5 ms·

"While I prefer lower taxes, I can tell you that no entrepreneur or CEO worth a damn in this country gives up or works less because of a change in tax policy."

hugh 18y ago
Really? I'm considering moving back to Australia in order to start my company when the time comes. I moved to the US because it had lower tax rates, but if that gets reversed then the US can say goodbye to my income.
- deleted 18y ago
  [deleted]
- abstractbill 18y ago
  Sounds to me like you're optimizing the wrong thing here. I moved from the UK to the Silicon Valley, because being here gives me a better chance of success as a tech entrepreneur. Worrying about being taxed a few extra percentage points seems similar to founders fighting over equity: It just distracts you from doing what's necessary to succeed.
  - DanielBMarkham 18y ago
    Equity is not the same as working income. You can't tell founders to save every penny they can and scrimp as much as possible and then say a few points of lost income isn't important. Or rather, you can, but to me it seems an inconsistency.
    - comatose_kid 18y ago
      By this logic, no entrepreneur should apply to YC, since they take 6% of your company. I'm a little surprised to read on HN that entrepreneurs would consider tax rates as a deciding factor on where to locate an early stage venture.
      - DanielBMarkham 18y ago
        Either I didn't explain myself well or you're not listening. Equity is not income. Early stage, I'll trade equity for all kinds of things. Income is a completely different affair. Income is cash-in-hand, cash for advertising, mortgages, food, operating expenses. Income is precious -- equity not so much. Later on, the balance shifts and equity is much more important. Income not so much. But there's a long run through a minefield to get to that point. Cash is power. Power to make choices and provide value. Equity is another matter entirely. Early stage I'd locate wherever the people and facilities were that could help me grow. But the internet's a great thing -- after early-stage I can choose to operate just about anywhere.
        briancooley 18y ago
        >Income is cash-in-hand, cash for advertising, mortgages, food, operating expenses. Income is precious -- equity not so much. Advertising and operating expenses offset revenues. A higher tax on profit doesn't reduce your ability to navigate any minefield on the way up unless your tax attorney is incompetent.
        DanielBMarkham 18y ago
        I hear what you say and agree, yet from this end it feels like we're playing pointless semantic games. If I have 100K in income as a business, and I have to pay my employees an extra 20K in salary just to make up for extra taxes, that comes out of my bottom line -- money that could go elsewhere. The categorization of the expense doesn't make it magically go away. People still have to eat. 200K a year, if I remember correctly, is about the average wage for working founders in a startup businesses that are funded and on the way to profitability.
        cstejerean 18y ago
        It might depend on where you live but I think 200k as salary for a founder in a company that is not yet profitable is ridiculously high.
    - abstractbill 18y ago
      You can't tell founders ... a few points of lost income isn't important. I didn't say it wasn't important, just that it's nowhere near as important as being in the right location.
    - briancooley 18y ago
      The emphasis on saving and scrimping is to reduce burn rate prior to profitability. At the point where Obama's proposed tax increases would affect you, you aren't burning any more. Further, from what I understand, Obama's plan would benefit you on the way up to that $250K/year in profit. I don't know the statistics, but my gut tells me that most small businesses in America are turning less than $250K/year in profit.
- vaksel 18y ago
  you are counting your chickens before they hatch. In this country we tax profit. Which means until your startup starts making you that 250K/yr in profit, you won't be affected one bit by any increases Obama makes. Actually you'll probably benefit during the early stage under Obama. And its not like Australia has a super low tax rate, you'll still pay 30% in taxes. So ask yourself this, is the extra 5-10% in profit worth it to you to lose x% of your customers who don't want to do any business with a company outside United States? I see the additional tax rate under Obama as an investment. I lose a little bit off the top, but I'll get more than compensated by my users actually having money to spend.
  - gojomo 18y ago
    In this country we tax profit. And payrolls, sales, and real property -- even if there's no profit.
  - brianlash 18y ago
