
Au Revoir, Entrepreneurs - 001sky
http://www.nytimes.com/2014/03/23/business/international/some-french-entrepreneurs-say-au-revoir.html?hp
======
crdoconnor
This is pretty clearly a knee jerk reaction by the New York Times to
Hollande's wealth tax:

>He had taken that job after his attempt to start a business in Marseille
foundered under a pile of government regulations and a seemingly endless
parade of taxes. The episode left him wary of starting any new projects in
France. Yet he still hungered to be his own boss. > >“A lot of people are
like, ‘Why would you ever leave France?’ ” Mr. Santacruz said. “I’ll tell you.
France has a lot of problems. There’s a feeling of gloom that seems to be
growing deeper. The economy is not going well, and if you want to get ahead or
run your own business, the environment is not good.”

A _feeling_ that something just isn't quite right about the place, and it's
better in London? Gee I wonder if they mean this:

[http://www.dailymail.co.uk/news/article-2161151/With-
Holland...](http://www.dailymail.co.uk/news/article-2161151/With-Hollande-set-
tax-spend-Cameron-invites-wealthy-French-settle-London.html)

>Some wealthy businesspeople have also been packing their bags. While
entrepreneurs fret about the difficulties of getting a business off the
ground, those who have succeeded in doing so say that society stigmatizes
financial success.

Yep. This article isn't about poor, plucky upstart rags-to-riches
entrepreneurs at all. It's about manufacturing consent for slashing taxes on
the ultrawealthy. The rich are pissed about Hollande's 75% tax and they want
you to do something about it for them.

~~~
argonaut
The 75% wealth tax point was only a minor point in an article that expressed
many many other points and anecdotes, and whose greater argument was that the
entrepreneurial climate in France was poor. The fact that your argument
focuses on this minor point in order to dismiss the whole point is rather
telling about what consent is being manufactured here...

~~~
nraynaud
There is quite some bullshit in this article, because the current government
has not changed _any_ law about creating a company (so we are exactly in the
same state as before). Moreover it's merrily intermixing entrepreneurs
problems with banking problems. And there is a little detail here: banking
salaries are higher in London than in Paris and bankers are driven by money,
so they emigrate massively in the pursuit of money. This has strictly no link
to entrepreneurship, starting companies, or creating value from nothing, but
hey, there is a complaint train, let's take it.

And you can see the intermix quite a few times (got his wealth in finance, he
worked in finance, the google references), Place de la Madeleine, is exactly
who Fleur Pellerin is not trying to help, this are different people doing
different things. And if for anything, bankers are part of the problems
entrepreneurs have.

So here is a nice little piece of context that was not in the article: here in
France it's an election day today, and yesterday and today, political
propaganda are forbidden in the country. The journalist is based in Paris, and
has been for years, so she probably knew that nobody could answer to the
article.

~~~
Silhouette
_Moreover it 's merrily intermixing entrepreneurs problems with banking
problems._

This is a big problem with current envy-driven politics surrounding wealth.

A lot of people don't like seeing bankers with big bonuses after they trashed
the economy for everyone else. They're suspicious of old money children who
have inherited a fortune but seem to have contributed little of value
themselves. They're envious of highly paid sporting or artistic celebrities
who get more salary in a week than most of us make in a year.

And so they support punitive rates of tax for those who earn noticeably more
than they do, not necessarily based on any rational economic argument, but
more because they feel it's "fair" for the "rich to contribute more" or some
such argument.

Unfortunately, what that usually does in practice is hit highly qualified
professionals or modestly successful entrepreneurs. It hits the doctors who
spent years training, then more years working long hours for little money as
juniors, and who finally made it to more senior positions where they are
literally in a position to save lives with their greater experience but earn a
fair bit of money. It hits the top public servants: the veteran judges, the
experienced military commanders, the senior civil servants, basically the kind
of people who keep government actually working despite the whims of successive
political administrations. It hits the lucky entrepreneurs, the ones who made
it after maybe putting their lives on hold for years and investing their
savings to build a real business that creates value and maybe jobs for other
people. All of these people are the kind of people we really need in society
to keep everything working, and usually they are people who have reached those
positions not through good fortune or family connections but through a lot of
hard work over a long period of time.

However, the people these punitive taxes _don 't_ hit are the ones that the
popular moneylust craves, because the super-rich are the people who have the
flexibility to move their assets and/or themselves around to avoid high-tax
environments. Absent serious international co-operation to overcome the
naturally competitive tax environment that today's globalised society creates,
these people will continue to be super-rich no matter what.

I like to think that if the people supporting these high rates of tax for
those with some above average level of wealth realised who they were really
targeting, we'd have a different attitude to taxation today. As it is, I fear
the politics of envy will continue to trump rational economic policy for the
foreseeable future, and unfortunately the people who actually did _earn_ their
wealth will be the ones who suffer most for it.

