Social Democracy and Entrepreneurship

[kimmy]

More than would succeed without the assistance, but is it more than would succeed if taxes were substantially lower, which they necessarily would be in a less socialist society?

How many businesses in the formative stages pay tax at all?

I believe that many businesses in this country, particularly ones that are young and small and without net income, pay very little tax at all.

Is tax really what kills new businesses? I suspect that raising sufficient capital is probably the greatest obstacle to getting started. Other barriers to entry (difficulty in obtaining permits or regulatory listings, for example) are closely related. Convincing capable people to invest their talents in a risky venture. That's before you even get to market. Then you have the challenge of either convincing consumers that your new and revolutionary product or service is something they need, or prying customers away from established, experienced businesses who offer similar products or services with the advantages of an established reputation and customer base.

I believe that Canadian tax laws are actually very generous to businesses in their formative stages. And I believe that by the time businesses actually have positive income to pay tax on, they're over the hardest part of the the journey.

I don't at all believe that tax is what kills new businesses in Canada, so I don't believe low taxes would be more helpful than more practical assistance.

I think that if help came in the form of assisting new companies in raising capital, speeding up regulatory processes, linking up with capable employees, identifying markets, that sort of thing... it would certainly be more valuable than lower taxes.

-k

[Jack Weber]

How many businesses in the formative stages pay tax at all?

I believe that many businesses in this country, particularly ones that are young and small and without net income, pay very little tax at all.

Is tax really what kills new businesses? I suspect that raising sufficient capital is probably the greatest obstacle to getting started. Other barriers to entry (difficulty in obtaining permits or regulatory listings, for example) are closely related. Convincing capable people to invest their talents in a risky venture. That's before you even get to market. Then you have the challenge of either convincing consumers that your new and revolutionary product or service is something they need, or prying customers away from established, experienced businesses who offer similar products or services with the advantages of an established reputation and customer base.

I believe that Canadian tax laws are actually very generous to businesses in their formative stages. And I believe that by the time businesses actually have positive income to pay tax on, they're over the hardest part of the the journey.

I don't at all believe that tax is what kills new businesses in Canada, so I don't believe low taxes would be more helpful than more practical assistance.

I think that if help came in the form of assisting new companies in raising capital, speeding up regulatory processes, linking up with capable employees, identifying markets, that sort of thing... it would certainly be more valuable than lower taxes.

-k

Kimmy...

The free marketeers will not be happy until the entities they support the most pay no taxes at all...

Because to them,at least on the surface,profit and shareholder value are all that matter...

[dre]

Kimmy...

The free marketeers will not be happy until the entities they support the most pay no taxes at all...

Because to them,at least on the surface,profit and shareholder value are all that matter...

The problem of course being profits would dry up and shareholders would get less if they ever got their way.

[Jack Weber]

The problem of course being profits would dry up and shareholders would get less if they ever got their way.

I agree...

That,of course,goes to their constant bleating about things like "competativeness" and "productivity".These are all free marketeer buzzwords for driving costs down,namely wages.What these folks never seem to grasp is that if you drive the standard of living down,there are fewer people to buy those shares to get increase any individuals wealth.Of course,they never see the standard of living death spiral they are promoting because,frankly,most people like that can't see the larger picture outside of their individual stock portfolio's...

Edited January 26, 2011 by Jack Weber

[Bonam]

How many businesses in the formative stages pay tax at all?

I believe that many businesses in this country, particularly ones that are young and small and without net income, pay very little tax at all.

Is tax really what kills new businesses? I suspect that raising sufficient capital is probably the greatest obstacle to getting started. Other barriers to entry (difficulty in obtaining permits or regulatory listings, for example) are closely related. Convincing capable people to invest their talents in a risky venture. That's before you even get to market. Then you have the challenge of either convincing consumers that your new and revolutionary product or service is something they need, or prying customers away from established, experienced businesses who offer similar products or services with the advantages of an established reputation and customer base.

I believe that Canadian tax laws are actually very generous to businesses in their formative stages. And I believe that by the time businesses actually have positive income to pay tax on, they're over the hardest part of the the journey.