    "customers who don't want to do any business with a company outside United States" Wait. When have you ever not done business with a web services company on the grounds that it was located outside the US? Do you think that kind of thing actually goes on? And that the problem is so endemic it should be cause to stick around, lest you lose all your US-based customers? It may be so with a brick-and-mortar, or with a business that involves high-cost shipping. But for a traditional web services company -- Freshbooks (Cananda), Netvibes (France), Problogger (Australia) -- I don't think that argument holds any water.
    - vaksel 18y ago
      Sure if you have some freebie app its not a big deal. But the second you ask your users to pull out a credit card your location becomes a big deal to most people.
      - brianlash 18y ago
        I get where you're coming from, but in terms of trust I think people check a few things: 1) Is my connection secure and encrypted, 2) Is either of Authorize.net, PayPal, or Google acting as a payment gateway 3) Is the site established, and does it have verifiable feedback from people I trust, 4) Does a Google search show other people talking about the site, What are they saying, 5)Does the site's content converge to norms I've come to know and expect from credible companies I've patronised And 6) Is it located in the continental United States (if Yes that's icing on the cake... nothing more). I won't speak for most (I don't think you should either) because I have no grounds for basing an assumption of the "most people" magnitude. But I think there are a lot of measures people check before swiping the credit card on a virtual transaction. The US/non-US piece is one consideration, but that's my point: It's just one item on a list of important credibility checks.
- dejb 18y ago
  I can tell you that the currency difference is pretty sweet at the moment. However the timezone difference does make it more difficult to communicate with US/EU customers and business partners. The expense of enforcing contracts overseas could also be an issue. I wouldn't come back just because of tax rates.
fallentimes 18y ago
We just spend more time avoiding (read: NOT evading) them.
mseebach 18y ago
And the next sentence: "In this country you work harder to achieve your dreams and goals." 1: The higher the tax, the harder you have to work to achieve your dreams and goals => the decision to leave certainty for a venture is harder => less people will do it. 2: A tax increase counts twice when you're hiring e.g. cleaning help for your home, since both you and the cleaner is paying the higher tax. Thus, it get harder to pay for cleaning (gardening, construction, mechanics etc), and you're more likely to do it yourself, devoting less time to your family, start-up or work. 3: Finally, higher taxes will make it harder to promote/be promoted. In a promotion, you get more money and more responsibilities. The higher the tax, the less money will be in your pocket after the promotion, and the incentive to accept is lower. Coupled with no. 2, if you're busy building a new bathroom and a garage at home, you don't have the time to accept more responsibilities at work. By the way - watch out for "95% won't be affected" rhetoric. A functioning democracy can't just be 95% fleecing the 5% - or the 55% fleecing the 45%.
- dusklight 18y ago
  If the only difference between the stated policy positions of Obama and Mccain was this one tax policy, then you might make some sense. As it is I can only conclude that you are really bad at math.
  - mseebach 18y ago
    As it is, I can only conclude that you are really bad at reading, since my post contains general observations about taxation, and only a brief remark about Obama. In the interest of making everyone smarter, rather than throwing mud, might you care to share where my math is wrong?
    - dusklight 18y ago
      Well okay so think about it this way. If the only change in the system, is that your tax rate gets increased, and the extra money that gets collected is thrown away, and the economy continues on its current trajectory, then what you said makes perfect sense. If the desired goal is "more money in your pocket" then the equation should be money I make - taxes = money in my pocket and assuming we are talking about a guy with a business and not someone taking a salary, the money you make is probably affected by the overall state of the economy. If the action that causes of increasing your taxes also substantially improves the economy, don't you think maybe .. just maybe .. you might make more money overall? What is better? To have a bigger slice of a shrinking pie or to have a smaller slice of a pie thats getting bigger and bigger?

