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Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

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Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#81

Post by FrejNorling »

dschiptsov wrote: post #75
mbesto wrote: post #11

I love Stockholm. It's an awesome city and despite the high taxes, it's very progressive in terms of trends. In other words, there are many early adopters there, which is something that is very unique to SV. Also, much of Swedish design is built on simplicity. You can see this everywhere from web design, to store design and of course furniture. The only downside, as others have pointed out, is that its extremely expe…

The trick is that most of population is in rural area..) btw, anyone form Dalarna are reading HN?)

Västmanland.... close enough =)

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#82

Post by walshemj »

luuse wrote: post #54
beagle3 wrote: post #45

Earlier quoted context omitted.

Your math doesn't make any sense - the 81% (assuming that all is right, and bjourne says it isn't) is out of 131%, not out of 100% - so the actual tax is 61%. Still high, but on par with Tel-Aviv and NYC (assuming fiscal cliff) - and you get back infinitely more than NYC and just "a lot more" than Tel-Aviv. I'd say it's great.

Well the state tax isn't as i said it, bjourne is correct about that part. I see that extra tax as money that if not for the tax would be part of my salary (at least some of it) because it's based on how much I earn, not how much I work or when I work. Thus making it of 100% of my salary, not 131%. I never said it's bad. It's OK. I'd just rather pay for something great/world class than having someone else take some o…

oh come on if they abolished NI Social Security or its equivalent do you really think that your employer would suddenly pay you that?

If you believe that I have some shares to sell you in London bridge

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#83

Post by onetwothreefour »

beagle3 wrote: post #58
king_jester wrote: post #46

Earlier quoted context omitted.

> Ask high-worth individuals in NYC with >$500,000/year income and a few millions to lose what their overall tax rate is. Wouldn't we expect the tax rate for such individuals to be high? It's not like someone with that high of a pay will suffer from a 50-60% tax rate.

Context: mbesto said (essentially) "well, yes, that's the theory, but in practice no one pays it because you can engineer your taxes around it". My reply was "people who have a lot to lose if they are found guilty of evasion do not actually try to engineer around it". Or, I'll say it another way: The reason most people believe it is easy to engineer around it, is because they have not yet been audited. It's actually…

Hehe. Yeah. Most people don't realise that the US has insanely high taxes for almost zero in return. Plus, double taxation on corporate profits.

Most sane countries have things like franking credits where owners only pay to top up from the corporate rate to the personal rate. You can sort of get around this in the US with a S Corp, but you're still paying something like ~50% for zero social services.

Let's not forget world wide taxation and other arcane issues in the US tax code.

Sigh... :)

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#84

Post by hjalle »

dschiptsov wrote: post #75
mbesto wrote: post #11

I love Stockholm. It's an awesome city and despite the high taxes, it's very progressive in terms of trends. In other words, there are many early adopters there, which is something that is very unique to SV. Also, much of Swedish design is built on simplicity. You can see this everywhere from web design, to store design and of course furniture. The only downside, as others have pointed out, is that its extremely expe…

The trick is that most of population is in rural area..) btw, anyone form Dalarna are reading HN?)

Im from Dalarna, currently studying CS in Stockholm though

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#85

Post by beagle3 »

kalininalex wrote: post #70
beagle3 wrote: post #60

Earlier quoted context omitted.

Were you ever an employer? If your salary is 10,000SEK/month (to make numbers simple), then you cost your employer 13,100SEK/month. You pay 3,000 SEK in taxes, so your take home is 7,000/13,1000 = ~55%, and the tax rate is 45%. If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them. It doesn't matter how the line items are listed from the…

> If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them. It's unlikely the employer would pay you more. You negotiated and expect 10,000 SEK. Yes, the employer knows it'll cost 13,000, but you only get 10,000. So if there's no employer tax, you'll still likely get 10,000, but now the employer can hire another person using the money that's…

On the first day. But then, a couple of years later, you are smarter and you know that before the tax was canceled, your boss was willing to pay 13,000 SEK to employ you. So the next time you negotiate (possibly with another employer), you know you are worth 13,000 SEK, so that's what you'll demand, and that's what you'll get.

The specific line item in which this expense is listed with the employer, whether "employment tax" or "salary", makes no difference to them, and shouldn't to you.

This is really basic economics.

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#86

Post by beagle3 »

luuse wrote: post #69
beagle3 wrote: post #60

Earlier quoted context omitted.

Were you ever an employer? If your salary is 10,000SEK/month (to make numbers simple), then you cost your employer 13,100SEK/month. You pay 3,000 SEK in taxes, so your take home is 7,000/13,1000 = ~55%, and the tax rate is 45%. If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them. It doesn't matter how the line items are listed from the…

Yes. That looks right. It's a completely different tax, if the employer didn't have to pay that to the government you'd have to renegotiate your salary to get any of it (because it's not part of your salary). But in Sweden you do negotiate the 10,000 SEK. You generally don't talk about the 13,100 unless you are an employer and have to think about it. That is my point and that is what I think is stupid.

What you say might be true on the day this tax is canceled, but if you like a few years later, you realize:

a) it was worth 13,000 SEK for your employer to employ you

b) you're only getting 10,000 SEK.

c) you ask for a 3,000 SEK raise, and get it.