~~~
jedrek
> This is a big problem with current envy-driven politics surrounding wealth.

It seems like most of the envy is more perceived by the ultra-rich (or
wannabes) than actually exists...

> I like to think that if the people supporting these high rates of tax for
> those with some above average level of wealth realised who they were really
> targeting, we'd have a different attitude to taxation today.

You realize the 75% tax rate is on year income exceeding one million euro,
right? One million euro is 34x the average salary in France, which means that
anybody hit by that tax makes more money in less than two years than the
majority of their countrymen will earn _in their entire lives_.

I make way more than an average salary where I live and I don't really have
any problem paying higher tax rates. Sure, I work harder than lots of people
who work 9-5 jobs, but I don't work any harder than friends I have who work
two jobs. There is no question, in my mind, that people who work harder and
take risks should reap greater potential rewards... the real question we need
to answer is how much higher those rewards should be.

It's time to stop pretending that the doctor who spent years training, working
as an intern, etc did it in a vacuum. It was tax francs that built the
hospitals, that created the institutions that taught them and made them the
best of the best. The entrepreneur sells a product shipped on roads built with
taxes, over an electric grid built with taxes and might very well bill people
using letters sent by mail... well, you get the idea. Not to mention the
employees they hire, who were educated with what? Was it taxes? You betcha.

Besides with progressive taxes, that doctor will always make more, because
progressive taxes do not penalize you for earning more. If you're making
100,000€, your after-tax income is ~62,500; if you're making 200,000€, it's
~133,000€.

> usually they are people who have reached those positions not through good
> fortune or family connections but through a lot of hard work over a long
> period of time.

You're a little delusional. France has a pretty high level of social mobility
because of it's high taxes, not in spite of them. Having access to free higher
education is a massive boon to lifting people out of poverty. France has the
second highest birth rate in the EU due do a generous social safety net. These
things cost money, but they're excellent long-term investments.

People don't exist in a vacuum, economies are wonderfully interconnected
things and acting like the people who take risks and succeed are some kind of
superheroes who shouldn't give back because of some deranged notion that they
"did it themselves" is myopic, dishonest and, to be frank, total bullshit.

~~~
Silhouette
_You realize the 75% tax rate is on year income exceeding one million euro,
right?_

Yes, though please note that I was commenting on a general trend of confusing
going after bankers with actually catching entrepreneurs, not on the French
situation specifically.

 _One million euro is 34x the average salary in France, which means that
anybody hit by that tax makes more money in less than two years than the
majority of their countrymen will earn in their entire lives._

By the time you allow for progressive taxation at lower levels, and for the
other taxes in the French system, the multiplier for how much money those
people are actually keeping is smaller than that. Of course it's still a wide
gap, but let's not pretend these people are rich enough to retire after two
years on that salary.

 _People don 't exist in a vacuum, economies are wonderfully interconnected
things and acting like the people who take risks and succeed are some kind of
superheroes who shouldn't give back because of some deranged notion that they
"did it themselves" is myopic, dishonest and, to be frank, total bullshit._

I have little interest in debating in detail with someone whose argument boils
down to swearing at me and calling me delusional, but please consider this:
taking the argument you seem to be making to its logical conclusion, why
shouldn't everyone pay 100% taxes and have the state pay for everything,
because we're all part of the same system?

~~~
jedrek
<i>Of course it's still a wide gap, but let's not pretend these people are
rich enough to retire after two years on that salary.</i>

Of course they're not retiring - someone earning enough to hit that 75% tax
rate isn't living like your average mope. Give them five years, though, and
they could easily put that money into blue chips, bonds and other low risk
investments and support a middle class family with interest.

And while I do see the difference between entrepreneurs and those who live off
the margins of financial transactions, I'm not really sure why they should be
treated all that differently as far as tax law goes. Kids grow up wanting to
be royalty, by college the fantasy is still there, now they're just Business
Superheroes, because that's how we treat the rich.

Entrepreneurs aren't magic. We're people who've decided that we either don't
like working for a boss or who've looked at the numbers and said, "hey, I
think I can make more working on my own than for someone." Should we be in awe
of someone who "worked hard" for a few years to get paid a couple million
dollars to have a competitor shut their product down? Or amazed by a company
who has managed to sell their stockholders on the idea that it doesn't need to
be profitable, allowing them to destroy (or disrupt, in SV terms) traditional
markets, where others can't compete, because their shareholders actually
demand they turn a profit.

