What if your model takes into account the fact that if income taxes are high enough, startups stop happening? These economists tried it, and found the optimal tax rate is 29%. https://www8.gsb.columbia.edu/faculty-research/sites/faculty-research/files/finance/Macro%20Workshop/toptax.pdf …
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how should we look at the startups in Scandinavia and other countries with really high taxes?
The obvious implication is that there would be more if taxes were lower.
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Yes, but there is a difference between “startups stop happening” and less startups. I think as everything it’s a very individual case if one chooses to make a startup or not. High taxes are just one of the market conditions to face.
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Actually the rate of startups is higher in Scandinavia because there’s no life threatening down side to risk taking like there is in America. High tax rate is fine if it provides a social failure safety net. High taxes in the US won’t improve American social nets. Just military.
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Stockholm 2nd highest rate of startups after silicon valley... here’s why.https://youtu.be/eRgvM_xXNy0
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Higher income taxes are better for number of start-ups, as you grow your company tax-free and pay capital gains on exit. Income taxes penalize employees
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You are right. I still think this is a investors point of view not a founders that has to pay the income tax if he is employed in the company. But as
@MichaelKogan14 and@ErrickRanford pointed out it's not only the taxes that matter and the capital gain taxes are lower.
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In Scandinavia and all Nordic countries startups get plenty of government grants. That helps a bit but just lowering the taxes instead would probably be a more efficient option.
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True that, but not always of course. And it's not so true that the grants are that easy and sometimes they're not really grants either. Still I guess it's easier to get VC's in the US than in Europe. And the US VC's tend to more prepared for risks than in Europe.
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...if the assumptions are correct, which they're not. Particularly that it's cash in hand after tax which is the motivating factor. Generally it's *relative* income levels which motivate those who scorekeep their success based on their income. Tax doesn't matter.
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Exactly. This is just propaganda with equations.
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Their end reward also includes being acquired out of Scandinavia.
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