I don't at all believe that tax is what kills new businesses in Canada, so I don't believe low taxes would be more helpful than more practical assistance.

I think that if help came in the form of assisting new companies in raising capital, speeding up regulatory processes, linking up with capable employees, identifying markets, that sort of thing... it would certainly be more valuable than lower taxes.

-k

Kimmy, you make good points. Certainly, besides coming up with an idea that can be the root of a viable business, raising initial capital is the hardest step. But who is it that invests capital in new businesses? It is angel investors and venture capitalists. These people are there for the monetary return, and unlike the infant businesses they invest in, these investors DO pay taxes, and those taxes factor heavily into how much they will be investing, and it factors into their analysis of whether the potential return from a given start up will be worthwhile or not.

Now sure, you can raise taxes and have a government department that hands out money to new businesses instead of having them rely on angel investors and venture capitalists. I'm not convinced, however, that such a government department could be anywhere close to as good at identifying winners and losers as private investors are (that is, deciding who is worth investing in and who is not). And it would cost taxpayers a lot of money to have a government department that fills this function.

As for speeding up regulatory processes, I certainly agree, that would be helpful. Regulations pose an almost impassable barrier in my field (aerospace technology), for example. Now as for finding employees and identifying markets, really, that is something that the businesses should be doing themselves, and it is something that entrepreneurs are good at, they don't need assistance from government in these respects.

Additionally, once businesses do start turning a profit, they do get taxed. You can get taxed if you start making money even if your company is just 1 or 2 people. That's money that could potentially be going to expanding the businesses, were it not going to the government. The fact that having less profit left over to invest in the business will slow the rate of growth can't really be denied.

[bush_cheney2004]

Norway has oil. Nigeria has oil.

Both also have Phillips Petroleum.

Why do Norwegians live well, and Nigerians don't? And what of people in countries with no oil?

Do you know the population of Nigeria? No oil in Lichtenstein either, but they live well.

Edited January 26, 2011 by bush_cheney2004

[August1991]

Norway has been a country for a very long time with a long history of having respect for the law... A standard model for a representative democracy.

In fact, you are wrong. Canada's federal confederation is older than Norway. Norway, once a colony of Sweden, came into being through a referendum (!) in 1905. Norwegians voted massively to have their own country.

I believe that Canadian tax laws are actually very generous to businesses in their formative stages. And I believe that by the time businesses actually have positive income to pay tax on, they're over the hardest part of the the journey.

I don't at all believe that tax is what kills new businesses in Canada, so I don't believe low taxes would be more helpful than more practical assistance.

I think that if help came in the form of assisting new companies in raising capital, speeding up regulatory processes, linking up with capable employees, identifying markets, that sort of thing... it would certainly be more valuable than lower taxes.

Kimmy, if you were thinking of starting a new business, you would probably want to talk to a lawyer, and an accountant first. And you wouldn't have these conversations to help yourself, the conversations would be about how to protect yourself.

As Russians would say, you need a "roof".

So Kimmy, even in Canada, I think you're wrong.

Both also have Phillips Petroleum.

Conoco-Phillips operates in both Norway and Nigeria. And you can buy Kentucky Fried Chicken in Beijing, and Lexington, KY.

What's your point, B_C?

Edited January 28, 2011 by August1991

[Evening Star]

Huh?

http://www.forbes.com/lists/2010/10/billionaires-2010_Stefan-Persson_XM99.html

[Evening Star]

So Sweden's been voting socialist since 1932. It won't make it a hundred years. It's already in pretty bad shape.

In what way?? The Nordic countries are performing extremely well by most yardsticks:

http://hdr.undp.org/en/statistics/

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

http://www.prosperity.com/rankings.aspx

I could understand if you argued that their successful economic model might not transfer well to other countries like our own or that it comes at the cost of diversity but it seems hard to accept the assertions that they are in especially bad shape now and are guaranteed not to last another 20 years.

