[tirant]

Regulations often stem from a particular mindset. However, they also serve to perpetuate that mindset.

As a member of the working class, I find there’s little incentive to build something new or innovate because the effort required to navigate through all the burdensome regulations is overwhelming. On top of that, any additional income I might generate from bringing my ideas or initiatives to market would be taxed at more than 50%. For many people like me, the effort simply isn’t worth it. Instead, we focus our energy on other pursuits, such as family, sports, or friendships.

This shift in focus isn’t inherently bad—a life balanced between family, friends, work, and leisure is often a recipe for happiness. However, societal progress relies heavily on the efforts of a small minority of individuals who are bold (or perhaps crazy) enough to pursue their ideas. When 90% of those individuals are discouraged from taking entrepreneurial risks, society’s capacity for innovation is severely stifled.

In short, it’s clear that excessive regulations and high taxes are holding Europe back from achieving its full potential for growth and innovation.

[mrtksn]

Which regulations exactly you find burdensome or overwhelming and stopping you from attempting the become wealthy, change your life and the world maybe?

Why would you skip having 1 billion Euros just because you could have had 2 Billion but the government took the rest? Up until 1960's rich Americans payed %91 tax, and yet they kept their entrepreneurial spirit - why you can't do the same at the stated %50?

When Apple was founded, the tax rates were %70.

[cdnthrownawy39]

Canadian here.

It's not so much any single regulation, as it is there's so many little ones that seem reasonable on the face of it. But it's also that what makes the ruling Canadian class so is the authority to bypass those regulations.

I can give one personal example; I was able to secure some public funding application for a non profit I'm affiliated with. But the only reason I was able to do that was because my parents were university classmates of the elected official that was able to pressure the staff that was handling the paperwork to prioritize and approve our application ahead of probably the hundreds in front of us. The official's going to get a nice thank you dinner out of it, but I also had to offer some information that the official could financially benefit from for him to even consider it, and a promise of some future favors.

For better or worst that's how a lot of Canadian system works. Grant applications, personal tax work, personal and business banking, etc. Anyone can get through it eventually for anything. But if you want it done quickly and in a way probably won't get tied up in the system itself, you better know someone that owes you a favor.

[mrtksn]

This is very interesting anecdote because it resonates with something that a friend of mine said when I pressured him to explain which regulations exactly are causing him problems in EU.

As it turns out, he also complained about excessive documentation he needs to get public funds for his project.

So both of you are actually complaining about accessing public funds and not actually doing private investment or starting a private company with private funds.

this is not what most of the Americans do and this is not what they mean by startups or business. Mostly.

[cdnthrownawy39]

Sort of. Accessing private Canadian financing is a lot harder for the most part, our financial sector is notoriously risk averse for any sort of personal or business loans unless there's a path of guaranteed returns and you have a track record of getting those returns. Last time one of my bosses tried to get something like $2 million in raising funds with Canadian investors, they said that we needed to show I think at least $2 million in net profits for 4 or 5 years at least.

Public funding is easier to access in part because the people that are overseeing it usually don't understand or care to understand what it is they're overseeing. My boss in 2015 or so was presenting my regular IT work as research and development and somehow it worked.

It's not just in new business either. Canada has the lowest investments in business machinery like computers to improve productivity. I don't know what the friction in that regard but just to give you an example; the big name company I was working in 2023 retired the DLink Fast Ethernet switches that we were using as core networking for one of our labs. $200 to upgrade the component that was bottle necking 20+ employees was not worth it and I had to buy it out of my own pocket to demonstrate just how badly it was hampering. And this was after showing fancy power points on the financial impact of 20+ employees doing file transfers at 1/10th the speed they could be (not so much that they didn't have the money, they just didn't believe that an engineer could understand finances. Go figure).

I gotta run, but there's more I can comment on.

[indeedmug]

> Sort of. Accessing private Canadian financing is a lot harder for the most part, our financial sector is notoriously risk averse for any sort of personal or business loans unless there's a path of guaranteed returns and you have a track record of getting those returns. Last time one of my bosses tried to get something like $2 million in raising funds with Canadian investors, they said that we needed to show I think at least $2 million in net profits for 4 or 5 years at least.

If someone's businesses is already working, then why would they go and get investment money?

It seems like the investors don't realize that if someone does have that much net profit, they actually don't have that much leverage over them to get good equity deals. So they are essentially just paying high and selling low later.

[robertlagrant]

> Why would you skip having 1 billion Euros just because you could have had 2 Billion but the government took the rest?

No one's making that choice. Most businesses fail, even in somewhere entrepreneur-friendly like America. Why not just work for someone else, given the rewards are capped even at relatively low level of success? Why take the risk, when taxation has failed to price risk into reward?

