Hacker News new | comments | show | ask | jobs | submit login
Obama's job aid plan - $10,000 to $13,000 in assistance for entrepreneurship (time.com)
172 points by GBond 1908 days ago | hide | past | web | 167 comments | favorite



Whoa, the article is ageist, and proud of it.

Though this program is geared toward people of all ages, young people are the best suited to maximize its advantages. Older generations tend to have families and other financial obligations, making it more difficult for them to transition into the roles of entrepreneurs.

I am married with a young child, and my salary covers all of my family's expenses, so my husband doesn't have the pressure to get cashflow-positive out of the gate. Contrast that with my younger, single self, when I burned through the start-up capital in a matter of months and had to take consulting gigs just to stay afloat on office expenses.

Young people can more easily adapt to less expensive lifestyles.

Young people care a lot more about what others think, the very foundation of "expensive lifestyles".

Further, young people have access to a wide range of resources, such as Income Based Repayment (IBR), SCORE, Startup America, [...]

IBR is a student loan repayment program, nothing to do with entrepreneurship. SCORE is open to all small businesses (and a waste of time, in my experience). Startup America targets young companies, not young people. And so on...


> Young people care a lot more about what others think, the very foundation of "expensive lifestyles".

Speaking of ageist ...


Young people tend to be single, which means they have a lot more at stake in terms of public image than married people do.


I read those statements as demographic, not judgemental. A median 40-something does indeed tend to have a family, more financial obligations, a more expensive lifestyle, etc... Those are just presented as facts, and while I don't have the statistics handy they jive pretty well with my 39-year-old intuition.

Nothing is saying entrepreneurship is impossible for the middle-aged, just that it's harder.


While I agree that the statements are not judgemental, I disagree that they are not so merely because they are presented as facts. It's entirely possible to present facts in a light that makes them ageist (or X-ist, for some value of X).


Isn't it okay to make general statements? I mean, if you grabbed 100 random 20 year olds and 100 random 40 year olds, wouldn't the 40 year old folks have more financial obligations?

Certainly you can find counter-examples-- older folks who are financially secure and young people with bad attitudes or bad burn rates... But I don't think if you say, "Tall people are better at dunking basketballs" that you're really being unfair to all of the shorter people who are great at dunking, are you?


1. I run a business. Therefore I make jobs. Or don't.

2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me. The employer. It isn't government largesse that funds unemployment claims. It's me.

3. Will this program be yet another potential cost to me? Hard to tell from the PR and press-gab. We'll have to see the law and how it is implemented. Devil in the details, etc.

4. My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors.

5. By the way. I pay 100% of the medical costs for all my employees.


Hi Phil, I've been following your blog about US taxes, but didn't know you post at HN. Small world.

I also have my doubts about this program. Employers are humans, and humans never associate "quality" with "discount".

Right now, the people who are unemployed face the real risk of exiting the economy altogether, along with their knowhow, and this will cost the economy as a whole in the long term.

Meanwhile, businesses are not going to hire if the consumers aren't there.

The problem with trying to restart the economy with government stimulus is that people are maxed out on their debt. The debt is acting like a sponge, sucking out any additional money that come from the government. The NPR Planet Money talked about how Japan's economy entered its longest growth period post the crash when the PM forced the banks to clean up its bad loans and recapitalize. Subsequently, government stimulus started to take effect. The government has been reluctant to do this, and it will cost the US in terms of its economic dominance as competing countries race ahead on its capital.

I believe any government money is better spent not trying to put people back in employment through incentives, but instead keep these people "engaged" in the economy. Be it through reimbursement of expenses in attending job interviews - fuel is expensive when you are out of work; Making the pool of "consultants" and "contractors" that you allude to more visible.

The mainstay of jobs post crash is going to be a small pool of permanently employed plus casualized, short term contract work. The sooner the government recognizes this, the better.


This law will be written in a week by Whitehouse interns without any experience running a business or employing individuals. And it will be constructed to be applicable across vast swaths of the US economy, or else it would not be "stimulative". And this administration's previous attempts to meddle in business resulted in the largest VC loss in history, namely Solyndra.

What could possibly go wrong?


"2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me."

Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?


It works like this:

Every year you have to pay a percentage of your total payroll as a tax, called Unemployment Insurance. If someone is fired or laid off, its from this pool their unemployment checks are drawn.

The percentage each company pay is based off a table. On this table there's 2 rates listed for each business size (its tiered, bigger businesses pay more). Rates last year for my company were around 1.7% and 3.2%, IIRC.

So, if you fired >=1 person in that year, you have to pay the higher rate. If you fired nobody, you pay the lower rate.

Note: if you fired 1 or 10 people it doesn't matter - you're paying the higher rate.


You have to pay for unemployment insurance. The more people who make claims against you, the higher your insurance gets. You probably aren't going to get charged 100% of the employee's unemployment, but you get charged a goodly chunk.


That's exactly right. For unemployment insurance you pay a percentage of your payroll to the government. The percentage depends upon the number of claims your ex-employees have put on the pool of money in the unemployment insurance scheme. More claims means a higher percentage.

That makes the cost of a replacement employee higher because you're paying for the cost of prior employees' unemployment claims when you are making unemployment contributions for the new employee.


You act like this was an unknown cost of having employees.


Seriously? I'm surprised anyone is still hiring at all in the US! Sheesh, what a policy. "Hello independent contractors" -- I hear you.


The IRS is very picky about what constitutes an independent contractor. This has long been abused by companies trying to skirt employment law and avoid payroll taxes. They have a litmus test of sorts to determine whether someone is an employee or an independent contractor (tl;dr: if you treat them like an employee, they're an employee). And of course, there are significant penalties for getting this classification wrong.

For more details, go to the source: http://www.irs.gov/businesses/small/article/0,,id=99921,00.h...


My lawyer (a tax attorney) said this is rarely prosecuted on independent contractors who are themselves incorporated (along with things like actually have a contract etc). From my own experience this is true as well. Think about it, the IRS would have to give back all of the matching that the contractor (agent) did when they collect from the employer (principal).

Edit: talk to your own attorney though.


What a policy? What would you do with people who get fired? It's pretty rare to lose your job at one place and pick up a new one the same day. How are they going to finance their life until they find a new job?

In other countries where employee protections are better there is usually an actual written contract in place that says employment must continue up to two months after notice is given from either party.

And yes, that does make contractors more practical but that's good because it pushes contract rates up.


Federal Unemployment Tax (FUTA) page 29:

http://www.irs.gov/pub/irs-pdf/p15.pdf

If you are in the lower rate, i.e 0.6% of the first $7000 in wages, the FUTA tax is... a whopping $42


Any other devs (front end, back end and or mobile) here now on unemployment or are on and off Obama's payroll?

If so why?

1. Lack of experience 2. You did a start-up for long time & having trouble finding regular work (that's me). 3. Something else?

