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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

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.
        DanielBMarkham 18y ago
        Recent discussion on this topic: http://news.ycombinator.com/item?id=322987 http://news.ycombinator.com/item?id=322987
        cstejerean 18y ago
        I'm not saying that you shouldn't pay yourself and try to live off Ramen the entire time, just that 200k is pushing it (although it depends on what people did before they started their startup and what kind of lifestyle they need to support). Edit: now that I re-read that article I think we might be talking about different things. I don't think it's common for the founders to pay themselves that much, although I can imagine having to pay that much for executives that you hire early on.
- 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.

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.
        DanielBMarkham 18y ago
        Recent discussion on this topic: http://news.ycombinator.com/item?id=322987 http://news.ycombinator.com/item?id=322987
        cstejerean 18y ago
        I'm not saying that you shouldn't pay yourself and try to live off Ramen the entire time, just that 200k is pushing it (although it depends on what people did before they started their startup and what kind of lifestyle they need to support). Edit: now that I re-read that article I think we might be talking about different things. I don't think it's common for the founders to pay themselves that much, although I can imagine having to pay that much for executives that you hire early on.
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.