hugh 18y ago

Really? I'm considering moving back to Australia in order to start my company when the time comes. I moved to the US because it had lower tax rates, but if that gets reversed then the US can say goodbye to my income.

deleted 18y ago
[deleted]
abstractbill 18y ago
Sounds to me like you're optimizing the wrong thing here. I moved from the UK to the Silicon Valley, because being here gives me a better chance of success as a tech entrepreneur. Worrying about being taxed a few extra percentage points seems similar to founders fighting over equity: It just distracts you from doing what's necessary to succeed.
- DanielBMarkham 18y ago
  Equity is not the same as working income. You can't tell founders to save every penny they can and scrimp as much as possible and then say a few points of lost income isn't important. Or rather, you can, but to me it seems an inconsistency.
  - comatose_kid 18y ago
    By this logic, no entrepreneur should apply to YC, since they take 6% of your company. I'm a little surprised to read on HN that entrepreneurs would consider tax rates as a deciding factor on where to locate an early stage venture.
    - DanielBMarkham 18y ago
      Either I didn't explain myself well or you're not listening. Equity is not income. Early stage, I'll trade equity for all kinds of things. Income is a completely different affair. Income is cash-in-hand, cash for advertising, mortgages, food, operating expenses. Income is precious -- equity not so much. Later on, the balance shifts and equity is much more important. Income not so much. But there's a long run through a minefield to get to that point. Cash is power. Power to make choices and provide value. Equity is another matter entirely. Early stage I'd locate wherever the people and facilities were that could help me grow. But the internet's a great thing -- after early-stage I can choose to operate just about anywhere.
      - briancooley 18y ago
        >Income is cash-in-hand, cash for advertising, mortgages, food, operating expenses. Income is precious -- equity not so much. Advertising and operating expenses offset revenues. A higher tax on profit doesn't reduce your ability to navigate any minefield on the way up unless your tax attorney is incompetent.
        DanielBMarkham 18y ago
        I hear what you say and agree, yet from this end it feels like we're playing pointless semantic games. If I have 100K in income as a business, and I have to pay my employees an extra 20K in salary just to make up for extra taxes, that comes out of my bottom line -- money that could go elsewhere. The categorization of the expense doesn't make it magically go away. People still have to eat. 200K a year, if I remember correctly, is about the average wage for working founders in a startup businesses that are funded and on the way to profitability.
        cstejerean 18y ago
        It might depend on where you live but I think 200k as salary for a founder in a company that is not yet profitable is ridiculously high.
  - abstractbill 18y ago
    You can't tell founders ... a few points of lost income isn't important. I didn't say it wasn't important, just that it's nowhere near as important as being in the right location.
  - briancooley 18y ago
    The emphasis on saving and scrimping is to reduce burn rate prior to profitability. At the point where Obama's proposed tax increases would affect you, you aren't burning any more. Further, from what I understand, Obama's plan would benefit you on the way up to that $250K/year in profit. I don't know the statistics, but my gut tells me that most small businesses in America are turning less than $250K/year in profit.
vaksel 18y ago
you are counting your chickens before they hatch. In this country we tax profit. Which means until your startup starts making you that 250K/yr in profit, you won't be affected one bit by any increases Obama makes. Actually you'll probably benefit during the early stage under Obama. And its not like Australia has a super low tax rate, you'll still pay 30% in taxes. So ask yourself this, is the extra 5-10% in profit worth it to you to lose x% of your customers who don't want to do any business with a company outside United States? I see the additional tax rate under Obama as an investment. I lose a little bit off the top, but I'll get more than compensated by my users actually having money to spend.
- gojomo 18y ago
  In this country we tax profit. And payrolls, sales, and real property -- even if there's no profit.
- brianlash 18y ago
  "customers who don't want to do any business with a company outside United States" Wait. When have you ever not done business with a web services company on the grounds that it was located outside the US? Do you think that kind of thing actually goes on? And that the problem is so endemic it should be cause to stick around, lest you lose all your US-based customers? It may be so with a brick-and-mortar, or with a business that involves high-cost shipping. But for a traditional web services company -- Freshbooks (Cananda), Netvibes (France), Problogger (Australia) -- I don't think that argument holds any water.
  - vaksel 18y ago
    Sure if you have some freebie app its not a big deal. But the second you ask your users to pull out a credit card your location becomes a big deal to most people.
    - brianlash 18y ago
      I get where you're coming from, but in terms of trust I think people check a few things: 1) Is my connection secure and encrypted, 2) Is either of Authorize.net, PayPal, or Google acting as a payment gateway 3) Is the site established, and does it have verifiable feedback from people I trust, 4) Does a Google search show other people talking about the site, What are they saying, 5)Does the site's content converge to norms I've come to know and expect from credible companies I've patronised And 6) Is it located in the continental United States (if Yes that's icing on the cake... nothing more). I won't speak for most (I don't think you should either) because I have no grounds for basing an assumption of the "most people" magnitude. But I think there are a lot of measures people check before swiping the credit card on a virtual transaction. The US/non-US piece is one consideration, but that's my point: It's just one item on a list of important credibility checks.
dejb 18y ago
I can tell you that the currency difference is pretty sweet at the moment. However the timezone difference does make it more difficult to communicate with US/EU customers and business partners. The expense of enforcing contracts overseas could also be an issue. I wouldn't come back just because of tax rates.

fallentimes 18y ago

We just spend more time avoiding (read: NOT evading) them.

mseebach 18y ago

And the next sentence: "In this country you work harder to achieve your dreams and goals." 1: The higher the tax, the harder you have to work to achieve your dreams and goals => the decision to leave certainty for a venture is harder => less people will do it. 2: A tax increase counts twice when you're hiring e.g. cleaning help for your home, since both you and the cleaner is paying the higher tax. Thus, it get harder to pay for cleaning (gardening, construction, mechanics etc), and you're more likely to do it yourself, devoting less time to your family, start-up or work. 3: Finally, higher taxes will make it harder to promote/be promoted. In a promotion, you get more money and more responsibilities. The higher the tax, the less money will be in your pocket after the promotion, and the incentive to accept is lower. Coupled with no. 2, if you're busy building a new bathroom and a garage at home, you don't have the time to accept more responsibilities at work. By the way - watch out for "95% won't be affected" rhetoric. A functioning democracy can't just be 95% fleecing the 5% - or the 55% fleecing the 45%.

dusklight 18y ago
If the only difference between the stated policy positions of Obama and Mccain was this one tax policy, then you might make some sense. As it is I can only conclude that you are really bad at math.
- mseebach 18y ago
  As it is, I can only conclude that you are really bad at reading, since my post contains general observations about taxation, and only a brief remark about Obama. In the interest of making everyone smarter, rather than throwing mud, might you care to share where my math is wrong?
  - dusklight 18y ago
    Well okay so think about it this way. If the only change in the system, is that your tax rate gets increased, and the extra money that gets collected is thrown away, and the economy continues on its current trajectory, then what you said makes perfect sense. If the desired goal is "more money in your pocket" then the equation should be money I make - taxes = money in my pocket and assuming we are talking about a guy with a business and not someone taking a salary, the money you make is probably affected by the overall state of the economy. If the action that causes of increasing your taxes also substantially improves the economy, don't you think maybe .. just maybe .. you might make more money overall? What is better? To have a bigger slice of a shrinking pie or to have a smaller slice of a pie thats getting bigger and bigger?