I hate being unemployed and feel working on my start-up for over four years alone in my garage has handicapped me professionally. Since the investment money ran out for my start-up, I have had two front-end dev jobs. Both positions were at local digital web agencies and both lasted under a year. Since getting laid off from the last job Ive had a hell of time getting my next job. I have 22 months of professional experience and 3 years of coding for my start-up.

I wonder if there are similar stories and experiences fellow members here faced? Also, what did you do to land your next coding job or what are you doing now?


> It's something I've long heard and failed to grok.

Where do you think that the money to pay unemployment comes from?


Sorry, it was the cognitive dissonance of being required to pay someone who was terminated for the purpose of not having to pay them.

I'd like to hire people for some long term work, but cumulative BS like this makes me not bother.


You just pass the cost on to your employee. Hire them for X/(1 + expected tax rate) instead of X.


If you fire an employee, why do you pay unemployment? I would understand if you laid them off, but firing?

Also, if you are paying for their unemployment, why is unemployment being deducted from their paycheck too?


The employee files for unemployment insurance regardless, lying and claiming they were laid off. You file a dispute, claiming they were terminated for cause. The unemployment office makes it quite clear that you will lose your dispute and should drop it. You refuse, because you have a good clear case where clearly this guy was fired for cause. You present your good clear case, and you lose anyway, and the person fired for cause still gets unemployment, and your unemployment insurance rates go up.

That's just how it works. It's not how it's written, and it's not how it's supposed to work, but it's how it works.


You are wrong. I won every case (~5) filed against me over ~3 years working at Tech Support. If you have proper documentation as to why you fired someone you do not have to pay unemployment insurance.


I'm flat out wrong? I see your anecodote and raise you a statistic: "In 2009, employers filed 405,153 appeals to deny benefits to former workers and 36% won, a figure that hasn't changed too much in recent years, according to the U.S. Department of Labor." Wall Street Journal "Feeling Blue about Pink Slip Taxes" http://online.wsj.com/article/SB1000142405270230396060457515...

36% won. So 2/3rds of the time (read: most of the time), employee wins.

By all means, still appeal. But odds are not fantastic. Plan on having to pay out some unemployment that you shouldn't have to. A written employee handbook and records showing when policies were violated will save you some money sometimes, but don't count on it. You can fire employees, for cause, and still see your insurance go up, even with an appeal.


Your (ridiculous) assessment doesn't mean that 64% of workers fired for cause end up getting unemployment. Far from it.

Like you said, these are appeals - not initial claims. That means they're cases in which the court has already reviewed the fairly clear-cut criteria for awarding benefits, determined that they are justified, and has proceed accordingly. Indeed, a court that reverses itself 36% of the time seems remarkably open to appeal by employers.

As far as the 64% of appeals that are rejected are concerned, it IS flat out wrong to say that these are all justified dismissals that they employer had to pay for anyway. After all, this figure also includes cases where employees quit for cause (e.g. flagrantly abusive work environments, failure to pay wages in full and on time, efforts to avoid paying unemployment claims by radically demoting or cutting hours instead of laying off, etc.), as well as cases in which the termination was wrongful, and likely to do lasting damage to the employee (e.g. by way of demonstrably slanderous performance reviews, for refusing to engage in abusive or deceptive practices on behalf of the employer, etc.)

You're also disregarding the way incentives function here. Since the employer is on the hook for damages - and the cost of an appeal is trivial - they have a strong incentive to fight, even in cases where they are monstrously in the wrong. Indeed, HR people will tell you that they automatically appealing everything, no matter what, as a matter of standard operating procedure. The idea is that by developing a reputation for reflexive fighting, they can use the notoriously slow pace of justice to delay payments for the better part of a year. Accordingly, people with limited savings who simply want to get the hell out of a truly unbearable situation can't count on unemployment insurance to finance their job search. Instead, they have to line up their next job before they quit their current one, rendering the question of unemployment moot.


I find it odd when people create such strange generalizations in their head. Whether this comment is from your own anecdotal experience or not, it is just plain wrong as a general matter. Defeating an unemployment appeal is certainly possible and not that difficult if you've done your due diligence during the process.


I don't think people are being careful about the terminology here. Firing could mean terminating employment because someone is no longer needed (what you are calling 'laid off') but it can also mean terminating employment because they broke some rules or laws (i.e. didn't show up for work, harrased co-workers, etc).

If you are fired "with cause" (i.e. you did something wrong) you aren't eligible for unemployment. If you quit you are not eligible for unemployment. Only if you are fired "without cause" are you eligible for unemployment payments.


If you quit you are not eligible for unemployment.

Let's be careful about this. It depends on the reason you quit. If you were being harassed and the company did nothing about it, or you had unsafe working conditions, etc, you can still collect.

It's better to say that if you quit for reasons that have nothing to do with the employer, you cannot collect unemployment.

I had a co-worker who quit because the raise he was promised (in writing) at hiring time never materialized. The company had to pay unemployment while he looked for work.


Good point. Thanks for the meta-clarification.


In most states it's quite difficult to prove that you fired for cause -- performance is quite subjective. Typically the employee needs to do something dramatic & harmful for you to deny unemployment.


It's pretty easy to document poor performance. Any McJob employer can swing it and their margins are almost certainly lower than anything involving knowledge workers.

I understand that no-one likes to do the business-overhead side of things in small businesses. But either the costs of paying (undue) unemployment aren't that big of a problem, or the employer has no-one to blame but themselves for not documenting cause.


There's a big difference between McJob and software development. If someone doesn't handle N customers, fails to show up on time, or has several documented customer relationship issues: it is clear cut. You have to give the employee several opportunities, etc.

If you have an equivalent recipe for a marginally performing software developer that doesn't cost more to implement than just paying the unemployment : I'd love to hear it.

Also consider team morale. Waiting for several phases of failure to "document" your case is a great way to lose your top performers and lose a customer. I think it's less expensive just to fire -- ideally /w severance in exchange for unemployment, if your state permits it.


> "There's a big difference between McJob and software development."

Yes and no. The basics are the same: you need to document responsibilities, goals and performance. Document performance that doesn't meet the goals. Document some sort of plan by which you try to help the underperforming employee meet their goals and then document their continuing performance.

Is it potentially cheaper to just pay a modest severance or unemployment insurance? Quite possibly.

But documenting performance is not voodoo and the fact that just paying a modest severance or unemployment is cheaper than documenting performance rather undercuts the assertion that unemployment costs are onerous.


Not to mention fairer on the employee.

Not everyone is a self-starter or "rockstar". Failing to document clear responsibilities and goals and then measure performance against those goals shortchanges you and them.

This may be an unpopular sentiment around HN circles, but just expecting every employee to "get it" and not having a consistent process to deal with underperformance (which can have many different and often addressable causes) is a crappy way to treat employees in my view.


"My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors."

From this country? That matters much more than whether they'd be contract or full-time.


Absolutely from the U. S. and A. All of them.


I like the spin on this. Sounds like something that could be very useful.

I must note, however, some phrases that set off my bullshit detector.