So, not immediately, but after a while it will reach the steady state that I described.

The bottom line is: it's arithmetics; It doesn't matter to the employer which line item the 3,000 SEK are listed under, whether "employment tax" or "salary"; it comes out of their pocket either way. It shouldn't matter to you either in the grand scheme of thing. Employment is a reasonably efficient market in the time frame of a few years, and you will realize, and then demand, and get, a salary of 13,000 SEK.

The transient is going to be weird. But in the steady state - it doesn't matter which lines appear in your pay stub and which do not.

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#87

Post by beagle3 »

walshemj wrote: post #82
luuse wrote: post #54

Earlier quoted context omitted.

Well the state tax isn't as i said it, bjourne is correct about that part. I see that extra tax as money that if not for the tax would be part of my salary (at least some of it) because it's based on how much I earn, not how much I work or when I work. Thus making it of 100% of my salary, not 131%. I never said it's bad. It's OK. I'd just rather pay for something great/world class than having someone else take some o…

oh come on if they abolished NI Social Security or its equivalent do you really think that your employer would suddenly pay you that? If you believe that I have some shares to sell you in London bridge

I am amazed at how many people have your response. If you are looking at a timescale of days, you are right. If you are looking at a timescale of just a few years, you are dead wrong.

The employer down the road was profitable paying 13,000 SEK for an employee like you just yesterday. They know you're still getting 10,000 SEK. When they need an employee, they'll offer you 11,000 SEK. Many people will happily switch job for a 10% raise. Later, rinse, repeat: It will eventually converge to how much the employer was willing to pay before. Not more, of course - but why would YOU settle for less than you did before?

The time it takes salaries in high-tech to converge in active economic times is 2-4 years.

I'm talking about the steady state, the transient is short lived and irrelevant in the grand scheme of things.

It really is basic economics.

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#88

Post by beagle3 »

winter_blue wrote: post #79
beagle3 wrote: post #19

Earlier quoted context omitted.

How high are the taxes in Sweden? Highest bracket in Tel-Aviv is, as far as I know, ~60% (50% income tax + 10% health/social taxes) + 17% VAT (=~sales tax equivalent, essentially applicable to individuals but less so to companies) Highest bracket in NYC as of 2013 (unless the "fiscal cliff" is averted) is a few % short of 60% (40% federal, 13% state, 2% fica, 2% social security, and a few more). If the fiscal cliff i…

The U.A.E. is a country where you have zero , yep zero taxes. Dubai is a pretty great city to live in, and it's not that expensive. You could live well easily on $1000/month. The only downside to U.A.E. is that the tech scene is barely starting up. So you'd have to find talent abroad. On the bright side, it's fairly easy to get visas both to bring people over and to start your own company.

The press has a story every quarter or so about a couple indicted for kissing in public, and stuff like that. Also, Alcohol is reputedly not available, and the internet is filtered.

Is that true? How restrictive is the regime towards migrant entrepreneurs?

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#89

Post by subsystem »

dbaupp wrote: post #67
Peer wrote: post #8

Earlier quoted context omitted.

Tel Aviv is probarbly larger than Stockholm though. The Swedish definition of "metropolitan" area is skewed, it consists of several cities and according to wikipedia its 6,519 km2 that is compared to Tel Avivs metropolian area of 1,516 km2. Still Tel Avivs has a metropolitan population of 3.4 million people compared to Stockholm's 2.1 million.

Just for others' reference, the metropolitan area of Stockholm[0] is the whole of the Stockholm county. Just looking at the map, a slightly better/more conventional measure of Stockholm might be Stockholm municipality[1] + Huddinge, Sundbyberg and Solna, which gives an area of 350 km2 and a population of about 1.1 million. [0]: https://en.wikipedia.org/wiki/List_of_metropolitan_areas_in_... [1]: https://en.wikipedia.…

I would really only call the city centre [0] an "urban area" i.e. somewhere you could find a decent bar etc.

http://en.wikipedia.org/wiki/Stockholm_City_Centre

Re: Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv

#90

Post by beagle3 »

onetwothreefour wrote: post #83
beagle3 wrote: post #58

Earlier quoted context omitted.

Context: mbesto said (essentially) "well, yes, that's the theory, but in practice no one pays it because you can engineer your taxes around it". My reply was "people who have a lot to lose if they are found guilty of evasion do not actually try to engineer around it". Or, I'll say it another way: The reason most people believe it is easy to engineer around it, is because they have not yet been audited. It's actually…

Hehe. Yeah. Most people don't realise that the US has insanely high taxes for almost zero in return. Plus, double taxation on corporate profits. Most sane countries have things like franking credits where owners only pay to top up from the corporate rate to the personal rate. You can sort of get around this in the US with a S Corp, but you're still paying something like ~50% for zero social services. Let's not forget…

I disagree that corporate tax is double taxation: It is the premium you pay for limited liability. You can run things personally, thus avoiding the higher ("double") taxation, but then if you are successfully sued, you can lose everything you ever earned.

Whereas a corporate structure shields you from personal liability (theoretically, not including criminal liability - but in practice, it's quite effective for criminal liability as well).

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