Google is a megacorp, and while megacorps aren't fundamentally "evil" (for some definitions of evil), they are fundamentally unconcerned with goodness or morality, and any appearance that they are is purely a marketing exercise.
I think megacorps being evil is universal. It tends to be corrupt cop evil vs serial killer evil, but being willing to do anything for money has historically been categorized as evil behavior.
That doesn’t mean society would be better or worse off without them, but it would be interesting to see a world where companies pay vastly higher taxes as they grow.
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.
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)
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.
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?
I find it hard to understand how $60K means no motivation but $100K would be highly motivating.
> I'd like to put more money towards things I care about.
You said later that you care about the public health system and helping the elderly. That's where a large percentage of our taxes go.
> Huh? Dividends are income. Or are you talking about the non-monetary rewards of owning a business?
No, I'm talking about selling all or part of the business. I agree with you that it's a problem our businesses often sell out to overseas interests who hollow out the company. But the general pattern of making most of your money by selling shares in the business is completely normal worldwide.
The marginal rate in NZ is 39%!? That’s LOWER than in California, the land of “serial entrepreneurship”, for anyone with a successful startup. Not to mention the US tax rate doesn’t include a myriad of other small taxes that for some reason are not included in that number. On top of having a higher tax rate the average Californian entrepreneur also has to source extremely expensive healthcare.
It sounds more like an excuse to keep doing what you already wanted to do rather than an actual demotivating factor.
Our society mostly works because of our non-monetary rewards, not because of monetary incentives. My teaching and nursing friends work for their own satisfaction, and more money is not a high priority to them.
I am not particularly motivated by money. I suspect you are a businessperson that believes money is strongly motivating? I chased financial success for 15 years when I started from $0: however I now hope I have enough and I hope it won't be unfairly taken from me. Yes, money was a big incentive then (and my personal costs have been very high), but now I have other goals.
I suspect I psychologically find high marginal taxation demotivating (48% if we include GST). Maybe because I have too many acquaintances and family sucking at the government tit. I see where government money goes because I have a wide variety of acquaintances including retirees, elderly, unhealthy, and unemployed. Yeah, I know they are not living the high life (well, maybe my drug-abusing anti-social acquaintances think they are).
> No, I'm talking about selling all or part of the business
Which requires an intense amount of work, and sometimes a significant loss, and usually requires selling 100%... Why should I sell at 4x earnings when I can hold on to the business - even if I don't want it? Taxation has too much influence on my investments because rebalancing across other investments has too high a cost/risk.
I guess I'm an idealist. I believe in startups, and I believe they help all New Zealanders. But the incentives of our taxation system mean that founding a startup is foolish: I don't recommend to anyone that they should be a founder (even though I have won the gamble). The unrecoverable costs of anything but spectacular success are too high. The non-monetary rewards are poor in my experience. The expected median return for a startup founder is about $0. Our social systems and taxation systems need to encourage business inception and growth so that all of NZ can be better off.
Thank you for your questions. It is always good to be asked why!
Sales tax 15%, 91 petrol USD5.34/gallon, means testing for many things, no tax friendly retirement savings (IRAs/ROTHs whatever). Auckland housing is less affordable than San Francisco https://www.visualcapitalist.com/least-affordable-cities-to-...
I pay for private healthcare insurance because I want better outcomes than waiting for years to get urgent surgery. I have seen loved ones literally killed by our healthcare system (unnecessary death - not just normal risks of medicine). Our public health system is good when it works but it has some sharp edges. Although I assume poor NZers are better off than poor Californians for heathcare access.
> It sounds more like an excuse to keep doing what you already wanted to do rather than an actual demotivating factor.
I am telling you that it demotivates me. We don't always know why we think things and I don't have to be perfectly rational. You might be right, but calling it an excuse is extremely rude.
Hard to avoid cheaters.
A policy could be that the government could pay for 2 years of current salary and you only get one chance per person -- however I can't imagine how the government could get that into the budget.
The policy I implied is be to reward winners with a tax break to offset their risk. Difficult to sell to any voters that don't understand risk/reward or voters that believe business owners are greedy worthless bâtards.
Ha: if the business fails you lose money (the wages you didn't receive), and if the business wins you are taxed: "Privatise the losses, socialise the gains" ;)