>SEA participants were 19 times more likely than eligible non-participants to be self-employed

Either I'm missing something or this says that people who are in a self-employed assistance plan are likely to be self-employed. Perhaps this is an editing error?

>In Oregon, nearly half of the successful SEA entrepreneurs have each created an average of 2.63 new jobs

Ok, but what kind of filter does "successful SEA entrepreneurs" imply? 1 in 100? 20%? Once again, the language is loose and circular.

Money is not an answer to everything. In fact, funding at high levels can be the worst thing ever to happen to a good team in a startup. At small levels, like this, it perhaps can make a big difference. Perhaps.

There is a great big giant humongous gap between something that sounds good in an editorial and something that actually does something useful. I'd want a lot more data on this before passing judgment one way or another.


There is a great big giant humongous gap between something that sounds good in an editorial and something that actually does something useful

I am reminded of "politician's logic" from Yes Minister.

1. Something must be done.

2. This is something.

3. Therefore, we must do this.


With regards to the "more likely … to be self-employed": I think the problem is that "eligible non-participants" is kind of vague. If we take it to mean "people who tried to start their own business without help from the program," it makes more sense — the people in the program managed to stick with it 19 times more often than people who had to fully bootstrap their business.


The ignorance displayed in the comments on that article is scary. It's quite obvious a lot of people have never been in the position to actually need this sort of aid before, so it's easy to knock everyone using it as "an illegal" or "lazy."

Of course people will abuse this, too, just like they abuse the unemployment insurance we have now. But to me, the net positives that come out of this will outweigh the (probably minor) fraud that will happen. Adding benchmarks (e.g., you have to legally register a business, you have to prove some sort of business activity to a case worker, and so on) will keep a lot of the fraud out, even if they're token requirements.


One word: Solyndra.

After they just wasted another $535M of taxpayer money in crony capitalist payments, why do you think it's "ignorance" to evince strong opposition to these kind of attempts at meddling in the economy?

VCs and angels fund selectively and with their own money. The govt funds politically and with other people's money. That selects for Chris Gronet and George Kaiser, not Mark Zuckerberg and Peter Thiel.


The comments on that article were infuriatingly stupid.

This one, probably most of all:

"Hilarious, what kind of "jobs" are all of these inexperienced young people going to create for themselves? Another Obama giveaway."

Obviously this guy doesn't have an account with Google or Facebook.


Yeah, what are they doing to do, start some company focused on providing good commenting systems on websites?

The fact that that comment appeared on a Disqus comment stream is icing on the cake.


I've long stopped reading comments on news sites specifically because they are obviously overrun by trolls. The problem is the trolls are winning as I can see by some comments I see on facebook by people who believe the bullshit.

But sites like this (http://literallyunbelievable.org/) also make me loose faith in humanity sometimes


Oh if only they were all just trolls, out to take the piss out of the entire Internet. Unfortunately, the majority of them aren't.


First, who said "an illegal" or "lazy"? Searching the page I only find your comment using those terms.

Second, "the system is already being abused so lets allow further abuse" isn't really a great argument.

(For the record I'm actually in favor of this I just don't think your tone is necessary and I think it discourages anyone who might disagree)


1. Read the comments on the actual article, not HN.

2. Unless you have another ingenious way to make unemployment money more efficient, I see it as a fairly decent argument.


Yeah sorry if that wasn't clear; I meant on the article's page on the original post, not here.

And I agree, it's a terrible argument for OR against the improvements. The abuse isn't so widespread that it should stop (what I conceive to be) a great way to improve it.


There is a comment from jmfay on there that talks about "illegals"...


To me the true significance, more so than this money, is the milestone of the federal gov't finally recognizing "entrepreneur" as a third category of employment status and not just the unemployed/employed binary.

Hopefully this leads to further help for folks starting a company (that will in-turn create more jobs when successful) like healthcare coverage.

EDIT: This will also help with mainstream cultural and social acceptance. Less weird looks when explaining to Joe Shmoe your employment situation!


It will also help massively to "massage" unemployment figures in a positive spin by reclassifying a million or two of them as "entrepreneurs". (And hey, the debt ceiling can be raised indefinitely so no problem re costs. We finally arrived in The Future: the perpetuum mobile exists.)


About time.

The policy of forcing a decision for laid off people between 1) sitting around doing nothing (i.e. "looking for a job") and being eligible for free money vs. 2) trying to start something which could have an an impact in not only getting that person back into a paying position but also on the economy as a whole (and thereby being ineligible for money) needed to end


> The policy of forcing a decision for laid off people between 1) sitting around doing nothing (i.e. "looking for a job") and being eligible for free money vs. 2) trying to start something

There was no such policy - there was no such "decision".

The standards for "looking for a job" are/were low enough that one could be trying to start something at the same time. (I know - that's what I did.)

While we like to talk about starting companies, ie we like startup porn, the vast majority of the long term unemployed won't start anything. More to the point, the folks who would are unaffected by this proposal, so there won't be any benefits received for the costs incurred.

How do I know this? The folks who would start do start and are doing so already. (Yes, I read the SEA stats.)


There is such a policy, at least in New York State. Any time spent on "self-employment" activities reduces the amount of unemployment insurance money you receive.


all activities, or activities with associated revenue streams?


There are precedents for it being all activities. Particularly anything you're doing that would be in line with your usual profession, whether you're getting paid for it or not.

The rules vary by state, though.


So a laid off programmer could be penalized for working on an open source project to keep their skills current? Incredibly idiotic if true, but it wouldn't be the first time we've created screwed up incentives for the lower end of the income scale. I'm becoming more and more convinced that we should replace most of the welfare bureaucracy with a negative income tax.


Potentially, yes. In the case law I remember, exceptions were explicitly carved out for "hobbies", so if you can show that it's something you usually do as a hobby and that it's not interfering with your job search, you can probably avoid penalties, but I could see it being a major pain in the ass.

In reality, enforcement of UI regulations is somewhat spotty, and at least in California, a tech worker who's only on it for 2-3 months is unlikely to have any trouble. The risk isn't nonexistent, though.


In essence, the president’s plan will create a guaranteed source of startup capital...

Is that necessarily a good thing? I was under the impression the whole "trial-by-fire" of a business plan looking for funding was a valuable testing grounds for the business-to-be.


Well you still get to do that when your $10,000 runs out.


At which point you've already wasted $10,000 of someone else's money.

There's also the good ol' sunk cost fallacy. The longer you've spent working on your dumb business plan, the less likely you are to change it to a smart business plan.


Then, if you become successful, you can be labeled as one of the hated rich and they'll put you out of business with crushing regulation and taxes.

Excellent.


"Crushing regulation and taxes" generally hits small businesses hardest.


According to descriptions of what "rich" seems to mean to most, small businesses are the largest part of that heavily disliked group.

In the recent English riots the prevailing thought seemed to be that simply owning a business meant you were rich.


It's hard to imagine this being the case. When I think of "has way too much money" I think of big corporate fat cats. Never small business owners. I don't know anyone personally who sees small business as hated rich either.