[flask_manager]

We have global commerce; you are not only working on the creation part of something new, but also competing with similarly skilled people working with different more advantageous start conditions.

Nobody is talking about the difference between 1 and 2 billion, they are talking about the difference between 50 and 100 thousand, while competing.

[_t9ow]

The highest marginal tax brackets tend to kick in very, very early in Europe. That makes a huge difference.

[mrtksn]

Does it? How many people skipped getting rich because they could have been richer? Any factual examples?

BTW, rich don't actually pay much taxes. The luxury life they live is usually not taxed, most of the things they do is considered business expense.

When a worker flies to Ibiza they first pay social security and income taxes, then they pay consumption taxes like VAT.

When a businessman flies to Ibiza they deduct whatever they can as an expense so they don't pay income tax and VAT. For whatever they can't claim that it is a business expense they will pay with a cheap loan against their assets and avoid paying income taxes. Since they still have those assents, they pay just the interest later when the assents increase in value. If their business fails those assets fail, the bank takes the assets and no taxation happens.

[paganel]

What the OP is trying to say is that to grow from 50k euros earned per year to 1 million euros earned per year is very, very cumbersome and, yes, mentally challenging and very stressful, and that a lot of people actively choose to stay/remain at the 50k euros per year level and they'll not take the risks of trying to get to more than 1 million per year.

Once you're at more than 1 million per year there are other challenges and you can probably afford to hire someone to take part of that burden off your shoulders, but until you get to that point you're on your own and it's very damn stressful (and by stressful I mean that that includes the possible inflated but all to real fear of getting to prison because of that tax-thingie that you didn't fill the 100% correct way or because some work your company did broke some municipal regulations or whatever and now you're on the hook for damages and, yes, personal liability).

Actually your VAT-skimming thing at the end is a very good example of that mentality, i.e. the innovators here having to have the Tax man front and center in their minds, before innovation and trying to build something useful off the ground, because if you don't know how to play the Tax man (at the limit of legality, as your example is) then you're toast. That "playing the Tax-man" thing consumes a lot of people's energy in the early stages, energy that would have been way better spent trying to actually make something new and innovative.

[the 50k and 1 million figures are just used as examples, maybe it's not 50k but 70k or 80k and maybe it's not 1 million but 5 to 10 million, but the idea stays the same]

[brewdad]

Those problems are universal. Or do you honestly think that American startups don't need to hire an accountant and consult with lawyers? You either find the risk/reward proposition worthwhile or you don't. There's nothing wrong with not pursuing the riskier avenue but don't pretend the US makes it easy.

[paganel]

There are levels and levels of enforcement, and, yes, from the across the pond it does look like the IRS is not breathing as menacingly each and every time you may want to do something different.

For example a company like Uber could have never taken off here in Europe because the tax authorities (and not only) would have never let that happened, i.e. Uber (the company) playing the "they're not real employees" game with the authorities. Yes, Uber eventually made it into Europe, but only because by that time it already was a big and established company in the States so it had lots of money to spend on lobby activities.

[fxtentacle]

For a married couple in Germany, they reach 40% in effective tax rate somewhere above 600,000€ in combined annual income.

My take would be that once people have 100k€ in net annual income per person, they just do other things and work less because it brings them more happiness than the additional money would.

[rpep]

I’m 33, in the U.K. and my marginal tax rate is currently 66.7%, because the support you get for having children gets withdrawn between £60000 and £80000. If a promotion came up I would take it but it’s also at a point where I’m considering already dropping down to four days a week because of this. I don’t live in London so my life is very affordable. Save myself money on children’s nursery for a few years too…

https://taxpolicy.org.uk/2024/03/10/infographic_marginal_rat...

[inglor_cz]

Nominal tax rates were 70 or 90 per cent, but no one really paid them. The tax code was full of loopholes for that purpose.

You can't rely on such paper figures to determine real tax burden in the past.

[mrtksn]

Which is still the case. No one is skipping getting rich because of taxes, they end up paying very little anyway.

[hdougie]

What makes you think anything has changed here? Certainly in the UK, there are plenty of "loopholes". Outside of PAYE, there are plenty of ways to legally lower your tax burden, and plenty of wealthy business owners and shareholders make full use of those loopholes.

[inglor_cz]

This is true and I believe it doesn't make sense to compare tax burdens of the people who are already wealthy.

It makes sense to compare tax burdens of well-paid employees, a favorite cash cow of most governments. These are the people who sometimes start new businesses, and use their savings to do so.

And there is a meaningful difference to the volume of their savings if their top tax bracket is 30 per cent or 55 per cent.

