4 ms·

> the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating This is a cliche you hear from right winger in any co

> the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating This is a cliche you hear from right winger in any country that has a progressive tax system. Regarding Norway, taxes aren't in the same ballpark as in some US blue states. Also, it's a very simplistic view to think that people are only motivated by money. Counter examples abound.

robocat 2y ago
> This is a cliche you hear from right winger in any country that has a progressive tax system Not a cliché - a fact. I'll explain to you. The incentive structure of progressive taxation is wrong: it only works for the few percent that are extremely money hungry: the few that are willing to work for lower and lower percentage gains. Normal people say "enough" and they give up once they have the nice house and a few toys (and some retirement money with luck). In New Zealand that is something like USD1.5 million. I'm on a marginal rate of 39% in New Zealand. I am well off but I literally am not motivated to try and earn anything extra because the return is not enough for the extra effort or risk involved. No serial entrepreneurship for me because it only has downside risk. If I invest and win then 39%+ is taken as tax, but even worse is that if I lose then I can't claim my time back. Even financial losses only claw back against future income: and my taxable income could move to $0 due to COVID-level-event and so my financial risk is more than what it might naively appear. Taxation systems do not fairly reward for risk. Especially watch people with no money taking high risks and pay no insurance because the worst that can happen to them is bankruptcy. New Zealand loses because the incentive structure for a founder is broken. We are an island so the incentive structure should revolve around bringing in overseas income (presuming the income is spent within NZ). Every marginal dollar brought into the economy helps all citizens and the government. The incentives were even worse when I was working but was trying to found a company. I needed to invest time, which had the opportunity cost of the wages I wouldn't get as a developer (significant risk that can't be hedged and can't be claimed against tax). 9 times out of 10 a founder wins approximately $0: so expected return needs to be > 10x. A VC fund needs something like > 30x return from the 1 or 2 winning investments. I helped found a successful business but high taxation has meant I haven't reached my 30x yet - chances are I'll be dead before I get a fair return for my risk. I'm not sure I've even reached 10x given I don't know the counterfactual of what my employee income would have become. This is for a business earning good export income. Incentive structures matter - we understand that for employees - however few governments seem to understand that for businesses. Most people are absolutely ignorant of even basic economics. The underlying drive is the wish to take from those that have more than them. We call it the tall poppy syndrome down here. (reëdited to add clarity)
- roca 2y ago
  I'm also on the 39% marginal income tax rate in New Zealand. That income tax rate isn't the problem. Keeping $60K out of every $100K extra salary I make is plenty of motivation to work harder to make the extra $100K... especially because the taxes paid aren't burned, they mostly go to things I care about. The income tax rate isn't all that relevant to the costs and benefits of starting a company, so I don't understand that part of your story. The rewards for founding a successful company mostly aren't subject to income tax, and NZ has a very light capital gains regime. I have started my own company and I do agree that there are some issues that could be addressed. For example, it would be fairer if the years I worked for no income created tax-deductible losses against future income. But NZ's tax rates are lower than Australia and the USA and most comparable nations, and NZers start a lot of businesses, so I don't think that is one of our major problems at the moment.
  - robocat 2y ago
    > Keeping $60K out of every $100K extra salary I make is plenty of motivation to work harder That's good that it motivates you. It doesn't motivate me any more. I'm not interested in "investing" more time for the reasons I have said. > the taxes paid aren't burned, they mostly go to things I care about. I'm pleased for you. I'd like to put more money towards things I care about. > The income tax rate isn't all that relevant to the costs and benefits of starting a company I am just less positive than you: it feels like win you lose, lose you lose bigger. I'm just pointing out that our government talks about supporting businesses but I've seen the waste from the repetitive attempts to monetise our scientific academics. > The rewards for founding a successful company mostly aren't subject to income tax Huh? Dividends are income. Or are you talking about the non-monetary rewards of owning a business? > NZ has a very light capital gains regime Which requires you to sell your company to receive the benefits of the lack of CGT. So every successful business in NZ is incentivised to sell. NZ sells it's jewels. Because keeping a company means paying income tax every year. NZ is fucking itself by selling anything profitable - usually to foreign buyers. The one big ticket item I would like to save for is my retirement fund. But Labour/Greens want to take 50% to 100% of capital if you have over 2 million. A bullshit low amount drawdown at 4% is $80k/annum before tax LOL. Say investments go up by 6% per year and you want to withdraw 4%. Then a 2% tax is 100% of your gains. Plus I'm certain they will introduce means testing for super before I am eligible. And younger people are even more fucked IMHO. The reality is I need to plan to pay for the vast majority of my own costs when I retire, but I get to pay to support everybody else. I believe in socialist health care and helping our elderly, but the country is slowly going broke and I can't do much about that. I believe that our government will take whatever I have carefully saved - often to pay for people that were not careful (My peer-group is not wealthy so I see the good and the bad of how our taxes are spent). Why should I try to earn more to save?
robertlagrant 2y ago
> This is a cliche you hear from right winger in any country that has a progressive tax system. This ad hominem stuff is very out of place. Why not solely engage with the argument?

robocat 2y ago

> This is a cliche you hear from right winger in any country that has a progressive tax system Not a cliché - a fact. I'll explain to you. The incentive structure of progressive taxation is wrong: it only works for the few percent that are extremely money hungry: the few that are willing to work for lower and lower percentage gains. Normal people say "enough" and they give up once they have the nice house and a few toys (and some retirement money with luck). In New Zealand that is something like USD1.5 million. I'm on a marginal rate of 39% in New Zealand. I am well off but I literally am not motivated to try and earn anything extra because the return is not enough for the extra effort or risk involved. No serial entrepreneurship for me because it only has downside risk. If I invest and win then 39%+ is taken as tax, but even worse is that if I lose then I can't claim my time back. Even financial losses only claw back against future income: and my taxable income could move to $0 due to COVID-level-event and so my financial risk is more than what it might naively appear. Taxation systems do not fairly reward for risk. Especially watch people with no money taking high risks and pay no insurance because the worst that can happen to them is bankruptcy. New Zealand loses because the incentive structure for a founder is broken. We are an island so the incentive structure should revolve around bringing in overseas income (presuming the income is spent within NZ). Every marginal dollar brought into the economy helps all citizens and the government. The incentives were even worse when I was working but was trying to found a company. I needed to invest time, which had the opportunity cost of the wages I wouldn't get as a developer (significant risk that can't be hedged and can't be claimed against tax). 9 times out of 10 a founder wins approximately $0: so expected return needs to be > 10x. A VC fund needs something like > 30x return from the 1 or 2 winning investments. I helped found a successful business but high taxation has meant I haven't reached my 30x yet - chances are I'll be dead before I get a fair return for my risk. I'm not sure I've even reached 10x given I don't know the counterfactual of what my employee income would have become. This is for a business earning good export income. Incentive structures matter - we understand that for employees - however few governments seem to understand that for businesses. Most people are absolutely ignorant of even basic economics. The underlying drive is the wish to take from those that have more than them. We call it the tall poppy syndrome down here. (reëdited to add clarity)

roca 2y ago
I'm also on the 39% marginal income tax rate in New Zealand. That income tax rate isn't the problem. Keeping $60K out of every $100K extra salary I make is plenty of motivation to work harder to make the extra $100K... especially because the taxes paid aren't burned, they mostly go to things I care about. The income tax rate isn't all that relevant to the costs and benefits of starting a company, so I don't understand that part of your story. The rewards for founding a successful company mostly aren't subject to income tax, and NZ has a very light capital gains regime. I have started my own company and I do agree that there are some issues that could be addressed. For example, it would be fairer if the years I worked for no income created tax-deductible losses against future income. But NZ's tax rates are lower than Australia and the USA and most comparable nations, and NZers start a lot of businesses, so I don't think that is one of our major problems at the moment.
- robocat 2y ago
  > Keeping $60K out of every $100K extra salary I make is plenty of motivation to work harder That's good that it motivates you. It doesn't motivate me any more. I'm not interested in "investing" more time for the reasons I have said. > the taxes paid aren't burned, they mostly go to things I care about. I'm pleased for you. I'd like to put more money towards things I care about. > The income tax rate isn't all that relevant to the costs and benefits of starting a company I am just less positive than you: it feels like win you lose, lose you lose bigger. I'm just pointing out that our government talks about supporting businesses but I've seen the waste from the repetitive attempts to monetise our scientific academics. > The rewards for founding a successful company mostly aren't subject to income tax Huh? Dividends are income. Or are you talking about the non-monetary rewards of owning a business? > NZ has a very light capital gains regime Which requires you to sell your company to receive the benefits of the lack of CGT. So every successful business in NZ is incentivised to sell. NZ sells it's jewels. Because keeping a company means paying income tax every year. NZ is fucking itself by selling anything profitable - usually to foreign buyers. The one big ticket item I would like to save for is my retirement fund. But Labour/Greens want to take 50% to 100% of capital if you have over 2 million. A bullshit low amount drawdown at 4% is $80k/annum before tax LOL. Say investments go up by 6% per year and you want to withdraw 4%. Then a 2% tax is 100% of your gains. Plus I'm certain they will introduce means testing for super before I am eligible. And younger people are even more fucked IMHO. The reality is I need to plan to pay for the vast majority of my own costs when I retire, but I get to pay to support everybody else. I believe in socialist health care and helping our elderly, but the country is slowly going broke and I can't do much about that. I believe that our government will take whatever I have carefully saved - often to pay for people that were not careful (My peer-group is not wealthy so I see the good and the bad of how our taxes are spent). Why should I try to earn more to save?

robertlagrant 2y ago

> This is a cliche you hear from right winger in any country that has a progressive tax system. This ad hominem stuff is very out of place. Why not solely engage with the argument?