Now, are you telling me these Superheroes of Business will look at a
progressive tax rate and say, "you know what, if I thought I could make $3
million after 3 years of hard work, I would do it... but since it'll only be
$2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because
that's the logical conclusion of what you're saying.

<i>why shouldn't everyone pay 100% taxes and have the state pay for
everything</i>

Probably because that's not the logical conclusion of the reality I've
described, although a lot of American businessmen do think the opposite should
be true: all services should be privatized, yada, yada. That's crap, there
tons of services that require long term, massive investments that will get
shitty ROIs but benefit society and the economy as a whole.

We all know that, we all think people should be rich, I just don't think that
income tax has the kind of dampening effect on entrepreneurship people claim
it does. I for one would rather pay 50% on my 1.5mil than 25% on 150k, should
it come to that.

~~~
Silhouette
_Now, are you telling me these Superheroes of Business will look at a
progressive tax rate and say, "you know what, if I thought I could make $3
million after 3 years of hard work, I would do it... but since it'll only be
$2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because
that's the logical conclusion of what you're saying._

No, I'm telling you that people who are capable of and considering starting a
business, several years earlier in their career than the kind of relatively
uncommon success story you're talking about where millions of dollars are
flying around, are going to look at a progressive tax rate where a high
proportion of their earnings if they are really successful are going to get
stolen away by the state in taxes and they're going to think twice. Some of
them are then going to decide it's not worth it and just stick with being
someone's probably relatively well-compensated employee, which is bad for
their national economy because usually small businesses drive a substantial
proportion of growth. Others are going to move to a more supportive
environment and start their business there instead, which is bad for the
original economy, though good for the new one.

You're selling lottery tickets where there is no jackpot, and people who
understand maths aren't going to play that game. Most people who are capable
of starting a successful business (and anyone who professionally invests in
young businesses) understand maths.

 _I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come
to that._

OK, but what about 75% of your 1.5mil? What about 90%, a rate we actually had
in the UK for much of the 1950s and 1960s? Or how about 98% on your investment
income, again a rate we really had for a while? Still want to invest in a 20%
share of a new business that might make a few million in this country, or
would you rather invest in a SV start-up, or in energy and natural resource
production in a developing economy, or any of the other vastly more profitable
opportunities that would then be available to you?

At some point, the numbers become prohibitive. The interesting question is
when that happens, not whether it does.

------
kybernetyk
> Taxes, Frustration, More Taxes

Uh, that's how I could describe my current situation in Germany. We were a
little too successful last year and now the tax advance payments are
endangering our liquidity.

It feels as if this year I had spent more time reading about taxes and
regulations than working on the business.

Something is wrong when taxes become such a prominent part of your daily
business life ...

~~~
marvin
In Norway, you have to pay net worth tax of 1% of your assets in excess of
~$200,000. So if you own 2 million of stock in an unlisted company, you are on
the hook for $20,000 in additional taxes every year. Most successful
entrepeneurs here have to sell stock every year just to pay their tax bill.

Company profits tax of 27%, capital gains tax of 28% and personal income tax
of ~35% ensures that you even in the best case get to keep <50% of the profits
your company makes, even before the annual net worth tax comes into play. Some
successful businessmen in cyclic businesses here have emigrated purely because
paying the full tax every year would deplete their companies' rainy day
buffers.

(We also have a 25% VAT on all consumer purchases, including "compulsory"
products purchased from the state such as the national broadcasting license or
local government residential parking permits).

And still you read in the newspaper every other week of someone wanting to
create the "new Silicon Valley" in some Norwegian city. It's delusional; the
incentives are completely wrong.

------
pi-err
I just left London for Paris based on:

\- cost/quality of life favorable to Paris by a large margin

\- France is 2nd biggest consumer market in Europe, giant opportunities still
open there (like Germany)

\- a gifted talent scene, among which many are short on capital/language to
work elsewhere in Europe

\- google campus is 2.5h away door to door

\- buzzing US community here

\- world hub for fashion and 3d

Yes, there are more of this in London: \- capital (London is a fiscal
paradise)

\- big startups

\- middlemen (all things admin to outsource)

\- flexible offices (this is changing fast though)

\- English speakers

This article (and main character) feels like a giant whine/rant.