Perhaps this is some kind of cultural thing in the UK?


genius. who needs voluntary transactions live venture capital or angels, what have they ever done? instead lets take money from everyone (if they don't like it we can lock them in a cage) and then give it to others who we decide are worthy.


I don't know why people downvote this. There are two problems when you have a democratic system of government (the US is no longer really a republic IMO):

1. Special interest groups 2. Involuntary taxation

The two combined make for some quite uncomfortable moral hazards. If you pay taxes in the US, you are paying for continued aggression. Or education you'd rather provide yourself. Or any number of things that you don't agree with. For every citizen, there are just a few government services they use over and above the common services everyone else uses as well (not listing them, numerous).

The majority of money that the government collects from the citizen is not spent on the citizen themselves.

"Sure", you say, "It's to help the poor!". As Milton Friedman said: if government could solve the problem of poverty, then why are there still poor people?

In my locality, there are instances of local governments spending $60K per poor family of four annually. Only $20K actually got to the family. The rest becomes overhead.

I think it's quite valid to say that the government should not be involving themselves in commerce in this manner because then they become indispensable. Not because they are useful, but because then they fund a set of uneconomical businesses that no one else would invest in.

TL;DR: don't downvote because you don't agree.


I downvoted it because it was a horribly written political cheapshot. I don't necessarily disagree with the sentiment but the quality of the post was terrible. Politics doesn't really belong on HN anyway so if you are going to inject it into a discussion it has to be intelligent (ignoring my snarky response to him that will likely garner downvotes as well).


Obama's aid plan etc etc -> not politics?

I agree, keep politics off HN.


Other option for people who don't like it: leave the country.

You wouldn't know it listening to most people complaining but unemployment insurance was not something implemented in 2008, it goes back to the 1930s. That should have been plenty of warning for you to find a place with a tax rate and entitlement system to your liking. Sorry, there aren't a lot of options in the 1st world without taxes and entitlments, but that must just be a coincidence.


I'm conflicted on the idea of leaving the country as a solution. Its not enough to simply live and work in another country -- you're still liable for taxes. You have to fully expatriate and renounce your citizenship. This is often very difficult and time-consuming to do, and near-impossible if you're not in a skilled line of work.


I'm still a Canadian citizen, but because I don't live in Canada, don't have assets in Canada, and don't earn income in Canada, I don't pay taxes in Canada.

As far as I know, being taxed on worldwide income is just an American thing.


It is just an American thing. And it's a great example of why "if you don't like it, leave it" is bullshit particularly when spoken in the context of American politics.


If you don't like it, leave it and then renounce your citizenship.


Clearly you have not been paying attention.


Even if you do, your total assets are taxed. If you're rich enough, you'll lose ~35% of what you have if you decide to expatriate.


Ah, I was using the term incorrectly. I meant that one must renounce their citizenship in their birth country to be completely free of taxation. Expatriation can be hard. Renouncing birth citizenship extremely difficult if not impossible in some situations (catch-22s, etc)


For US citizens, to renounce you need to prove that you've paid all income taxes over the previous 5 years, pay an excise taxes on all assets being taken out of the country (which I think is %1-2%) and -- here's the kicker-- get permission of the federal government to be allowed to renounce your citizenship. If they think your earning power is significant enough, they can deny you by claiming your "renouncing to avoid taxes".

However, if you live outside the USA full time, I believe that the personal exemption on income is around $80,000. So even if you're making millions, if you pay yourself $80k or less, you can avoid income taxes in the US on your worldwide income.

Thus, holding stock in a startup that is appreciating avoids taxation, however, if you ever sell that stock, then you'd be realizing the gain and run into the issue.

PS - of course you're right that some countries simply won't allow you to renounce, and that might even end up being the case for some US citizens. I'm just giving the information I've been able to gather on this topic, not really disagreeing with you.


Singapore? Hong Kong?

Your underlying assumption is that the US can increase taxes and regulations indefinitely without consequence. But capital and talent are more mobile than ever before.

Record numbers have been renouncing citizenship in recent years (Google it). Most likely when the current flow of expatriation becomes a flood, though, there will suddenly be restrictions imposed on exit: an asset tax, a waiting period, anything to stop the talented from leaving. We've seen this movie before in East Germany, 1961. Remains to be seen whether the US government will do more than expropriate 50% of your assets (2008's exit tax) to deter you from leaving.


Your facts are a misrepresentation. There have been many american expats for a long time. We usually keep our citizenship because there was no need to give it up. Having to file taxes to the US every year is annoying but not enough to renounce citizenship over.

Lately, however, the US has been getting more and more intrusive in my foreign life. Why do I owe any taxes on money I earn in a foreign land? I'm not using any US resources (don't give me any nonsense about navy seals coming to my rescue if I get kidnapped), I'm not working there, I have no property there, nothing.

Now they want to know how much money is in my bank account! I have a hard time finding banks that will do business with me because I happen to be in a "tax haven" country so doing business with americans means you have to have infra to send information about my banking activity back to the US. The cost of rejecting a handful of american customers is minuscule compared to the cost of setting up such infra.

I don't want to give up my citizenship but I'm not putting up with this mafia-style protection racket anymore.


Why do banks in other countries have to obey US disclosure laws at all? If US authorities make demands of them, why can't they just say no?


Well, the country could just say no but once the country has said yes (probably after some very one-sided negotiation) the bank no longer has a choice. That is the case here: have American customers? Then you have to comply with the US rules.

The US is making a lot of trouble in banking. For example, if two non-US parties trade some US-based stock, then the whole thing has to be reported to the US specially independent from the normal reporting they have to do. I wish the US were a small enough player that everyone could just ignore this kind of nonsense but that's not the case at the moment.


More people are abandoning US citizenship because a rule change in 2008 has made it simpler, cheaper, and less restrictive to do so: http://economix.blogs.nytimes.com/2011/06/16/more-americans-...


It's by no means cheaper. It used to be free to leave. Now they expropriate 50% of your net worth.

Massive shift in US policy. Used to be hard to enter the US. When they make it hard to leave, that is a terrible sign.

Legal Background:

www.mwe.com/index.cfm/fuseaction/publications.nldetail/object_id/3892307d-1b8e-4636-ba2b-f58609256689.cfm

Color commentary:

www.davidtanzer.com/david_tanzer_articles.asp?article=exit+tax+in+america

"The Exit Tax works as though you have died. It’s calculated similarly to the Federal Estate Tax. It requires American taxpayers to identify all assets and debts to determine their net worth, and then to compute a theoretical gain or loss on all assets. The Exit Tax applies to anyone with a net worth of more than $2 million. It also applies to a taxpayer whose average U.S. income tax liability for the past five years is above approximately $124,000. Net worth is without inflation adjustment, which means increasingly more individuals will fall victim. It treats all property as being sold, and all deferred income retirement accounts as being distributed. There is an exclusion of $600,000 for any unrealized gain or deferred income. Then a 30% withholding tax is automatically withheld before deferred income accounts are distributed."