[marcinzm]

You've fallen into the classic trap of thinking about the very very very tiny of people who are billionaires. Very few people are billionaires. Very few startup founders will ever be even if they succeed.

Life changing money is going from $50k/year to $1m/year. Not from $1b to $2b.

The vast majority of tax burden and complexity hits the middle class.

> When Apple was founded, the tax rates were %70.

It was 35% on capital gains.

[mrtksn]

In Europe the capital gain tax ranges from %37 in Norway, %34 in France, %26 in Germany and Italy, %10 in Bulgaria and %0 with conditions in many other places. Tax heavens are a European invention anyway.

And no, millionaire or billionaire doesn't matter much. Europe lacks Billionaires not Millionaires. Europe is full of small businesses and by small I mean millions in profits and revenues.

In Europe %99 of the companies are small or medium sized enterprises, which is not different than the USA. In USA however, large companies have slightly higher number of employees which is an indicative of concentration of power and that's how you get your "USA has 5 unicorns in top 10 but EU has only 1" lists.

Contrary to the narrative, Europe has much more small and medium sized enterprises per capita: https://www.nationmaster.com/country-info/stats/Economy/Micr...

[marcinzm]

> Europe lacks Billionaires not Millionaires.

It lacks both.

The US has 8.5% millionaires. Germany has 4.1. France has 5.6. Norway has 5.9. The UK has 5.8. Once you include the rest of the EU it goes even lower.

https://en.wikipedia.org/wiki/List_of_countries_by_number_of...

edit: And in the US there's no need to start a business to be a millionaire. You can become one by just working a regular job. Sales, consulting, tech, finance, etc. jobs can even pay you $1m per year.

[myrmidon]

Thats not an entirely fair comparison because GDP/capita is different, and the base assumption would be that millionaires/capita increases with GDP.

That assumption appears to hold in general (Luxembourg and Switzerland have higher GDP and significantly higher millionaire percentages than the US), but there are a LOT of exceptions, like Ireland/Norway (way less millionaires than you would expect from GDP).

This is very interesting, I would not have expected to see such significant differences between countries...

[marcinzm]

From what I can tell the millionaire discrepancy existed in 2010 as well when the per capita GDPs between Germany/France/UK and the US were fairly close. The gini index for the US is much higher so it's not surprising that there's more millionaires per capita. And a lot more poor people per capita as well (once you account for the US's weaker standard for what constitutes poverty).

[brewdad]

EU has pensions. US has 401k plans. There may be more millionaires in the US but that, in and of itself, doesn't prove anyone is better off there.

[jandrewrogers]

The US has a pension, it is called Social Security, and it is relatively generous among developed countries. 401k is in addition to, not a replacement for.

[marcinzm]

I never said people were better off in one or the other nor is this a discussion about that. This is a discussion of the societal differences driving startups and risky investments.

[mrtksn]

With enough inflation the millionaires supply will increase, but that's not the point. Toplists and arbitrary round numbers doesn't mean anything. Let's stick with stuff that matter, like concentration of wealth.

[marcinzm]

> but that's not the point

You made it a point, not me. If you're going to try changing the goal post when proven wrong then there's no point in talking further.

[wertqgd]

The 50% tax being a roadblock is exactly what the lack of ambition is about. There's an implicit assumption you're only ever achieve just over the tax limit rather than hundreds of thousands or milllions over with share options etc.

[netdevphoenix]

I think this is a combination of a lack of supportive environment and a risk averse mindset. Employers will likely scoff at a CV with one or more entrepreneurial stints. The way I see it is this: if the prohibition era was implemented in the UK, people would still acquire alcohol against any and all barriers. The same drive doesn't exist for entrepreneurial goals. Regulations make things difficult but the critical problem is that the entrepreneurial mindset is not there

[vladms]

> As a member of the working class, I find there’s little incentive to build something new or innovate because the effort required to navigate through all the burdensome regulations is overwhelming. On top of that, any additional income I might generate from bringing my ideas or initiatives to market would be taxed at more than 50%. For many people like me, the effort simply isn’t worth it.

I find it ironic you mention "classes" (regarding "as a member of the working class"). There are problems everywhere (either as an employee or as an entrepreneur). Feeling overwhelmed is just a feeling, does not say anything about how much you can do or if you get a reasonable workload.

I think what is holding Europe back is the people not trying and understanding various things without having lots of fears (of being overwhelmed, of large tax, of what people will say, etc.).

A balance must be stricken also between what you can do (leisure, family) and how many resource you produce/consume. The purpose should be for more of leisure/family but that is ONLY IF we (I am also European) produce/consume enough. Too many smart and capable people want to "just be an employee", which results in gaps in other places (entrepreneurs, politicians, etc.).