[dre]

In fact, you are wrong. Canada's federal confederation is older than Norway. Norway, once a colony of Sweden, came into being through a referendum (!) in 1905. Norwegians voted massively to have their own country.

Kimmy, if you were thinking of starting a new business, you would probably want to talk to a lawyer, and an accountant first. And you wouldn't have these conversations to help yourself, the conversations would be about how to protect yourself.

As Russians would say, you need a "roof".

So Kimmy, even in Canada, I think you're wrong.

Conoco-Phillips operates in both Norway and Nigeria. And you can buy Kentucky Fried Chicken in Beijing, and Lexington, KY.

What's your point, B_C?

Kimmy, if you were thinking of starting a new business, you would probably want to talk to a lawyer, and an accountant first. And you wouldn't have these conversations to help yourself, the conversations would be about how to protect yourself.

That hasnt been my experience at all. Canada is a pretty damn easy place to start a business actually. The government gave me back almost all of the taxes it took from me for the first few years in business development grants (which are not real grants, but tax credits).

[Jack Weber]

In fact, you are wrong. Canada's federal confederation is older than Norway. Norway, once a colony of Sweden, came into being through a referendum (!) in 1905. Norwegians voted massively to have their own country.

In fact,I'm quite right because it's a simple question of math and culture...

Try to follow along here...

Norway...

1905 to 2011...106 years...Over 1 century of democratic government.(I'll leave out the Quisling NAZI years,for the moment)

Nigeria...

1960? to 2011...

51 years of autocratic rule and one of the most corrupt countries in the world.No REAL history of representative democracy...

AND,just to stick it to your "referendum!" little dig...

Canada,quite rightfully,did not give one of its charity case,crybaby provinces constitutional veto power because of some bogus "Distinct Society" arguement through a national referendum...Enjoy the repression!

Edited January 28, 2011 by Jack Weber

[Guest TrueMetis]

In fact, you are wrong. Canada's federal confederation is older than Norway. Norway, once a colony of Sweden, came into being through a referendum (!) in 1905. Norwegians voted massively to have their own country.

No it was part of a union with Sweden it was not a colony. Norway was first united over a thousand years ago.

[bush_cheney2004]

What's your point, B_C?

The point is obvious.

[M.Dancer]

No it was part of a union with Sweden it was not a colony. Norway was first united over a thousand years ago.

Norway was part of Denmark, then later part of Sweden. It became fully independent in the early 20th century becoming independent for the first time in over 500 years

[August1991]

No it was part of a union with Sweden it was not a colony. Norway was first united over a thousand years ago.

Union, or colony - your choice of term. But do you deny the basic facts? Norway, once a colony/part of union, became a sovereign country through a referendum in 1905.

The point is obvious.

??? (Or as Obama would say, WTF?)

Conoco-Phillips operates in Norway and Nigeria. So?

Edited January 29, 2011 by August1991

[Guest TrueMetis]

Union, or colony - your choice of term. But do you deny the basic facts? Norway, once a colony/part of union, became a sovereign country through a referendum in 1905.

It was also a sovereign country before it's union with Sweden (and Denmark) which is important. It's part of why they became a kingdom again, because they used to have their own sovereign. And yes it being in a Union matters because being part of a union is not the same as being a colony.

Norway was part of Denmark, then later part of Sweden. It became fully independent in the early 20th century becoming independent for the first time in over 500 years

The history of Norway is weird because it joined and left unions with Sweden and Denmark a couple of times.

[kimmy]

Kimmy, you make good points. Certainly, besides coming up with an idea that can be the root of a viable business, raising initial capital is the hardest step. But who is it that invests capital in new businesses? It is angel investors and venture capitalists. These people are there for the monetary return, and unlike the infant businesses they invest in, these investors DO pay taxes, and those taxes factor heavily into how much they will be investing, and it factors into their analysis of whether the potential return from a given start up will be worthwhile or not.

Canadian investors receive significant tax benefits for investing in Canadian ventures.