If you want a quick buck, London's great- though expect everyone to be working
on a booking.com-like something or "Airbnb for x".

As for the next 2 decades, I bet that Paris and Berlin will take off just as
smoothly.

~~~
nraynaud
Here is my advice: go somewhere else than Paris, one of the 15 biggest cities
in France (look at the TGV, and tram, bike life, weather). Your quality of
life will just skyrocket.

------
djur
I don't see any actual evidence cited that entrepreneurs or "creatives" in
particular are fleeing France. They might make up a larger percentage of the
diaspora, but that's generally true of expatriates from any country.

France has about the same percentage of citizens living abroad as the US, and
about a quarter as many as the UK:

France: total population ~63m, living abroad ~2m, about 2.5% US: total
population ~317m, living abroad ~6m, about 1.9% UK: total population ~63m,
living abroad ~6-12m, about 9.5% or more

------
digitalengineer
> “Generally, if you are self-made man and earn money, you are looked at with
> suspicion,”

> there’s a deep-rooted feeling that you don’t show that you make money

> It’s more like, if someone has something I can’t have, I’d rather deprive
> this person from having it than trying to work hard to get it myself

This. A lot of people still don't understand money can me _made_. They see
succesfull men and woman and assume the money must have been _stolen_ instead
of made.

~~~
existencebox
I don't mean to play devils advocate here, but let me apply two other possible
interpretations: My statistical prior that someone with money did questionable
things to obtain it has only been rising with time as I see increasing
evidence of illicit business practices among the highest earners. (everything
from insider trading to the more recent wage fixing).

Secondly, is it reasonable to assume that one might find distaste for people
with money who flaunt it? And that this might cause one to share that distaste
for others with money, even if they don't flaunt to such a degree? I realize
the latter half is a generalization that can cause problems, I'm just trying
to state a rather "human" response. If it is constantly shoved in your face
that certain people drive cars worth enough that it could bring your family
out of debt for life, you may grow bitter at this.

I believe money can be made, I just also believe there are a lot of "bad
actors" in the system, for whom it is "stolen" to some degree, and it only
seems to be becoming more common.

~~~
crusso
_increasing evidence of illicit business practices among the highest earners_

Corruption is the core problem. I think that worry about corrupt businesses is
misplaced when a corrupt government is 10x worse.

 _everything from insider trading_

There's a good example right there. Congress can inside trade. It's absolutely
extraordinarily corrupt. They wrote a law a while back to prevent it when
there was some press on it, but then quietly scaled back the restriction.

Consider this: Political office holders can lie to us outrageously and never
face repercussions besides (perhaps) not being re-elected in a future cycle.
You could list case after case of politicians who knowingly made definitive,
verifiably false claims that have caused real damages to people. If they were
officers of a public company, they would be sued into oblivion. They would be
hounded by the Justice Department. But since they're in the political club,
they've written the rules so that they can't be held accountable.

~~~
markvdb
<quote>I think that worry about corrupt businesses is misplaced when a corrupt
government is 10x worse.</quote>

Worrying about private sector corruption misplaced? One shouldn't have to
tolerate _any_ kind of corruption.

~~~
crusso
Don't disagree, but in terms of priority on how we're going to fix the
world...

------
7Figures2Commas
> "Sometimes I do ask myself if I'm making the right choice," he acknowledged.
> "But if you don't take risks, there will be no reward."

This is true, but one of the most important things I learned in my 20s was
knowing _when_ to take risks. It takes money to make money, and if you're a
starving founder waiting for an investor to cut you a check or trying to
bootstrap your business with insufficient savings, you increase your risk of
failure substantially.

Patience is a virtue, as is focused and consistent saving, but in a lot of
professions, like finance and technology, you won't have to work until you're
60 to build up meaningful savings that you can invest in yourself. If you've
trapped yourself in the startup bubble, it's easy to convince yourself that
your best opportunities are behind you by the time you hit 30, but the reality
is that most businesses are not founded by 20-somethings. The Kauffman
Foundation did a study called The Anatomy of an Entrepreneur a few years back
and found the average entrepreneur was about 40 years old when he started his
first company.

Beyond being in a position to capitalize your own venture, one of the great
advantages of starting a business in your 30s, 40s or later is that you're far
more likely to have the domain expertise so many young founders lack. There
are literally countless untapped, unsexy million-dollar opportunities that
20-somethings running around Silicon Valley will never pursue because they
don't even know that certain industries and problems exist.

------
asselinpaul
I found this article interesting. Being french and living in London, I
certainly witnessed the influx of french immigrants.

------
coulix
Being from the France tech scene and now living in SF ther are several things
we should not forget.

CONS

\- Yes you get big taxes, and setting up a company is a pain (RSI/URSSAF),
administration is slow and inefficient.

Finding fundings can be hard and investements are generaly smaller than in the
US.

French market is smal unless your target is international from day 1.

But,

PROS

\- You have a pool of not so pricy talented workers (Well supposing you
benefit from “Credit impot recherche” otherwise the total cost of an employee
is x2 his salary).

\- Fight for some government subsidies (time consuming).

\- Leverage the government to pay your salary while bootstrapping. For
startupers with previous work experience, you can quit your company in good
terms and receive unemployement paychecks for a year or so.

------
jotm
Heh, you know how developing countries "solve" the bureaucracy problem?
Through corruption! A few hundred [local_currency] here and there and you've
got your business started in no time.

If things don't improve soon, France (and other countries) will have to resort
to the same thing - and it's a bad thing since it's hard to come back from
that, when everyone gets their share independently and no one follows the
rules anymore.

