position because they didn't spend all their oil money on weapons and instead put it into savings for their people.

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

#75

Post by Aeolun »

jplrssn wrote: post #8

Not surprising that an Atlas Shrugged reading entrepreneur dislikes taxation. But government services cost money, and by other accounts [0] Norway are doing pretty well: Norway performs well in many dimensions of well-being relative to other countries in the Better Life Index. Norway outperforms the average in jobs, work-life balance, education, health, environmental quality, social connections, civic engagement, saf…

Anyone that gets taxed more than they have money to pay is inclined to dislike that taxation. I completely agree with the wish to not cannibalize hour company before it’s even properly profitable.

They’re ‘unrealized gains’ for a reason.

That said, I also feel there is a way to do this tax properly.

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

#76

Post by JeffL »

no_wizard wrote: post #31
barbazoo wrote: post #19

Earlier quoted context omitted.

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 o…

I agree with and appreciate your comment, but I do think there is some validity in the more broad usage of "socialism" that has come to be. To steel man the other sides argument, if you have to pay taxes on an asset, be that the means of production or real estate, or else the government will come and take it away from you, it feels more like renting than owning, and the only thing you "own" is the right to pay rent on the governments asset.

I do definitely think that just labeling every government overreach that one dislikes as "socialism" is not the most useful.

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

#77

Post by vidarh »

thrw42A8N wrote: post #63
mikrl wrote: post #61

Earlier quoted context omitted.

I think the rationale is that if you have unrealized gains, there is a high likelihood that you are well off, and can therefore be pressured into reifying your economic potential into a resource that the government can appropriate (ie money) It’s not a straightforward tax like income tax, it’s more of a class based tax that has some aspects in common with income / CG taxes. It makes sense when you consider that the c…

What a nice way to preserve feudal classes. It'd be just terrible if someone not rich attempted startups.

Having started companies in Norway without being rich at the time, it's not generally remotely a problem. The wealth tax is low, and it only kicks in over a threshold. If you can't afford to have your company pay you enough or lend you money to cover the wealth tax at the point where it starts to become a challenge, then your company is likely a shitty investment.

There can be extreme corner cases where it's a challenge, but it's extremely rare.

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

#78

Post by asadotzler »

seryoiupfurds wrote: post #59

If you ask a socialist to describe their ideal world, it is one in which everyone is equally poor. They see "taxing the rich" first and foremost as punishing an ideological enemy, with little thought given to actually maximizing the tax revenue they can collect from them over time.

If you build strawmen it's easy to knock them down.

Socialist mostly want a floor so people don't starve to death or lose their roof to medical bills. That floor would be quite easily to establish at a comfortable life for 10 billion people on this planet while still allowing for more than enough many times over millionaires.

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

#79

Post by vidarh »

HarryHirsch wrote: post #45
cbmuser wrote: post #28

Earlier quoted context omitted.

I have lived in Norway for a year and it’s definitely not as bright as you’re painting it. Rent prices are extremely high and apartments are quite small compared to other European cities. Alcohol is so expensive, that Norwegians go on alcohol shopping tours to Sweden. Trains in Oslo don’t run 24 hours, so you have to take long detours with busses at night or pay obnoxiously high rates when taking a cab. No, Norway is…

Don't forget that Norway banned Life of Brian and people had to travel to Sweden to watch it.

While I like to tell that story too (it was supposedly advertised in Sweden as "so funny it was banned in Norway"), it was not technically banned. It was not given a certificate, so it couldn't be shown in public cinemas, due to concern it might breach the blasphemy laws, at a point where Norway was still fairly religious.

It's also the last time that ever happened - the Heathen Society tried repeatedly to provoke the use of the blasphemy paragraph for many years until it was repealed, and kept failing. The paragraph had at that point not actually been invoked since Arnulf Øverland was acquitted in 1933 (after being charged following a speech titled "Christianity, the tenth plague" - "Kristendommen, den tiende landeplage").

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

#80

Post by asadotzler »

HPsquared wrote: post #30
exe34 wrote: post #18

Earlier quoted context omitted.

> Norway imposes a wealth tax that taxes unrealized gains at approximately 1% annually. Calculated on the full market value for publicly traded assets and the book value of private companies. On New Year's Eve, whatever your net worth - including illiquid assets - is subject to this tax. It doesn't matter if you're running a loss-making startup with no cash flow, if your investments have tanked after the valuation da…

Do they give a tax refund if the assets then lose (notional) value the next year?

Yes, well credit and other mechanisms keep the ledger balanced. Do you think you're the first person who thought of that criticism or that none of the economics professionals though to address it? What arrogance.
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