If you invest your money in a Canadian enterprise, it's almost as if you never earned it in the first place as far as the tax man is concerned. If we lived in a purely free market, that money would have been taxed at the same rate that money that is spent on buying a new car or a new home, but instead it's an opportunity to reduce your taxes while potentially acquiring an asset.

Now sure, you can raise taxes and have a government department that hands out money to new businesses instead of having them rely on angel investors and venture capitalists. I'm not convinced, however, that such a government department could be anywhere close to as good at identifying winners and losers as private investors are (that is, deciding who is worth investing in and who is not). And it would cost taxpayers a lot of money to have a government department that fills this function.

We already have that. We have any number of government grants and funding opportunities available for business, for everything from encouraging technological innovation and research and development to encouraging economic diversification to encouraging new industries in depressed regions. (it's not just new businesses, mind you... one need only look at the amount of cash that's been given to GM or Bombardier to name two.)

As for speeding up regulatory processes, I certainly agree, that would be helpful. Regulations pose an almost impassable barrier in my field (aerospace technology), for example. Now as for finding employees and identifying markets, really, that is something that the businesses should be doing themselves, and it is something that entrepreneurs are good at, they don't need assistance from government in these respects.

Additionally, once businesses do start turning a profit, they do get taxed. You can get taxed if you start making money even if your company is just 1 or 2 people. That's money that could potentially be going to expanding the businesses, were it not going to the government. The fact that having less profit left over to invest in the business will slow the rate of growth can't really be denied.

Of course lower taxes would be great for businesses once they're actually at the stage of being profitable.

But if lower taxes came at the cost of, say, ending the tax benefits that Canadian investors receive for investing in Canadian ventures, I doubt the overall effect is positive.

Weigh the effect of higher tax rates on successful businesses against the number of ventures that are killed off by the obstacles that new businesses face, I think it's obvious where the real benefit is.

-k

[Pliny]

In what way?? The Nordic countries are performing extremely well by most yardsticks:

http://hdr.undp.org/en/statistics/

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

http://www.prosperity.com/rankings.aspx

I could understand if you argued that their successful economic model might not transfer well to other countries like our own or that it comes at the cost of diversity but it seems hard to accept the assertions that they are in especially bad shape now and are guaranteed not to last another 20 years.

Well, the environmental movement is not going to be kind to Norway in the future but aside from that they socially aren't doing well. The people are learning dependency upon government for their sustenance instead of themselves.

The "most yardsticks" you sight, are first of all statistics, they are based upon a country's tabulation of those statistics and are based upon criteria set by social and economic standards that are given priorities according to "some one's" assignment of priorities. For instance it doesn't matter how many people are sick in a country it only matters that the size of the health care industry is large enough to reasonably service it. On the Legatum prosperity index, as an example, if I prioritize health as the prime concern the US comes up first in that category. Not many people in Canada would say that the US has a number one health care system.

I beleive that a country's sustainability lies in the hands of the next generation not the current generation that votes itself favours at the expense of the future generation. The shucking of social responsibility upon government is what the future generation is learning and the understanding becomes that health care, education, food, shelter, clothing should all be provided for "free" from government.

This attitude is fostered by the State but the underlying reason for it is basically a debasing of "money". Since most govenrments can provide as much money as they feel necessary to an economy and create all that it itself deems necessary at whim the idea to live large appears to have no end unless one looks at the future. The short and/or precarious career of politicians in social democracy's also contribute to a myopic and neurotic focus on the current state of affairs and perhaps their greatest concern is their cherished legacy of wha they provided for people during their term and not on the cost or state of affairs future generations must endure.

[Pliny]

Canadian investors receive significant tax benefits for investing in Canadian ventures.

If you invest your money in a Canadian enterprise, it's almost as if you never earned it in the first place as far as the tax man is concerned. If we lived in a purely free market, that money would have been taxed at the same rate that money that is spent on buying a new car or a new home, but instead it's an opportunity to reduce your taxes while potentially acquiring an asset.

We already have that. We have any number of government grants and funding opportunities available for business, for everything from encouraging technological innovation and research and development to encouraging economic diversification to encouraging new industries in depressed regions. (it's not just new businesses, mind you... one need only look at the amount of cash that's been given to GM or Bombardier to name two.)

