4 ms·

easy, impose an exit tax. capital doesn't need to be free when it's trying to evade justice. you pay tax on unrealised gains the same way the rest of us do whe

by exe34 2y ago

easy, impose an exit tax. capital doesn't need to be free when it's trying to evade justice. you pay tax on unrealised gains the same way the rest of us do when facing an unexpected bill that we can't afford - you sell your stuff.

HeckFeck 2y ago
You do realise they were taxing the entrepreneurs before their companies made a profit? What sort of "justice" is that?
- emn13 2y ago
  Anybody earning a wage pays tax on revenue, not profit. Property taxes can be even be on value, not revenue or profit. For any given tax burden, I don't see the "justice" problem by shifting more of that towards value and revenue and less towards profit. You could argue that in a vacuum that it is more just because it slightly incentivized investment over saving. And I'm sure you could argue the reverse too. However, to me this mostly looks like a practical issue, and the traditional dogma that a broader tax base is a better one likely holds here too. Taxes should be on all three categories, and for both legal and real persons - and thus each specific category lower (and in particular thereby reducing the height of specific niche corners cases such as this one, and also reducing the opportunity to game the system). Also, it's interesting to listen to anecdotes like this, but caveat lector; the article's author's experience may not be the norm; and the issues they experienced may be due to the specifics of norway's taxation system or their personal choices, not the principles behind it; and last but not least as long as money can flow mostly freely between tax systems it's not enough for a system to be fair and well designed in a vacuum; it also need to consider how shifting wealth/income/profits across borders will affect outcomes. To my mind, this is all pretty orthogonal to justice. Clearly, you see that differently. Why does this smack of injustice to you?
  - cscurmudgeon 2y ago
    > Anybody earning a wage pays tax on revenue, not profit Not really though. You do have deductions in the US (though limited). https://www.irs.gov/credits-and-deductions-for-individuals https://www.irs.gov/credits-and-deductions-for-individuals And lots of places don't tax houses or real estate.
    - emn13 2y ago
      Those deduction in no way change the basics of income (and sales) tax, which is on revenue, not profit. A person that has a good wage will pay a significant amount in tax even if at the end of a year they have no more wealth than before it; i.e. no profit. And while of course there _exist_ places that don't work this way or don't tax real estate that doesn't diminish the fact that there exist places that _do_ work this way - which demonstrates the fact that there's no broad agreement that taxation must be limited to and occur after profits. Norwegian self-proclaimed entrepreneurs aren't unique in their "victimhood", which seems to be the angle of the original article. Consider a though experiment: In a fast-growing world, taxation limited to profits when honestly applied and without exploitable loopholes (not an obviously satisfied precondition) might be able to cover costs of shared concerns, i.e. government's primary business. But imagine for a moment that that growth were to significantly slow or even stop - without profits, taxation could fall to a trickle (limited to those niches that have zero-sum profits yet lack the ability to amortize over loss making periods and lack the ability to strike a deal to fiscally merge with a loss-making business for tax purposes). Clearly, that's not sustainable. I think it's hard to imagine that the the only "just" way to tax is one that is fundamentally dependent on permanent significant growth, even if we've been lucky enough to live in such a world for quite a while, at least on paper. Given how some costs (e.g. depletion of natural resources and pollution) aren't on the fiscal books, and that from an idealistic free market stance one might prefer to include those costs on the books, the true global growth is surely already lower than it looks on paper, even if it's still hopefully positive.