Ah, yes, the 'HEROES' act. (Hard to vote against something with an acronym like that, huh?)

That's the one that might bankrupt me if either I or the federal government ever decides I'm no longer a permanent resident -- because the taxes on the value of all that illiquid (but highly-valued, on paper) startup stock, marked-to-market, would be more than my liquid assets.

And my wife wonders why I get nervous when crossing the border.


Er....no. It was not free before; section 877 of the Internal Revenue Code was amended in 2004, and even before that reflected the assumption that any expatriation from the US was for purposes of tax avoidance. All US income for 10 years after expatriation was subject to US income tax for 10 years, and if you spent more than 30 days of any given year within the US, you were treated as a resident and liable for full US taxes on all income worldwide. Now you can spend up to 120 days in the US per annum after expatriating.

http://www.irs.gov/businesses/small/international/article/0,... has detailed explanation of the different tax regimes since 2008, from 2004-2008, and prior to 2004.

They don't take 50% of your net worth; they take progressive amounts on assets above the inflation-indexed $600k exemption up to a top rate of 35% (same as the estate tax). The 50% thing is a special case for future deferred income from a US asset; you pay 30% up front and 30% on distribution, which comes out at 51%. The idea here is that you should pay more because you are trying to have your cake (live outside the US and not pay US income tax) and eat it too (enjoy the fruits of the US economy and enforce any future income claims in a US court if required). If you really don't want that, then you can sell the asset, giving up any deferred income, and take the 30% hit.

I am not a tax lawyer, or any other kind of lawyer right now. Nor do I have a very strong opinion on whether this tax is good or bad; I'm just pointing out that there are factual errors in your statements above.


By your own admission you are not a tax lawyer. Perhaps this is why you are conflating two different things, income and assets.

  All US income for 10 years after expatriation was subject 
  to US income tax for 10 years
Yes, and that was bad enough, but what is new is this:

  they take progressive amounts on *assets* above the 
  inflation-indexed $600k exemption up to a top rate of 35% 
  (same as the estate tax). The 50% thing is a special case 
  for future deferred income from a US asset; you pay 30% up 
  front and 30% on distribution, which comes out at 51%
That is a tax on assets in addition to income. Assets. Meaning everything you've built up to this point, not just your continuing revenue streams while overseas. An asset tax for expatriation is a new development in American history.


Then maybe you should have made that clear in your original post, rather than claiming that expatriation was 'free,' as if there were no costs at all. If you read the IRS instructions a little more carefully (or peruse the more detailed treatment at http://www.irs.gov/publications/p519/ch04.html#en_US_publink...) you'll see that liquidation or exchange of any US assets, including property, were booked as gains prior to 2008.

For the majority of people (ie: not multi-millionaires) it has become easier and cheaper to take up citizenship elsewhere than it used to be. The worldwide taxation approach of the IRS is an anomaly, but a long-standing one rather than some recent innovation. You have yet to show that the increase in voluntary expatriation is correlated with high earnings, much less caused by them.


> You have yet to show that the increase in voluntary expatriation is correlated with high earnings, much less caused by them.

http://www.time.com/time/world/article/0,8599,1983238,00.htm...

  While a small number of Americans hand in their passports 
  each year for political reasons, the new surge in 
  permanent expatriations is mainly because of taxes.
http://www.nytimes.com/2010/04/26/us/26expat.html

  Amid mounting frustration over taxation and banking 
  problems, small but growing numbers of overseas Americans 
  are taking the weighty step of renouncing their  
  citizenship.
http://blogs.wsj.com/wealth/2011/06/13/are-taxes-causing-the...

  The IRS doesn’t tell us why people expatriate, or who they 
  are or where they go. Lawyers say most are wealthy 
  Americans who have expatriated to all manner of countries.

EDIT: Look, I'm as put off by deeply nested arguments as the next person. My empirical points are primarily two fold. One, the new exit tax is both substantial and yet also just the beginning. Two, many are seeing the writing on the wall and trying to get out while the tax is "only" 51% of assets.

Given the discussion in the United States about raising taxes on the successful* to balance the budget, do you really think this is an irrational decision on their part? Or that it is irrational to infer that this is part of their decision-making process, especially given copious media reports to this effect?


I agree about the nested arguments. We're going to disagree about the tax thing; I think your teleological argument takes no account of circumstances, but on the other hand I don't think the media saturation on fiscal questions does much to clarify the issues.


Hardly conclusive. From the same WSJ article: Other attorneys who specialize in helping the Americans expatriate say the reason is that the IRS is cracking down on overseas bank accounts and offshore income. There is a population of U.S. citizens who live overseas and may never have paid U.S. taxes on their non-U.S. earnings and non-U.S. accounts. Now that the IRS is enforcing the rules, with criminal penalties for scofflaws, the overseas residents would prefer to expatriate rather than pay. ...and a great many of the comments (by people who have actually left, as opposed to people venting their spleen) say the paperwork is more onerous than the taxes.

The Time article contains several factual errors, such as ignoring the fact that most countries have tax treaties with the US which prevent double taxation, and stating that the allowable visiting period for US expatriates is 90 days rather than 120 (which is 90 more than what it used to be- perhaps sloppy copyediting is to blame). The NYT article quotes one person who has been abroad 20 years and renounced citizenship after 10, which must logically have been back in 2000 or 2001. I fail to see how this provides any insight into current behavior. It strikes me as somewhat telling that both stories use the example of people living in Switzerland, a country famous for banking privacy, and somewhat infamous for acting as a tax shelter. I'm not sure that typifies the expatriate experience at all.

Not that I don't think taxes are an entirely irrelevant factor, mind. This paper offers a rather more plausible explanation, albeit a dry one: that low-tax entrepots with high standards of living risk becoming unaffordable for US residents unless consumption taxes can be offset against income, and recommending repeal of taxing on citizenship rather than residency (which I support, incidentally). http://www.aca.ch/joomla/images/pdfs/taxnotes.pdf


>There is a population of U.S. citizens who live overseas and may never have paid U.S. taxes on their non-U.S. earnings and non-U.S. accounts.

This really pisses me off. If I don't live in the US why on earth would I pay taxes on my non-US earnings? No other first world country expects this and no country has a right to it. Am I slave who's very soul belongs to the US government?

>Now that the IRS is enforcing the rules, with criminal penalties for scofflaws

Scofflaws? If I ignore laws of countries I don't live in I'm a scofflaw?


Instead of downvoting me, I suggest you take your complaint up with the writer of the Wall Street Journal article. I quoted that extract to demonstrate that there were contradictory points of view about the reason for the recent uptick in renunciation of US citizenship besides the one offered in the grandparent post.

As for why US citizens living abroad pay US income taxes, that has been around since the time of the civil war, when a temporary income tax was imposed for reasons that I hope are obvious. It seems to have escaped your attention that I said I don't support it, and even linked to a paper in a tax law journal arguing that it makes poor economic sense. On this topic, you should take your complaint up with the US government.