Of course lower taxes would be great for businesses once they're actually at the stage of being profitable.

But if lower taxes came at the cost of, say, ending the tax benefits that Canadian investors receive for investing in Canadian ventures, I doubt the overall effect is positive.

Weigh the effect of higher tax rates on successful businesses against the number of ventures that are killed off by the obstacles that new businesses face, I think it's obvious where the real benefit is.

-k

There is one big flaw I see in your position. In order for there to be a level playing field the government should not be granting favour to companies over other enterprises and because there are various differences in the competency or concern of lawyers and accountants some will access government privilege over others. Social agencies, as an example, have learned this and initiate letter writing campaigns and other lobbying practices to receive grants and it depends upon the government's priorities at the time who gets them. Where in the past families were important to government and received baby bonuses and family allowances, today the importance's are rights for minorities.

In business, not all businesses get subsidies, they must meet all the set criteria which doesn't mean that they are the most worthy and deserving enterprise. The tendency may be to prop up poorly managed but properly positioned companies.

Edited January 31, 2011 by Pliny

[Evening Star]

Well, the environmental movement is not going to be kind to Norway in the future but aside from that they socially aren't doing well. The people are learning dependency upon government for their sustenance instead of themselves.

The "most yardsticks" you sight, are first of all statistics, they are based upon a country's tabulation of those statistics and are based upon criteria set by social and economic standards that are given priorities according to "some one's" assignment of priorities. For instance it doesn't matter how many people are sick in a country it only matters that the size of the health care industry is large enough to reasonably service it. On the Legatum prosperity index, as an example, if I prioritize health as the prime concern the US comes up first in that category. Not many people in Canada would say that the US has a number one health care system.

Sure, but at least they have clear criteria that can be evaluated. I haven't seen any stats using any criteria to show that the Nordic social democracies are struggling at the moment, compared to other Western countries, or that they are unlikely to last for another couple of decades.

[Pliny]

Sure, but at least they have clear criteria that can be evaluated. I haven't seen any stats using any criteria to show that the Nordic social democracies are struggling at the moment, compared to other Western countries, or that they are unlikely to last for another couple of decades.

Because it is progressing as expected in the way expected by engineers with an objective in mind. What is a human development index? It is formulated out of what is a desired social outcome, the imagined needs and wants of humans, but it actually ignores the individual who may have different priorities or needs and wants unaligned with those prescribed in it's assessment of it's social objective. And many things are measured in dollar terms and we know that govenrments propensity to throw money at problems is not necessarily a guage of success.

Basically, all the current democracies suffer form the same malaise in varying degrees. They are not democracies of the people anymore but democracies of special interests. Special interests that are not particularly interested in the welfare of the nation but that "their" interests are served. That is a result of power being centralized and no longer in the hands of the people and that is a result of the wealth of the nation no longer being held by the people through the debasement of their "money" and control of the money supply enabling the manipulation of the economy by government.

Over-population has long been a global concern of those in international government bodies that has sifted down to national governments. The problem with not encouraging population growth is that with less people there is less necessity to have economies annually expand on a continuous basis. It is necessary though for the continued growth and sustaining of government revenues. The problems that low procreation bring are solved through immigration which results in it's own set of problems. Multi-cultural integration being a concern.

When a company grows it grows because it is providing a service and supports itself and expands out of profits. If it is not making profits it closes or downsizes or shifts or improves it's product base or changes management strategies all at it's own expense. Government cannot do such things. It is also dependent on the profits of companies and is inflexible, especially in granting entitlements in the form of future liabilities. Confidence of the people in government demands it lives up to it's legal obligations. These are not the promises of politicians they are obligations of law. In order to renege on them laws need to be changed which will, if entitlements are lessened or eliminated, not make the people happy - especially those special interests that benefit from them. In order to avoid this cycle which has existed since civlization existed it is necessary that governments be limited in their mandate and allow society to engineer itself, to set it's own course.

Edited February 1, 2011 by Pliny