4 ms·
> Can the spirit of enterprise be taught? That's the wrong question to ask. The correct question to ask would be: "Does the government of that country let ent
by Toshio 14y ago
> Can the spirit of enterprise be taught?
That's the wrong question to ask.
The correct question to ask would be: "Does the government of that country let entrepreneurs breathe?"
Having witnessed first-hand how taxation systems work in real-life in the U.S. and in a few poor countries, I can say this: when the IRS has suspicions about your accounting treatments, they begin sending you letters politely asking for photocopies of individual legal documents. There are a few rounds of this back-and-forth, after which the IRS figures out whether you committed fiscal fraud or not. This is pretty much a hands-off approach.
In poor countries, where governments are usually corrupt, things happen differently. Tax inspectors show up (unexpectedly and carrying guns) at the door of your small business. They are incentivized by the policies of the fiscal enforcement agency not to leave until they found even the tiniest mistake in your accounting treatments. And then they slap a hefty fine on you - legislations in poor countries do not provide for any sort of sense of proportion. Also, legislations are contradictory and skewed such that you can't really be an honest entrepreneur, even if you try really hard. There is always more than one accounting treatment for anything more complex than revenue=5, expenses=4 => profit=1. And the tax inspectors slap you with fines for not going with the other accounting treatment.
All of this has a chilling effect on entrepreneurship, unfortunately.
- fierarul 14y agoSo true. The actual trick is that in a broken country they don't expect people to be honest. Quite the contrary -- it's more profitable for everybody else if you are corrupt. Actual quote from an IRS employee from Romania: "Don't you worry about that [rules]. You just worry about making money and we'll worry about taking the money from you."
- ipince 14y agoThis, so much! In many instances the only choice you have is to bribe the tax inspector so he doesn't impose a completely unreasonable fine on your business. Then you're essentially fighting the government to see who pays the tax inspector more money...
- witoldc 14y agoThis is both true and false. While corruption is rampant and often expected, the environment can be easier particularly for lower capital businesses. If you want to open a restaurant here in DC, it will take you quite a long time to get all the permits, permissions and inspections done. If you have to remedy anything, it probably won't be cheap. Once you have all the permits, you have to apply for special exemptions to stay open later, to serve alcohol, etc. When a Latino immigrant woman tried to sell her food on some neighborhood street in DC, she didn't even last a day. She tried (at least) twice, and she was promptly ticketed and got in some trouble for selling simple treats on the street. In contrast, in the developing countries the business comes first. You worry about making money. If it's actually working, then you can start worrying about bribes and taxes and regulations. So it can be cheaper and quicker to startup as many of these expenses are on the back end instead of being front loaded. The Romanian quote is right on.
- gcb 14y agonobody is talking about small business. the talk is about small business becoming medium or large. or even small-but-not-so-small.