I think "like it or leave it" isn't really a useful response, and it takes the discussion into the realm of politics. I'm not going to debate the politics, but since I did "leave it", I thought it might be enlightening to share a bit of my experience. (Leaving the USA had nothing to do with unemployment insurance.)

It is not difficult to find first world situations that don't involve burdensome taxes or regulations. One strategy would be to domicile your business in a country that doesn't tax worldwide corporate income, only local income. Believe it or not, most countries meet this criteria. Banking in a second country and living in a third, where the latter doesn't tax your worldwide income (like the USA does, but again, the US is the exception rather than the rule) would result in you effectively living tax free. (A US citizen, owing for their worldwide income would have to pay taxes on the amount earned above the living-aboard exemption.)

Further, even if we decided that we wanted to bring our business back into the USA, the USA does not want us to be located here... because at some of our founders are not US citizens and the hassle and cost of importing a foreign entrepreneur to the USA is much higher than it is for many other competitive countries.[1] There are first world countries that, believe it or not, are welcoming to entrepreneurs who want to relocate there.

So, while I'm not going to go into specifics because if I did, the possible combinations are more than could be discussed here, I can say with first hand experience that there are many, many options for doing this.

[1] Just coming in for a short term stay was more ordeal than I like to put up with, and more than we've experienced with any other country.


I don't throw out the 'love it or leave it' for 99% of posts on almost all issues, but when a person equates taxation with theft, it's just a lost cause.

We can and should debate what to do with our tax money, but fundamentally the system always ends up in a state where some people are unhappy with some of the spending. There is no way to reconcile what those on the far right and far left want. We end up somewhere inbetween and that means at the end of the day some people are unsatisfied. Those people still need to pay taxes or the system falls apart.

For those people there are two solutions. Convince people to agree with you and change the policy, or leave the country. (Of course another option is to just whine about it.)


Your "love it or leave it" attitude towards taxation assumes that all individuals should for some reason resign themselves to the sovereignty of the Unites States Federal Government.

My chosen geographic location is not an admission of consent to be 'taxed' by men with guns.

Edit: Oh cool, looks like I stepped on somebodies toes, they went back and downvoted all my currently votable comments at once. So tell me Mr Revenge Voter. What here do you actually disagree with?


Thankfully that statement makes sense to such a small group of people even if all of you dropped out of society completely it wouldn't make one lick of difference politically or financially.

I'm not the downvoter of your comments, but I basically disagree with your entire sentiment.

Obviously, no one enjoys paying taxes. But guess what, everyone benefits from government services and you have a responsibility not only to the other people currently paying taxes that benefit you, but also to those generations that paid the taxes before us to make our country what it is today.

You will probably be thinking right now 'but I don't use many (any?) government services, I don't need the government to do this stuff'. Sure you can be home schooled, grow your own food, live off the electric grid, protect yourself with a gun etc etc etc etc. I don't care. That argument will never convince me. As a single guy with no kids making way more than the national salary and renting an apartment, guess what, I pay an enormous amount of taxes and get basically no deductions while using almost no government services. Too fucking bad for me.

At the end of the day, this country is what it is because of the massive amount of taxes paid by people over the last 235 years that has gone into settling the country, building the economy, and running our defense dept. It's my turn to pay the bill and while I'm not happy about it, I know I'd rather be paying the taxes I pay and living in this country than paying no taxes in an anarchist state.


I am not questioning that some percentage of money collected at gunpoint by the group of men who call themselves 'government' is put back into society.

I am questioning the so called sovereignty of those with the guns.

The distinction is fine, however important.


I downvoted you because, although I am sort of interested in potential government support for entrepreneurs, I have zero interest in reading an argument about whether countries have a right to tax their citizens. This is HN, not prisonplanet.com.


Well I hope you took the time to downvote this entire thread then.

What is a citizen anyway though?

Edit: I just looked up prisonplanet.com. Interesting how extreme left-wing positions (I am an anarchist) can be easily mistaken for extreme right-wing positions, such as those of Alex Jones.


You can bet that I downvoted the majority of it. (Although I upvoted your comment below about American exceptionalism regarding taxing the assets of expatriates, since afaik it's accurate and it's informative.)


That's because although the political spectrum is often described as a line, it's really a circle and the ends of the right and left meet.


The political spectrum is far more multidimensional than that.


No, your choice to participate in society by earning or spending money does however constitute consent to be taxed.

If you do not want to be taxed, don't participate in society.


"and that means at the end of the day some people are unsatisfied" -- exactly! And somehow you think this is awesome? It is, for the bureaucrats. They see the pendulum swing from left to right and back every other decade, collecting their ever-growing cuts along the way, primarily for wearing a special hat.


Taxation is only feasible because the authorities have guns and use them to jail tax resisters. And 100% taxation is quite literally slavery. Do you seriously disagree with either of those two points?

No one signed up for continual boiling of the frog. Many, many millions of people in this country oppose this kind of divisive policy. A poor statesman rams it down people's throats by brute force. The consequence is that when the other party gets hold of the apparatus of state, turnabout is fair play.

Is that really what you want?


Compared to all the thousands of ways in which the government tends to find to waste taxpayer money with near-zero chance of it helping anybody, I just can't seem to be so offended by this one.

If you hate the idea of taxation or stimulus, that's fine, you're certainly not alone, and I'd even agree with a lot of your arguments. But do you really think this is such a poor attempt at it, compared to the other things governments tend to try? As far as I can tell, this is aimed at allowing people that would have been on the dole anyways to spend their time doing something productive in an entrepreneurial capacity rather than sitting on their asses and deliberately not working so that they don't lose unemployment benefits.

Personally, I'd take even a half-baked attempt at spurring entrepreneurialism over monetary fiddling, another round of tax cuts for the rich, or a $50 check in the mail, any day of the week. At least this has a small chance of incentivizing innovation, which is known to help the economy in the long term, as opposed to most of the other options which mostly rely on wishful thinking...


Did you read the article?

The gyst of it is that if you are receiving unemployment insurance, you no longer forfeit it by starting work on a pre-revenue startup. Previously, you would have been "self employed" and lost access to your unemployment.

I'll further note that this bill, as far as I know, does not make venture capital illegal.


Outside of Silicon Valley (and a few other hot spots maybe) "voluntary transactions" aren't happening, so the government feels the need to step in.


Yes, govt feels the need to step in. The relevant question is whether said "step in" makes any sense.

If there really are such wonderful opportunities, why aren't you funding them?


I don't have enough cash on hand.


Interestingly enough, neither does the US government.


The government can borrow money at negative interest rates. People are literally paying the U.S. government to take their money. It may have a large budget deficit, but the government has no shortage of cash.


> The government can borrow money at negative interest rates.

The feds are borrowing at less than the rate of inflation, but they're not borrowing at negative rates.