- exe34 2y ago
  > 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 date, or even if your company has gone bankrupt—you still owe the tax. "unrealised gains". gains, not losses.
  - HPsquared 2y ago
    Do they give a tax refund if the assets then lose (notional) value the next year?
    - asadotzler 2y ago
      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.
      - HPsquared 2y ago
        Yikes. I'm interested to see how it handles that. The risk aspect is one reason capital gains are taxed at a lower rate than regular income. I guess it's not a tax on gains per se but specifically a wealth tax.
        exe34 2y ago
        I'm okay with a wealth tax if it stops the runaway growth of wealth inequality.
    - exe34 2y ago
      in many places you can claim the last few years worth of losses as offset on your profits before taxes.
- psd1 2y ago
  You can avoid profit indefinitely - just ask uber. That's if we're sticking to the customary definition of "profit". So that you know, the practice in question is to open a line of credit on the value of your stock. This enables you to put large amounts of money in your pocket without "realising" your gains. It's a blatant tax dodge. "going into debt" lol no. Close the loophole.
kingstoned 2y ago
It's amazing to me that on a startup-oriented forum like this one you see these kinds of socialist comments when it comes to something that is harmful to startup founders and the entire ecosystem. Honestly curious to see what people who are hostile to entrepreneurship are even doing here.
- no_wizard 2y ago
  It’s amazing to me that people think this is what socialism is. This isn’t seizing the means of production.
  - sandeepthroat 2y ago
    [flagged]
  - barbazoo 2y ago
    Wouldn't that be more communism than socialism?
    - no_wizard 2y ago
      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 ownership Communism differs in that it takes this a step further advocating not only for social ownership but also the dissolution of of all private property ownership and its corresponding economic role, and distribution, and exchange that allocates products to everyone in the society based on need. For the record, I think communism is a dead end as it flys in the face of human nature. Market socialism might have legs though. I was being a bit tongue in cheek but taxes aren’t inherently socialism. Taxation has been levied under multiple periods of economic philosophy like in feudal Europe or during the age of mercantilism for example. Seems to be a hallmark of highly organized civilizations Something like an employee owned co-op is a valid socialist concept, for example. Social doesn’t automatically mean government. Though communists like Marx believed in revolutionary uprising and those tend to be inherently violent. It’s a shame that the only exposure people have to any form of socialist ideas is via Marx.
occz 2y ago
The article mentions the existence of such a tax.
deleted 2y ago
[deleted]
Aloisius 2y ago
Norway already has an exit tax which levies a 37.84% tax on unrealized gains. The "easy fix" isn't working for some reason. Perhaps a one-time tax is still preferable to an ongoing one.
- exe34 2y ago
  you can also do what America does, if you're a citizen, you get taxed on your gains worldwide.
cscurmudgeon 2y ago
Law != justice. Else, you won't have the concept of unjust laws.
- exe34 2y ago
  any law I agree with is justice though, almost by definition.

by exe34 2y ago

HeckFeck 2y ago

You do realise they were taxing the entrepreneurs before their companies made a profit? What sort of "justice" is that?

emn13 2y ago
Anybody earning a wage pays tax on revenue, not profit. Property taxes can be even be on value, not revenue or profit. For any given tax burden, I don't see the "justice" problem by shifting more of that towards value and revenue and less towards profit. You could argue that in a vacuum that it is more just because it slightly incentivized investment over saving. And I'm sure you could argue the reverse too. However, to me this mostly looks like a practical issue, and the traditional dogma that a broader tax base is a better one likely holds here too. Taxes should be on all three categories, and for both legal and real persons - and thus each specific category lower (and in particular thereby reducing the height of specific niche corners cases such as this one, and also reducing the opportunity to game the system). Also, it's interesting to listen to anecdotes like this, but caveat lector; the article's author's experience may not be the norm; and the issues they experienced may be due to the specifics of norway's taxation system or their personal choices, not the principles behind it; and last but not least as long as money can flow mostly freely between tax systems it's not enough for a system to be fair and well designed in a vacuum; it also need to consider how shifting wealth/income/profits across borders will affect outcomes. To my mind, this is all pretty orthogonal to justice. Clearly, you see that differently. Why does this smack of injustice to you?
- cscurmudgeon 2y ago
  > Anybody earning a wage pays tax on revenue, not profit Not really though. You do have deductions in the US (though limited). https://www.irs.gov/credits-and-deductions-for-individuals https://www.irs.gov/credits-and-deductions-for-individuals And lots of places don't tax houses or real estate.
  - emn13 2y ago
    Those deduction in no way change the basics of income (and sales) tax, which is on revenue, not profit. A person that has a good wage will pay a significant amount in tax even if at the end of a year they have no more wealth than before it; i.e. no profit. And while of course there _exist_ places that don't work this way or don't tax real estate that doesn't diminish the fact that there exist places that _do_ work this way - which demonstrates the fact that there's no broad agreement that taxation must be limited to and occur after profits. Norwegian self-proclaimed entrepreneurs aren't unique in their "victimhood", which seems to be the angle of the original article. Consider a though experiment: In a fast-growing world, taxation limited to profits when honestly applied and without exploitable loopholes (not an obviously satisfied precondition) might be able to cover costs of shared concerns, i.e. government's primary business. But imagine for a moment that that growth were to significantly slow or even stop - without profits, taxation could fall to a trickle (limited to those niches that have zero-sum profits yet lack the ability to amortize over loss making periods and lack the ability to strike a deal to fiscally merge with a loss-making business for tax purposes). Clearly, that's not sustainable. I think it's hard to imagine that the the only "just" way to tax is one that is fundamentally dependent on permanent significant growth, even if we've been lucky enough to live in such a world for quite a while, at least on paper. Given how some costs (e.g. depletion of natural resources and pollution) aren't on the fiscal books, and that from an idealistic free market stance one might prefer to include those costs on the books, the true global growth is surely already lower than it looks on paper, even if it's still hopefully positive.
exe34 2y ago
> 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 date, or even if your company has gone bankrupt—you still owe the tax. "unrealised gains". gains, not losses.
- HPsquared 2y ago
  Do they give a tax refund if the assets then lose (notional) value the next year?
  - asadotzler 2y ago
    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.
    - HPsquared 2y ago
      Yikes. I'm interested to see how it handles that. The risk aspect is one reason capital gains are taxed at a lower rate than regular income. I guess it's not a tax on gains per se but specifically a wealth tax.
      - exe34 2y ago
        I'm okay with a wealth tax if it stops the runaway growth of wealth inequality.
  - exe34 2y ago
    in many places you can claim the last few years worth of losses as offset on your profits before taxes.
psd1 2y ago
You can avoid profit indefinitely - just ask uber. That's if we're sticking to the customary definition of "profit". So that you know, the practice in question is to open a line of credit on the value of your stock. This enables you to put large amounts of money in your pocket without "realising" your gains. It's a blatant tax dodge. "going into debt" lol no. Close the loophole.

kingstoned 2y ago

It's amazing to me that on a startup-oriented forum like this one you see these kinds of socialist comments when it comes to something that is harmful to startup founders and the entire ecosystem. Honestly curious to see what people who are hostile to entrepreneurship are even doing here.

no_wizard 2y ago
It’s amazing to me that people think this is what socialism is. This isn’t seizing the means of production.
- sandeepthroat 2y ago
  [flagged]
- barbazoo 2y ago
  Wouldn't that be more communism than socialism?
  - no_wizard 2y ago
    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 ownership Communism differs in that it takes this a step further advocating not only for social ownership but also the dissolution of of all private property ownership and its corresponding economic role, and distribution, and exchange that allocates products to everyone in the society based on need. For the record, I think communism is a dead end as it flys in the face of human nature. Market socialism might have legs though. I was being a bit tongue in cheek but taxes aren’t inherently socialism. Taxation has been levied under multiple periods of economic philosophy like in feudal Europe or during the age of mercantilism for example. Seems to be a hallmark of highly organized civilizations Something like an employee owned co-op is a valid socialist concept, for example. Social doesn’t automatically mean government. Though communists like Marx believed in revolutionary uprising and those tend to be inherently violent. It’s a shame that the only exposure people have to any form of socialist ideas is via Marx.

occz 2y ago

The article mentions the existence of such a tax.

deleted 2y ago

[deleted]

Aloisius 2y ago

Norway already has an exit tax which levies a 37.84% tax on unrealized gains. The "easy fix" isn't working for some reason. Perhaps a one-time tax is still preferable to an ongoing one.

exe34 2y ago
you can also do what America does, if you're a citizen, you get taxed on your gains worldwide.

cscurmudgeon 2y ago

Law != justice. Else, you won't have the concept of unjust laws.

exe34 2y ago
any law I agree with is justice though, almost by definition.