~~~
dualogy
> Heh, you know how developing countries "solve" the bureaucracy problem?
> Through corruption!

True and this "grease lubricating the economic engine" does "work" on a small
scale. Problem in an environment where pervasive corruption trumps over "rule
of law" for the small honest budding startup up-start -- there's always be
someone bigger with better connections and deeper pockets willing to outbid
you when it comes to securing local market dominance which will more than pay
off their elbowing-you-out ;)

Still, you have a point. A western-style rule-of-law environment is generally
better for business and worth paying some amount of taxes -- within reason.
But there comes a point where the tax and regulation codes do overwhelm small
agile but resource-limited up-starts. (Of course there's still many success
stories, but they have perhaps much to do with pressing forward relentlessly
at the slight risk of perhaps missing one minor regulation or other tax facet
and simply inadvertently gambling on the very tiny off-chance of doing so
actually blowing them up.)

Then if you do decide "taxes and regulations are really kind of too expensive
but still just-about worth it for _just and fair_ legal protection", you'll be
well advised to keep telling yourself that fairytale where your taxes are
directly funding a functioning well-balanced governance system, rather than
being simply a metric used _NOT_ even to pay interest on the governments past
and present outsized debt excesses --which would be crazy enough, but nowadays
your average western "non-corrupt" government will borrow even for interest
payments-- _BUT_ simply for said government to reach some kind of good agency
rating as a "quality" borrower.

~~~
JoeAltmaier
Yeah I don't think its taxes that suppress corruption in America. Its the
tendency of ordinary people to blow the whistle on bribe-seekers. As such, its
cultural, and making laws won't change that quickly.

------
conradfr
> French entrepreneurs have been fleeing to other countries, especially
> England, which some 350,000 now call home.

It's been estimated that between 70 000 and 300 000 French live in the U.K so
I really doubt that 350 000 entrepreneurs live in England (granted the article
also use the more wide "French nationals", but still).

------
ThomPete
Ahh European entrepreneurship.

The US has it's issues, but Europe is simply decades behind.

The irony of all this is that the EU has very successfully created an internal
market allowing for easier trade between countries in the EU, but it's ability
to foster new comanies is still hindered by it's old industry understanding of
a new industry.

 _" Les misérables

Europe not only has a euro crisis, it also has a growth crisis. That is
because of its chronic failure to encourage ambitious entrepreneurs..."_

[http://www.economist.com/node/21559618](http://www.economist.com/node/21559618)

------
analog31
It would be interesting to know how _personal_ taxes work in European
countries. I remember conversing with somebody, maybe from England, who told
me that the typical worker doesn't file any paperwork for their annual taxes,
unless they're doing something unusual. If that's the case, then filing
business taxes for the first time would come as somewhat of a shock. In
contrast, my personal tax return here in the US is about 10x more complex than
my business tax paperwork (Schedule C plus a state sales tax return).

------
yodsanklai
Classic NYT with a stereotypical and ideological article.

Concerning expatriation, I think many people want to live abroad just to
experience a different lifestyle. It's not always about taxes.

~~~
gutnor
That's it. That is way cooler for a French to go in London than Paris.
Especially, if it does not work out for him he will just come back with a
solid resume that will get him a comfortable position easily.

Like he decided to live in Kengsinton. Sure he share, like most singles in
London, but he tries to live the life and was not too successful (yet,
hopefully for him).

------
louthy
Paywall.

~~~
wikiburner
Incognito.

~~~
louthy
Thanks :)