Note that current interest rates don't accurately reflect the interest cost of borrowing because those loans will be rolled over a couple of times. Do you really think that the low interest rates will continue?

More to the point, said borrowing has to be repaid. If the expected/likely additional tax revenue from this program is less than the amount spent, it's a bad deal.


That's not true at all. SBA and SCORE offices help entrepreneurs all over the US get outside funding. Silicon Valley may have the largest numbers, but it doesn't mean the rest of the country isn't investing...


I think it is a salient point that one of the reasons these "voluntary transactions" are not happening in the rest of the country is because the government has already stepped in.

I would be an angel investor, if the SEC would let me. It is silly that I could blow $20k on a bad stock investment, but can't put it into a tiny startup.

The regulatory burden and the prohibition on "non accredited investors" quells a lot of support the entreprenurial community could use.

Interestingly, you sometimes read stories about immigrants who came to the USA, built small businesses, and then helped later immigrants with investments and loans... resulting in thriving communities (the korean grocer community in LA is an example I heard about.) They wouldn't have been able to do this if they had been following SEC rules!


One of the cool thing about this job bill is crowdfunding might be now legal. It could be cool to be allow to put under 100 bucks to fund a startup idea. You could spread that 20k around.


"The regulatory burden and the prohibition on "non accredited investors" quells a lot of support the entreprenurial community could use."

So, "friends and family" start-up money is illegal? When did that happen?


I didn't say they were illegal, I said there was a regulatory burden and prohibition:

"If, however, not all of the investors are accredited, founders will need to provide a lot more disclosure to the investors, including a full-blown private placement memorandum, risk factors and financial statements. Also, note that all non-accredited investors in a Rule 506 offering must be sophisticated, which means that the company must reasonably believe that non-accredited investors (either alone or together with their investment representatives) have sufficient financial and business knowledge to allow them to evaluate the risks and merits of an investment."

Its prohibited to take investments from non-accreddited investors in the straightforward manner you can from accredited investors, and if you do, you have a greater burden, and additional risk to bear.


This seems really cool and all, but what are we talking about in terms of wait time and hurdles to jump through? Anyone know details?

I've looked into and seen others go through grant processes and they are often terrible. Hope it isn't similar.


This isn't a grant. It's a modification of the rules for unemployment insurance. It's a good change.

It allows you to use unemployment insurance to pursue your own business for about half a year. Of course, for you to be eligible for unemployment insurance, you had to have been employed at some point and gotten fired. It's also a paltry sum. But, again, any movement in the right direction is a plus.


Strange question, but couldn't you always do this?

From my understanding, unemployment insurance only required that you take no/low salary from a company. You were still able to receive money from capital-gains/investments.

Start a consulting firm/startup, pay yourself a $1 salary with stock options. Don't exercise these options for a long time (when you stop UE). I read the UE stuff time and time again in Massachusetts and kept looking for something to say that I couldn't do this but couldn't find anything that said so explicitly. I didn't end up doing consulting (just more learning/studying), but it would have worked and been legal right?


> Strange question, but couldn't you always do this?

No. For you to receive unemployment insurance you must prove that you are actively seeking a job.

I suppose you could have invested the time into looking for a job while spending the rest of it starting a business, but this will provide you with an explicit option to start your own business. That will encourage more people to do so.


Right. Let's say I was searching for a job, but doing Rails work on the side (not a startup per-se, but you know... doing startupy like work). I could spent 1 day per week looking for a job, and 4 to 6 days a week coding for people. All the proceeds go into a consulting firm which I hold ownership of.

But yes, it is good for this to be official now.


If you do this you are probably violating the unemployment rules in your state[1]. If you reported this income with the unemployment office you will most likely have your benefits reduced or eliminated. But most people don't report this income and get away with "double dipping" which was heretofore not allowed. Technically if the government found out you did this they could penalize you retroactively. But this is a hassle and most people just get away with it unnoticed.

Even more technically, some states will even deny unemployment benefits if you are working without pay such as in a startup situation (and you are honest enough to admit this). It's not about income or full utilization, it's are you working at all.

The change in the law makes getting paid for self employment legal. Although if your self employment included revenue I assume it would still count against the amount you received from unemployment, again depending on your state.

[1] http://career-advice.monster.com/salary-benefits/benefits-in...


Remember unemployment insurance rules vary depending on the state. New York State for example asks if you are employed, not if you are drawing a salary.


True. Massachusetts asks your salary. If you're working a job that pays less than your UE benefits, then they make up the difference.


It's too bad that it's a modification of unemployment. I'd take this, but I have a job and it's next to impossible for me to be fired or laid off.


The amount in question is a paltry sum. If that's all that's stopping you from starting your own business, quit. Walk into a bank and ask for a loan. You can get an SBA backed loan for 10K with moderate to good credit and no collateral. You can also just get a credit card with a 10K limit and a 0% APR offer, and transfer the funds to your checking account. Of course, all of these mean taking on the risk personally ... but if you're not willing to do that, you really have no business running a business.


I'm not sure there are details yet. The stimulus / jobs plan has been proposed, but there is no bill written yet. It will be another ten days before Obama presents his plan on how to pay for the jobs plan, and the bill won't likely be written until after that.

This is a great idea and would have helped me when I faced this situation 9 years ago. Following a layoff, I asked the unemployment office about this, and they said I must actively be looking for work. Still, I think the overall economic impact of this proposal is small potatoes compared to the overall jobs situation, but I guess every little bit helps.


This article does not mention that in order to qualify for unemployment insurance you have to have worked for a certain period of time and then been laid off.

This program will not help a college graduate (or dropout) that wants to start a business right away.

It's a great program, but unemployment should be expanded to include people who are first time entrepreneurs that have never had a job and been laid off.


Seems like there are some states that have this program in place- Delaware, Maine, Maryland, New Jersey, New York, Oregon and Pennsylvania.

http://workforcesecurity.doleta.gov/unemploy/self.asp

Unfortunately, not California


incidentally this has been done in Australia under the auspices of NEIS apparently over the past 20 years (link to monthly success story here: http://www.nna.asn.au/success-stories )

On top of it, there is a layer of mentoring as well:

  To be eligible for the NEIS Small Business Course, 
  you must be in receipt of a Benefit and must have a   Jobseeker ID Number.
http://www.becnorthside.com.au/index.php?option=com_content&...


Is this just PR releases or is the full text of the bill out? After the pre-press on the health care bill versus actually reading the thing, I really want to see the actual text (and the follow-up rule making).


The bill's been sent to congress this morning, if you can't find it on their website yet, you'll be able to soon. (Haven't gone looking myself).


isn't there yet - hope they put it up sometime tonight



Who cares about these proposals? They might be good ideas but the Republican House is never going to pass this.


I found the link for a list of unrelated things 2 paragraphs in quite jarring.


Starting a tech company is so cheap that funding should never be the bottleneck. If your idea is too expensive to start with a laptop and cheap hosting, think of another idea.


I rue the day when "tech company" came to equal "software company"... there are so many other kinds of tech, too.


Web software at that. HNot to pile on (I saw the comment below about sloppy wording), but there are a lot of other business models besides 'online service that does one thing really well'. If you want to create the next Photoshop or Excel, for example, you need to deliver a lot of functionality right from the get-go, which will take longer to build.


I agree with you, that was sloppy writing on my part.


It would be unfortunate if everyone thought this way. It will be a sad day when the only innovation in the world is new web apps.


This is true for some startup ideas, but not others. By saying "think of another idea" you eliminate many useful types of startups.

I see your point, which is that you don't need a fancy office and an HR staff to get a company off the ground, but that doesn't mean every company can get to profitability on a laptop and cheap hosting.


You're only looking the smallest of expenses. It also depends on how far along you already are with the company. For any non-trivial idea that you're trying to implement from scratch, (especially if you're doing all the work yourself) you're going to want to be able to work on it full time, which means you have living expenses. Depending on where you live, those can be quite high. You might need to pay for training materials as well. There are also software licenses that might be required. I'm sure people with more experience can think of other costs. Hell, if you're just talking about iOS development then you might have to pay for devices, the Apple developer program and a Mac. Not saying these are insurmountable but not as inconsequential as you seem to be implying.


If you need living expenses, save up. If you live somewhere too expensive, move. "If your idea is too expensive to start with a laptop and cheap hosting, think of another idea."

Sorry to be somewhat flip, but starting a tech company isn't complex, it's just difficult. These start-up costs are the easy part and if you can't solve them on your own, then a 10K infusion from the government isn't going to help you solve the actually difficult problems down the road.


Sorry to be somewhat flip, but starting a tech company isn't complex, it's just difficult.

I think you're over-generalizing here. There's a big difference between a "tech company" that's an online TODO list monetized with Google Adwords, and a "tech company" that's selling enterprise knowledge management software to Fortune 2000 companies.

These start-up costs are the easy part

For some classes of startups, that's probably true. I argue that it's not true for all of them.

and if you can't solve them on your own, then a 10K infusion from the government isn't going to help you solve the actually difficult problems down the road.

Money is money for a startup... I don't see how it matters where founders "self funding" money comes from... stored savings, or this program. If you're self-funding / bootstrapping, you're self-funding/bootstrapping, full-stop.

I have my own issues with this program, being a libertarian who believes that the proper roles of government should be very limited... but within the context of the system we have, I can see this being very beneficial to certain would-be entrepreneurs.


Suppose you're working on a product that is time sensitive. In other words, if you don't start full time on it three months ago, you'll be too late to market. Also suppose that you see this opportunity while you're a student. Finally, consider that skilled programmers tend to be concentrated in high cost of living areas. In that case, you never had the opportunity to save up and you probably need to be where the potential cofounders and employees are, so you've no choice but to look for funding.


"Suppose you're working on a product that is time sensitive."

Pick another project. There's a lot of money to be made on the internet.


I'll tell you what: since it's so easy, why don't you make a list of 100% guaranteed ways to make money on the internet. Lord knows I'd rather be in my own business than working for a huge corporation.


where the hell is the TLDR?

i just want a place to submit an idea and prototypes and get cash ....


US need a win-win proposition with Chindia


There is nothing more ironic than the jingoist segment of the population who are also ravenous Walmart shoppers.

It seems like such a no brainer for a political movement/party to run on a platform of restoring Americas manufacturing base.

I think people forget how many second order jobs are lost with the withered manufacturing base. Transportation, IT, HR, restaurants that people eat at on lunch breaks... I can't even enumerate how many second order jobs large scale manufacturing creates...

I regularly go out of my way to pay for American made stuff, so I can say I put my money where my mouth is. Same with shopping locally - farmers markets with local producers etc.

I don't know when well ever snap out of this way of life --- spend less to have more and the quality of life around you declines. Personally I wish my kid had less toys but they're so cheap that grandma and grandpa ship em by the boxful.

Ugh.


I know this is getting downmodded, but hes somewhat right.

"Chindia" is draining our economy, by "draining our economy", I mean its destroying the people who actually do the work.

For every job that is sent overseas, not only does it result in someone, an actual real person, losing their job, but a form of slave labor in a foreign country "hires" the replacement.

If I was President, honestly, I would push for a 0.5% tariff on all goods and services from countries that are not considered first world countries.

I may be unable to improve the conditions of slave laborers in foreign countries (especially China and India due to massively corrupt governments that are doing everything possible to widen the gap between the poor and the rich instead of closing it), but I don't have to support doing business with those who make this possible.

0.5% would result in hundreds of millions of dollars in recaptured revenue, which could be instead spent on trying to preserve jobs in the US instead of exporting them, but it would also be low enough that the consumer would not bear the brunt of this.


>If I was President, honestly, I would push for a 0.5% tariff on all goods and services from countries that are not considered first world countries.

An alternate statement of that idea (which I'm not sure I agree with either), is a tariff on goods and service in the amounts required to bring the hourly foreign labor costs up to the US federal minimum wage with no exemptions.


I was actually considering something similar. Instead, define "first world country" as a county who's median yearly pay is at least half of hours, recognizes basic human rights, recognizes democratic voting, and doesn't punish their population for speaking out against the government or any government sponsored religion (such as the Muslim religion in various middle eastern countries), and also recognizes the rights of women.

As in, fellow countries that believe in life, liberty, and the pursuit of happiness.

Attempting to tariff any harder can have extremely adverse effects. The rich wish to remain rich at all costs.


So apparently the real "exorbitant privilegue" is not being able to print the world's (soon to be ex) reserve currency, but being a poor country (Chindia) with billions of people willing to work their way out. Interesting thought.


It seems to me that for most jobs it isn't true that it's being done by slave labor. I know in China, factory jobs pay much more than the average job (2x-3x more). In India, call center workers are considered one of the upper rungs of society - they are thrilled to do it. This can hardly be called slave labor...


2-3x more than 5-10 cents an hour is still slave labor.

Call centers may be well paying jobs in India, but I still view it as kicking an entire society while its down.

In a way, its no different than back before the civil war, white plantation owners would have slaves work inside of the house, ie, a "house negro". The parallels between the two are rather scary.

Its almost like the Civil War was lost in the sense that all we did was export slavery to a country where its legal and accepted.


The comparison would be more apt if abolishing slavery just meant that you couldn't employ black people on plantations. But those people were given rights to work for a wage, buy property with their earnings, or run businesses. What you have right now is that people in the developing world voluntarily entering employment contracts because they are the best available so far. Simply ending those contracts does not do any service. If those contracts are not "fair", we have to ask why that is. Perhaps it is because of protectionist policies in the developed and developing world?


Wow, I'm getting down voted for pointing out slave labor in India is racist by drawing parallels from our own history.

Since when did the HN community support racism?


Your argument is not really convincing, because you have neglected to consider that wages paid in foreign markets have quite different purchasing power from the amount that they would have here. Furthermore, the element of coercion is absent.





Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact

Search: